Public Works: How The Clinton and Sanders Infrastructure Plans Measure Up
Posted by carldavidson on December 1, 2015
By Dave Johnson
Campaign for America’s Future
“Investing in infrastructure makes our economy more productive and competitive across the board.”
– Hillary Clinton
Dec 1, 2015 – Democratic presidential candidate Hillary Clinton has announced a plan for infrastructure investment. How does her plan stack up against that of her chief competitor, Bernie Sanders?
Also, how will Clinton and Sanders pay for their plans? On that question, Sen. Elizabeth Warren (D-Mass.) recently came up with a set of principles we can use to judge this.
Clinton’s Infrastructure Plan
Clinton on Monday announced a plan for investing in infrastructure improvements. Meteor Blades laid out the need for infrastructure investment at Daily Kos in “Clinton proposes $275 billion spending for infrastructure“:
… 11 percent of the nation’s bridges are structurally deficient and a fourth of them are functionally obsolete. Similar deficiencies can be found in schools, dams, levees, railroads, the electrical grid, and wastewater facilities. In its 2013 quadrennial report card on U.S. infrastructure, the American Society of Civil Engineers said the nation would need to invest an additional $1.6 trillion by 2020 to put its infrastructure into good repair. And that doesn’t include innovative infrastructure like universal broadband.
Clinton’s infrastructure plan is detailed at her website in “Hillary Clinton’s Infrastructure Plan: Building Tomorrow’s Economy Today.” Here is a distillation:
● $250 billion dollars in infrastructure investment, spread out over five years as additional spending of $50 billion each year.
● An additional one-time $25 billion to seed a national infrastructure bank. The bank will support up to an additional $225 billion in direct loans, loan guarantees, and other forms of credit enhancement. These are loans to states and cities which will require tolls, fees, etc. to pay off.
● Spending priorities include “smart investments in ports, airports, roads, and waterways”; “giving all American households access to world-class broadband and creating connected ‘smart cities’”; “building airports and air traffic control systems”; “a smart, resilient electrical grid”; “safe and reliable sources of water”; “a national freight investment program”; “upgrade our dams and levees to improve safety and generate clean energy”; safe, smart roads and highways that are ready for the connected cars of tomorrow” and “the new energy sources that will power them.”
● A promise of “a faster, safer, and higher capacity passenger rail system.” But the plan does not mention high-speed rail. (Note that a single high-speed rail system from Los Angeles to San Francisco is expected to cost up to $60 billion, which alone is almost one-fourth of Clinton’s entire five-year infrastructure investment for all infrastructure needs.)
Sanders’ Infrastructure Plan
Clinton’s $275 billion infrastructure plan offers modest spending and contains few specifics. Contrast that with candidate Bernie Sanders, who has proposed a highly detailed, $1 trillion plan.
Sanders’ infrastructure plan was originally introduced in January as a Senate bill called the Rebuild America Act. A summary is laid out on his campaign issues page, Creating Jobs Rebuilding America. The plan calls for spending $1 trillion over the same five-year period. Here’s what his plan includes:
● A $125 billion National Infrastructure Bank to leverage private capital to finance new projects.
● $75 billion to upgrade our passenger and freight rail lines.
● $12.5 billion to improve airports across the country.
● $17.5 billion to upgrade air traffic control systems.
● $15 billion to improve inland waterways, coastal harbors and shipping channels.
● $12 billion each year on high-hazard dams that provide flood control, drinking water, irrigation, hydropower, and recreation across the country; and the flood levees.
● $6 billion a year so states can improve drinking water systems.
● $6 billion a year to improve the wastewater plants and stormwater infrastructure.
● $10 billion a year for power transmission and distribution modernization projects.
● $5 billion a year to expand high-speed broadband networks in underserved and unserved areas, and to boost speeds and capacity all across the country.
Warren’s Key Tests For Corporate Tax Plans
Clinton’s infrastructure plan says only that it will be paid for through “business tax reform.” It does not detail the nature of the reforms that would pay for this spending. Similarly, Sanders does not yet have a specific individual and corporate tax proposal, but he has proposed a financial transaction tax and says he will close loopholes.
As we wait for the candidates’ plans for raising revenue through individual and corporate taxes, Sen. Elizabeth Warren has recently outlined a set of principles that we can use to judge the plans the candidates eventually offer.
