Biden's new plan is a misfocused expense (Opinion)

This includes Biden's infrastructure plan 0:50

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Carrie Sheffield is a senior member of the Independent Women's Forum.

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(CNN) -

On Wednesday, President Joe Biden unveiled his massive infrastructure plan, his latest effort to expand government influence over the U.S. economy, outlining a two-part spending that will grow our national debt. It will make us less competitive with other countries and will likely lead to job losses among working-class Americans.

It's hard to see how this plan, which is touted as the American Jobs Plan, helps an economy that continues to try to climb out of a covid-induced hole, especially when it comes less than a month after Congress passed a bill for $ 1.9 trillion spending bill that was not as well designed as it should be to help those most in need: the unemployed and those whose wages were cut.

And this is especially shocking because there is little evidence to suggest that previous stimulus packages have worked efficiently, with the Congressional Budget Office (CBO) estimating that only 60% of stimulus checks of US $ 1,200 from last year would generate economic activity.

Meanwhile, a study on the spring 2020 stimulus conducted by the National Economic Office found that more than 80% of stimulus recipients saved the money or used it to pay off debts, “and only 15% reported having spent it. for the most part. '

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Saving and paying off debt is worth it, but it doesn't boost economic growth.

Americans are better off making more money in existing jobs rather than living off future generations.

From what we know so far of Biden's new plan, it seems like a bag of spending projects without limits, far from serving those most affected by the pandemic.

As reported by CNN, a part of the plan aims to invest in "national manufacturing, research and development, the welfare economy, climate infrastructure and roads, bridges and railways" and a second part in "day care, paid disability for maternity, medical care and educational infrastructure ».

The White House says it wants to pay for the plan by raising corporate tax from the current 21% to 28%, increasing the global minimum tax, ending federal subsidies for fossil fuels and adding the obligation for multinational companies to pay the tax rate. American.

However, experience shows that the introduction of new taxes ends job creation, just at a time when the competitiveness of the United States is fragile, especially in the race with China.

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An analysis conducted in February by the Tax Foundation concluded that raising the federal corporate tax rate to 28% would raise the combined federal-state tax rate in the United States to 32.34%, making it the highest in the OECD and in any other country. of the Group of Seven (G7).

The CBO has noted that increasing corporate tax lowers workers' wages and makes the United States less attractive compared to other countries.

The Tax Foundation also estimated that Biden's hike would reduce long-term economic output by 0.8%, eliminate 159,000 jobs and cut global wages by 0.7%.

But the worst thing is that with the economic contraction, the most vulnerable are the hardest hit, since the Tax Foundation estimates that “the lowest 20 percent of wage earners would see an average drop of 1.45 percent in income after taxes in the long term.

As I pointed out in December 2019 (just before the pandemic hit), Republican-led tax cuts passed in 2017 and regulatory reform helped spur record growth in jobs, household wealth, and employment for Americans. blacks.

An important part of Biden's package is infrastructure spending, and while some civil engineers advocate new spending in this regard, some economists question the overall economic impact of infrastructure spending.

Why make such big spending decisions right now, instead of initiatives more focused on helping the poorest neighborhoods?

Especially when covid-19 has begun to redesign the demographic map of the United States, causing future infrastructure needs to change, as Pew notes that in 16 states there was a population decline last year, with flows migrations out of states such as California, New York and Illinois and to states such as Texas and Florida.

Bottom line: Biden's new plan is a misfocused waste that needs a major overhaul to help those most in need.