A trillion here, A trillion there
Infrastructure is a critical asset
A trillion here, a trillion there and soon enough we're talking real money.
But here's the kicker...Biden's new plan will raise taxes.
Yes, higher taxes are coming.
You see, last year we saw $6 trillion in Covid related stimulus. This year we may pass that.
But that money isn't free.
Biden is betting big on America
Infrastructure is a critical asset in America. In fact, infrastructure is a critical asset for every single country in the world. Yet you may not think about the capital required for clean water, reliable energy and smooth roads.
But it costs big bucks.
There was a time when America was built on manufacturing. Meaning we would invest billions in industry to create jobs and a better America. Today that's not much the case anymore.
In the last century we created these major infrastructure assets (not inflation-adjusted):
- Ellis Island was built in 1900 for $1.5 million
- Hoover Dam was completed in 1936 for $49 million
- DARPA was founded in 1958 for $246 million with continuous investments
- The Apollo Space Program from 1961 to 1969 cost $24 billion by President Kennedy
It’s also worth mentioning it took over 35 years (1954–1991) to build the interstate highways we take for granted today. And as for speed I'll mention the construction of the Empire State Building which was started and finished in 410 days!
Pretty remarkable to see the speed at which we built America in the last century. A lot of the core assets we take for granted today were built with millions of man-hours and billions of dollars.
So what's the problem? Why do we need an infrastructure plan?
The Intent of Infrastructure
Every election cycle there's a political pitch for some big idea. In the last election President Trump used the infrastructure bill for political points. And for a brief moment I thought he would have pulled it off.
But that's in the past.
So why don't more presidents speak on infrastructure?
Well for starters it's not an attractive investment. It's very expensive and has a low return on investment. But it can create jobs. A lot of good paying jobs. Something America desperately needs at the moment.
And this is President Biden's intent.
Building a modern infrastructure
I know it’s been a while but imagine taking a flight to Europe.
On the way, you hit a pothole, get stuck on the bridge & tunnel traffic only to arrive at the airport with minutes to spare. Now at the airport there’s heavy construction and half of the terminals are closed.
This is America’s current infrastructure. So critical that if we had an emergency, half of Americans would be stuck in traffic before getting to safety.
That’s why we need to fix our highways, rebuild bridges, upgrade our transit systems.
President Biden is proposing to modernize 20,000 of highways, roads and main streets. Plus the 10,000 worst small bridges in America. Today none of America’s airports are ranked in the top 25 worldwide.
Beyond investing in manufacturing to strengthen our supply chain, Biden also plans to deliver clean drinking water, and high-speed broadband to all Americans.
Almost sounds too good to be true...
The American Jobs Plan
The Bill’s bottom line is to create millions of jobs and rebuild our country's infrastructure.
But this is also a way to compete with China.
You see, for too long we've outsourced manufacturing of critical supplies. Last year was a good example during the pandemic.
We didn’t have access to medical equipment, supplies or even food in some cases. Pretty embarrassing for one of the wealthiest countries in the world.
And I'm betting there are other areas we're falling behind as well.
Time to reallocate America’s budget
Now let’s breakdown one major piece of the budget: $621 billion for transportation
About 28%, or $174 billion, will be invested in electric vehicles. This will include building a network of 500,000 electric vehicle stations, bus fleets and replacing government diesel vehicles with electric vehicles. We can also expect new tax incentives and credits for electric car owners.
Then another $280 billion will be designated to fix roads, bridges and our railway systems. Besides the recent upgrades to Penn station, I couldn’t find much about expanding our railway transits. The most recent American railroad project was 21 years ago to build Amtrak’s Acela! This train only averages 70 mph!! China’s High-speed Railway almost triples that!!!
Don’t even get me started on America’s shipping ports…
The rest of the $1.3 trillion goes to homes, schools, elderly care and much more. But that’s not all.
Biden plans to raise the corporate tax rate from 21% to 28% to fund this Bill. I suspect the capital gains and income tax rates will also change to foot the deficit.
Vijar’s Infrastructure Plan
Like I said, a trillion here, a trillion there and soon enough we're talking real money.
Well $2 trillion is not chump change. But to be honest, I think it’s a waste. We’ll be lucky to see $200 billion worth of impact from this bill.
My suggestion: take the entire amount and only invest in climate change and transportation.
$1 trillion each.
We’re spending billions of dollars on different programs and I feel that the long-term impact will be close to zero. Do we need high-speed internet? Yes, of course. But I’d rather see private companies make these investments. Then the tangible investments will be felt.
Not that we shouldn't invest in manufacturing to create jobs and help Americans. But I prefer that local municipalities work on these problems instead of the Federal government.
We don't have the time or resources to split our focus. If the federal government is creating an infrastructure plan it needs to be a big picture idea. The federal government is taking on too much and bailing out everyone. We need to stop the bleeding and invest in only big ideas.
Do you see my point? If not...
Then take a step back
You probably think I'm being disingenuous. But I want you to take a moment to think about energy and transportation. Do they sound familiar to you?
Well Elon Musk is working on each of these problems by himself.
He’s a one man show and he needs help.
Elon has done more for climate change than any single politician or businessman in history. And he funded the entire vision with his capital. Even with hundreds of billions invested in Tesla, SpaceX and the Boring company, he can't move quick enough by himself.
We can do more when it comes to infrastructure.
For example, we can create sustainable energy within 50 years or less. We already have the tools and resources to get the job done. SpaceX’s Starlink satellite is providing broadband to increase internet connectivity in rural areas. Elon is tackling telecom and transport at the same time!
Tesla cars are available everywhere. Charging stations are becoming more accessible. Elon’s bet on electric cars sparked a revolution in the industry.
If we don’t smarten up about this infrastructure bill, America will be on the hook for $2 trillion with nothing to show for it.
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