In the dark days of the 2009 recession, President Obama signed the $840 billion American Recovery and Reinvestment Act. It was an ambitious plan to kill a whole flock of birds with one stone. The bill’s supporters promised it would help rebuild the country’s aging infrastructure while accelerating the transition to green energy. Most important, the White House promised, the bill would quickly inject cash into the flat-lining economy with its focus on “shovel-ready projects.”
Like municipalities across the nation, the fading waterfront city of Bayonne, New Jersey, saw an opportunity. How could it qualify for some of that sweet stimulus money? Soon a plan was hatched to build a wind-power project on the grounds of a city waste-water facility. It was “green.” It would cost $5.6 million. And the people in charge of handing out the money weren’t asking too many questions about whether a single wind turbine in an urban area was the most cost-effective way to make electricity—or to reduce emissions.
The project faced endless hurdles and delays. By the time workers broke ground, the Great Recession was long over. As Obama belatedly admitted to the New York Times, “there’s no such thing as shovel-ready projects.” Who knew? Still, when the turbine blades finally started turning in 2012, it looked like a win for Bayonne. The turbine had cost the city almost nothing, and the electricity it generated was projected to save the municipality more than $300,000 a year.
Until it stopped working. Repairs dragged on for months and cost more than $800,000. Then it broke down again. “You can’t just call up Joe Mechanic to fix it,” one frustrated Bayonne official told me when I visited the installation in 2019. They were learning the hard way that they weren’t cut out to be wind farmers. And they discovered why renewable-power companies typically build multiple turbines at each wind-farm location: It vastly simplifies management and maintenance.
Taller than the Statue of Liberty a few miles away, the Bayonne wind turbine today stands as a 400-foot-high monument to the pitfalls of rushed infrastructure spending. As the Biden administration floats plans to spend a mind-boggling $2.3 trillion on “infrastructure,” it is a timely cautionary tale. Sure, the turbine still works, most of the time, and it still saves some money for Bayonne. Some might even call that a success. But, from the point of view of the American taxpayer, it was a dubious investment. It will take decades for the Bayonne project to pay back its initial cost—if it keeps running that long. It was also a poor environmental investment. If the money spent on this project had been invested in a more conventional wind farm, it would likely be producing almost twice as much clean power today.
The saga of the Bayonne wind turbine was all too typical of the projects funded under Obama’s stimulus plan. Many turned out to be neither shovel-ready nor wise investments. “Money was spread far and wide rather than dedicated to programs with the most bang for the buck,” writes Michael Grabell, author of Money Well Spent, a history of the stimulus. But this result wasn’t some accidental glitch in the Obama program; spending huge amounts of money as quickly as possible was the goal. Building useful infrastructure was a secondary concern at best.
In its new $2.3 trillion infrastructure plan, the Biden administration hasn’t tried to fix the weaknesses in the Obama-era approach. Instead, Biden’s team simply took that creaky vehicle and supersized it, turbocharged it, and added rocket boosters for good measure. The numbers involved in the proposal are so mind-blowingly large that it almost seems as if the administration actuaries periodically dozed off at their calculators and randomly added zeros. (Mind you, this plan follows the recent $1.9 trillion COVID-relief package and will be followed by another Biden proposal—this one dedicated to “human infrastructure”—estimated to cost perhaps an additional trillion dollars. Or maybe two. Really, who’s counting at this point?) At any rate, among many other items, the current plan includes $621 billion for transportation; $231 billion to build and retrofit affordable housing; $100 billion to create publicly owned broadband networks in underserved areas; $100 billion to improve water systems; and $100 billion for the electric grid. Another $100 billion goes to worker training.
On Twitter, Michael Gallagher, a Republican congressman from Wisconsin, took note of that recurring pattern: “What are the odds that in each of these cases, the investment that we need would be identical, and then that in each case it would be a nice round number like $100 billion?” He surmised that those conveniently round numbers do not reflect the Biden team’s exacting estimate of what the country needs but rather the target for how much they want to spend.
