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Macroscope
OpinionComment
Anthony Rowley
Anthony Rowley

Macroscope | Biden’s US$2.25 trillion infrastructure plan boldly recognises public sector role

  • US corporate taxes will rise to help fund the infrastructure upgrade and social welfare spending that the US will need to catch up with front-runner China
  • The Biden plan is a tacit recognition that financial systems in market economies such as the US are not best suited to financing public spending

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A highway construction project in progress in Fredericksburg, Virginia, US, on April 2. President Joe Biden’s infrastructure package seeks to upgrade and maintain the nation’s highway systems. Photo: EPA-EFE
Anthony Rowley
President Joe Biden’s bold infrastructure plus social welfare spending package in effect acknowledges China’s lead as a global infrastructure power, and the need for America to catch up in this regard. But it also represents a major US concession to the role of the public sector.
These facts have been obscured by the size of the projected spending – US$2.25 trillion on infrastructure, clean energy, digital upgrading and others, with perhaps a further US$1 trillion to come for health and education. But the ideological significance of the package is greater than its size.

That the infrastructure spending will be financed chiefly by an estimated US$1.6 trillion of extra corporate US taxes, phased in over 15 years, is remarkable in a country where market financing and operation of infrastructure facilities has been strongly favoured over public provision in recent decades. The Biden plan is a tacit recognition that financial systems in market economies such as the US, parts of Europe and elsewhere which follow Anglo-Saxon principles of putting shareholder interests ahead of stakeholder interests, are not best suited to financing public spending.

That is one reason China’s state-dominated economy has been able to surge so far ahead in the provision of domestic transport, energy and digital communications infrastructure, as well as globally under the Belt and Road Initiative – and why the US lags behind in these areas.

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Joe Biden says China will ‘eat our lunch’ on infrastructure

Joe Biden says China will ‘eat our lunch’ on infrastructure

Poor infrastructure is often accompanied by low productivity and other economic inefficiencies and in this sense, the Biden package could do more to make America great again than anything Donald Trump ever did while in the White House.

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