Earlier this month Warren gave a speech laying out key tests for a progressive approach to corporate tax “reform.” The post “Must Watch – Warren’s Warning About The Coming Corporate Tax Giveaway” covers this speech. She says that “the problem with our corporate tax code” is “not that taxes are far too high for giant corporations, as the lobbyists claim. No, the problem is that the revenue generated from corporate taxes is far too low.”
Warren laid out three principles for tax reform that benefits middle-class families and small businesses, not just wealthy multinational corporations:
1) Increase the share of revenue that corporations pay. The tax code now is so tilted toward the big corporations that any “revenue neutral” plan leaves the country with too little money to fund basic services.
2) Level the playing field between small and big businesses. The business tax code is rigged against small businesses, making it harder for them to compete.
3) Promote investment and jobs in the U.S. Lower tax rates and loopholes for hiding profits overseas encourages more outsourcing of jobs and investment. “Our tax code should protect jobs and investment here at home, period,” Warren said.
How will Clinton and Sanders’ plans measure up to Warren’s tests?
Do They Offer Corporations A “Repatriation” Tax Break?
Here’s one key point to pay attention to regarding any plan for corporate tax “reform”: There is a huge pot of money sitting offshore that giant corporations have moved out and kept out of the country thanks to a loophole that allows them to avoid paying the taxes due on those profits until it is “repatriated” – brought back to the US. The amount being kept out of the country is now over $2.1 trillion, with $620 billion of taxes due. Another $90 billion is added to this pot of taxes due each year.
There are two ways this money can be brought back so the country can use the resulting tax revenue:
1) The corporations can be told to bring it back and pay the taxes they owe on these “offshore” profits. This brings $620 billion of revenue to the government immediately, and another $90 billion each year thereafter.
2) Politicians can offer an “incentive” to bring the money back, in the form of a cut in the taxes due. This is a trick because it “generates” revenue but actually brings less than the $620 billion owed, the rest being pocketed by the corporations.
This is the key point to watch for in Clinton and Sanders’ plans for funding infrastructure. Do they require the corporations to pay what they owe now or do they hand them tens or hundreds of billions by letting them repatriate the profits at a lowered tax rate?
The Politics Of Passing Anything
It is interesting to examine the Clinton and Sanders’ infrastructure plans in light of what is needed by the country, and the fact that a Republican Congress is unlikely to allow any infrastructure plan (or anything else) to pass.
Republicans on Monday immediately came out in opposition to Clinton’s proposal, calling it more government spending. The Republican National Committee called it a “spending binge” and said Clinton “wants to treat Americans’ tax dollars like every day is Black Friday.”
With Republicans opposed to any investment in America’s infrastructure, the proposals are measures of political positions, not measures of what the country should be able to do.
The need is $3.6 trillion by 2020, according to the American Society of Civil Engineers’ (ASCE) most recent Infrastructure Report Card. That what ASCE says is needed just to catch up to basic standards. (Note that the ASCE total is both federal and state investment.) This need is $1.6 trillion more than currently budgeted – again, just to catch up to basic standards, never mind catching up to the rest of the world by upgrading to things like high-speed rail.
Sanders proposes $1 trillion towards this, Clinton proposes $275 billion, plus loans generated by both candidates’ infrastructure bank plans.
Why So Little?
Why does Clinton propose spending so much less than the needed amount? The second paragraph of her plan says, “Estimates of the size of our ‘infrastructure gap’ register in the trillions of dollars.” Following the fourth paragraph, a new section begins, “That’s why Hillary Clinton is announcing a five-year $275 billion dollar infrastructure plan.” That sums up Clinton’s less-than-courageous proposal.
Republicans are not going to allow any infrastructure spending to pass anyway, so why not take a strong stand? And why not enter into negotiations with a solid progressive position to fall back from? Like her proposal for a $12 minimum wage while Sanders, labor and most progressives propose $15 – with Republicans allowing neither to become law – her $275 billion infrastructure proposal appears to be some sort of signal to voters that she is to the right of and perhaps less “scary” than Sanders. But it is also a recipe for little, if any, incremental improvement at a time when the people and the country clearly need transformative reform.