Others noticed that a surprisingly small share of the money called for in Biden’s infrastructure plan is dedicated to, well, infrastructure. Airports, bridges, and waste-treatment plants, for example, get relative pennies compared with the $400 billion allocated to providing health-care aides to the elderly and disabled. Another $300 billion goes to helping promote U.S. manufacturing. Subsidizing manufacturers and providing federally funded aides to the elderly might or might not be defensible as policies. But they aren’t anybody’s definition of infrastructure. Even those portions of the plan that sound like they describe traditional infrastructure aren’t quite what they seem. For example, the largest single portion of the $621 billion targeting transportation is devoted to subsidizing electric cars, not rebuilding highways, improving rail lines, or updating airports.
Biden has long promised that his administration would make addressing climate change a top priority. But even during his campaign, he made it clear that his definition of “climate” is a little different from that of, say, an atmospheric scientist. “When I hear the words ‘climate change,’” he liked to say on the stump, “I hear the word ‘jobs.’” And not just any jobs, but “good-paying union jobs.” President Biden introduced his plan at a Pittsburgh union hall. And, as is his wont, he extemporized a bit before turning to the teleprompter. “I’m a union guy,” he said. “Unions built the middle class. It’s about time unions got a piece of the action.”
Reading through the administration’s voluminous proposal, it becomes clear that neither climate nor traditional infrastructure is the ultimate target. Instead, the plan focuses on two overarching goals. The first is advancing the ideological causes of Biden’s progressive flank. Promises to funnel benefits to various “disadvantaged communities” abound. The second is those union jobs. This isn’t a hidden agenda. The proposal isn’t called the American Infrastructure Plan or the American Climate Plan. It’s called the American Jobs Plan. And the word “union” appears in the document more than the words “electricity,” “highways,” “transit,” or even “climate.” Almost every time the plan describes work that needs to be done—insulating apartments, say, or building electric cars—it specifies that union members should do it. Will nonunion workers be barred by federal mandate? And the plan suggests that projects funded under the program must give unions a helping hand in organizing workers. Get ready for the federal government to start preempting right-to-work laws in the majority of states that have them.
I’ve got nothing against unions. Near where I live, union workers recently completed the beautiful new Tappan Zee Bridge across the Hudson (I’m sorry, I just can’t bring myself to call it the “Governor Mario M. Cuomo Bridge”). Thanks to smart contracts and incentives, the project came in more or less on time and on budget. Building great infrastructure isn’t impossible, with or without union workers. But too often, union work rules and extravagant wages and pensions make construction almost impossible. Building new subway lines in New York City today costs roughly $3 billion per mile. A mile of subway in Paris: a little over $300 million. (Paris!) Unions empowered to follow the New York City model will never rebuild our infrastructure. Even projects that don’t hire union workers will be hobbled under the Biden plan. It insists that workers employed under the program be paid according to “prevailing wage” rules that force contractors to not only match union pay scales but also offer expensive fringe benefits. According to New York’s Empire Center, such regulations drive up construction costs by 13 to 25 percent.
The Biden plan also stipulates that goods and materials used in infrastructure projects must be “made in America and shipped on U.S.-flag, U.S.-crewed vessels.” Obama’s stimulus plan also had a buy-American requirement. And it wreaked havoc on the ability to get projects built. Critical products used in infrastructure—especially those employed in energy technology—contain components from all over the world. In the case of the Bayonne wind project, for example, the only suitable turbine was partly built in Italy. The project faced a holdup as officials scrambled to get a waiver on that requirement. The idea that we can blithely mandate strictly American-built content, and transport materials only on U.S.-flagged vessels, reflects a simplistic view of how the world economy works. It’s a recipe for even higher costs and longer delays. But it ensures that unions get a piece of the action.
