Infrastructure: not just roads and bridges

President Joe Biden has proposed spending $3.5 trillion on a package of social benefits. That sounds like an awful lot of money, and it is. But consider that amount of money in context.

At first glance, the cost of Boden’s package dwarfs previous transformative social programs such as President Franklin D. Roosevelt’s New Deal, which cost around $324 billion in today’s dollars, and President Lyndon B. Johnson’s Great Society, which cost around $520 billion in today’s dollars. But adjusting for inflation, the U.S. economy is more than 20 times larger than it was in 1934 and five times larger than in 1964, thanks to a U.S. population that has more than doubled, as well as industries that produce far more than their predecessors. So rather than simply adjust for inflation, many economists compare spending to the size of the economy, the GDP. On that basis, the spending by FDR was much larger than Biden’s, and the spending by LBJ was about the same. In an average year 1934 to 1940, New Deal spending was equal to 2.8 percent of GDP; the Great Society averaged about 0.9 percent a year. Biden’s plan averages 1.1 percent of GDP from 2021 to 2031. Overall social spending has increased steadily over the decades as the population ages and incomes rise, regardless of who’s president.

That $3.5 trillion is just the cost side of the package. According to recent estimates, it would be offset by $2.9 trillion in revenue, leaving its budgetary impact at $0.6 trillion. In regard to the federal deficit, what is the difference between increased social spending and a tax cut? The answer: there isn’t any. In other words, Biden’s social benefits package will cost not more, and perhaps less, than Trump’s 2017 Tax Cuts and Jobs Act.

In any event, cost alone is not a meaningful measure of the value of social programs. “Many of the costs should be regarded as investments with fairly sizable returns,” said University of California at Los Angeles professor Martha Bailey, co-editor of Legacies of the War on Poverty. “The political discussion often revolves around how much things cost today but neglects that these costs are substantially reduced or even generate revenue when viewed over the longer term.” For example, Medicare (Johnsoncare) and Medicaid significantly increased access to health care among the elderly and reduced the risk that they could not afford health care, or that obtaining it would bankrupt them and their families. Many programs, particularly those focused on low-income children, generate generational returns that ultimately pay for themselves, according to an analysis of 133 policy changes over the past 60 years by economist Nathaniel Hendren of Harvard University, published in the Quarterly Journal of Economics.

What about Biden’s package? For education, it would provide $726 billion for universal pre-k for 3- and 4-year-olds, child care for working families, and tuition-free community college. For health care, it provides investments in paid family and medical leave, expansion of the Affordable Care Act (Obamacare) to include dental, vision, and hearing benefits along with lowering the eligibility age. Also included are investments to address shortages of health care providers, expansion of the child tax credit, and long-term care for seniors and people with disabilities. For housing, it provides $332 billion for housing affordability, rental assistance, homeownership initiatives, revitalization projects, transit improvements, and public housing investments. For homeland security, it provides $37 billion toward improving cybersecurity infrastructure, border management, and investments in green materials procurement. For small businesses, it provides $25 billion toward access to credit, investment, and markets. For veterans, it provides $18 billion toward upgrading VA facilities.

The budget outline aims to meet Biden’s goal of 80 percent clean electricity and 50 percent less carbon emissions by 2050. For clean energy, it provides $198 billion toward a clean electricity payment program, financing for manufacture of clean energy and auto supply chain technologies, federal procurement of energy efficient materials, and climate research. It also provides $67 billion toward funding solar technologies, EPA climate and research programs, federal investments in energy efficient buildings, and investments in clean vehicles. It also provides $135 billion for agriculture conservation, drought and forestry programs to reduce carbon emissions and prevent wildfires, and child nutrition.

It amazes me that so many so-called deficit hawks think it terrible if we leave future generations with a large federal debt, but okay to leave them a degraded, dangerous, unhealthy environment.

Lyndon Johnson’s first reference to the Great Society occurred during a speech on May 7, 1964, at Ohio University. “And with your courage and with your compassion and your desire, we will build a Great Society. It is a society where no child will go unfed, and no youngster will go unschooled.” By 1966, the number of families with annual incomes of $7,000 ($59,000 in 2020 dollars) had reached 55 percent, compared with 22 percent in 1950. By 1968, the average annual income of American families was $8,000 ($67,500 in 2020 dollars) double what it had been a decade earlier. Do we have courage and compassion now?

Mark Berg is a community activist in Adams County and a proud Liberal. His email address is MABerg175@Comcast.net.