Are you starting to get the impression that actually getting infrastructure built isn’t a top priority for Team Biden? That is especially true when it comes to energy infrastructure. Progressives argue that climate change is an existential threat requiring a massive transformation of our economy. And concern about climate is a central justification for the gargantuan scale of the Biden program. The plan promises to deliver “100 percent carbon-free” electric power by 2035, an extraordinarily aggressive goal. But it offers only vague steps to reach that target. Right now, coal and natural gas produce nearly 60 percent of the electricity in America, while wind and solar account for about 11 percent. Replacing those coal and gas plants with renewable power would require building six times more wind and solar capacity than we have today—in just 14 years. The plan includes big subsidies and incentives for renewable power but nothing on the scale that would accomplish this task. Moreover, the goal itself is misguided. Because the output from wind and solar is so erratic, powering the grid primarily with those sources is enormously difficult and expensive. More dependable sources, such as natural gas or nuclear, need to be kept in the mix.
At the same time, Biden’s master plan avoids some obvious steps that could ease the transition from fossil fuels in more affordable, market-friendly ways. One would be streamlining the endless environmental reviews that today delay many energy projects for a decade or more. (Protecting the environment is vital, but reviews shouldn’t be allowed to drag on for years.) Another would be to put a tax on the carbon dioxide output from fossil fuels and let the market innovate ways to reduce those emissions. One widely discussed plan would entirely refund those carbon-tax revenues to U.S. citizens. For lower- and middle-income Americans, this “carbon dividend” would generally more than make up for the higher prices they would pay for fuel and other carbon-intensive products.
If Biden tries to meet his climate goals without some form of a carbon tax, writes the Wall Street Journal’s Greg Ip, “he is fighting with one hand tied behind his back.” Such a plan might even gain bipartisan support, since at least a few mainstream Republicans have embraced the idea. Progressives used to like carbon taxes, too. But lately many have turned against the concept, in part because it seems too business-friendly. There are legitimate arguments for and against carbon pricing. But the fact that Biden’s proposal doesn’t even mention the concept reveals either a lack of political imagination or deep political cowardice.
Amid all the social-justice jargon and pro-union pork, the Biden plan does include some good ideas. Our bridges, ports, and airports do need work. Incentives to make the power grid more resilient are overdue. Targeted R&D funding can help bootstrap new industries such as energy storage and next-generation nuclear power. (Biden deserves a smidgeon of credit for standing up to the anti-nuclear wing of his own party on that issue.) The White House would do better to propose those ideas in clean, stand-alone bills.
Despite all the polarization under President Trump, several moderate, pro-environment bills were passed with bipartisan support during his term. Biden could have pursued a similar course here. After all, infrastructure was the key issue on which political observers thought he might seek—and find—some common ground with Republicans. Instead, the White House’s American Jobs Plan seems deliberately designed to be toxic to conservatives. And that tells us something important, and ominous, about the Biden presidency. Voters mostly viewed Biden as a traditional, mainstream Democrat—a “unifier.” But this proposal reveals just how thoroughly his administration is dominated by the Sanders-Warren wing of the party. The progressives pulling Biden to the left aren’t interested in compromise. Quite the contrary; they sense they’re on the verge of jamming through a sweeping realignment of the relationship between government and the economy. They don’t want to back off now. In fact, they want more. “This is not nearly enough,” Representative Alexandria Ocasio-Cortez wrote on Twitter when the Biden plan was announced. “Needs to be way bigger.”
Environmentalists often use the term “greenwashing” to describe businesses that trumpet superficial pro-environment initiatives while continuing to pollute behind the scenes. But progressives can play the greenwashing game, too. The Biden proposal is stuffed with policies that apply a thin green veneer over long-standing progressive goals. For example, progressives have always believed that the government can do a better job than private enterprise at building housing. So it’s no surprise to see the New York Times explain that the Biden plan “seeks to reduce the carbon emissions that drive climate change by adding one million affordable and energy-efficient housing units.” Building new housing is the slowest and most expensive way to reduce carbon emissions imaginable (especially given the stipulation that the projects must pay “prevailing wages”). But then, reducing carbon emissions isn’t really the point, is it?
Back when the Trump administration briefly had a policy of separating children from their border-crossing families, critics liked to say, “The cruelty is the point.” Reading through this vast progressive wish list, one must remember that the mind-numbing sums allocated to each proposal aren’t simply large but sensible “investments” in necessary goals. No. The spending is the point.
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