It’s been a few months since President Joe Biden unveiled the first part of his so-called infrastructure package; combined with the second piece announced later, the total price tag is now north of $4 trillion.
With Congress wary of an unprecedented level of spending on so many programs, the White House has engaged in weeks of negotiations intended to force it through. The right move however – for the Hispanic community, in particular – would be to turn to a more focused and effective approach.
It’s clear that in many states, transportation infrastructure needs improvement. Unfortunately, the White House proposal won’t accomplish that.
Of the more than $4 trillion in new spending, less than 5 percent would go to things like roads and bridges. The vast majority goes to other purposes which, however well-intended, do nothing to improve transportation infrastructure. These should be debated on their own merits as part of the regular appropriations process. About $1 trillion of this new spending consists of handouts to political allies in the form of corporate welfare.
While the tax increases in this plan are supposedly up for negotiation, they remain in the president’s budget proposal. The more than $2 trillion in higher taxes sought by the White House would badly damage U.S. competitiveness in comparison with industrial competitors. The combined federal-state corporate tax rate would exceed that of any of the advanced economic competitor nations in the Organization for Economic Cooperation and Development (OECD), making it less attractive for companies to invest and hire in the U.S.
These tax increases would badly impact small businesses – many of which are owned by Latinos. A recent study shows that Latino-owned small businesses have grown by 34 percent over the last decade and employ 3.4 million Americans. We work and own businesses in all major industries: manufacturing, education, health care, finance, construction, and more. Imposing a massive new tax burden will undo genuine progress.
Approving this package would be a costly and damaging mistake. Instead, Congress should build around targeted spending and straightforward, effective reforms.
Right now, only about three-quarters of gas tax revenue nationwide goes back into funding roads, bridges, and traditional infrastructure. About 25 cents of every dollar is redirected to other purposes. The first step in any reform package should be to return gas tax dollars to the uses for which they are intended.
The ability of state and local governments to improve transportation is also hurt when Washington sets the spending priorities. State and local officials are closest to the problem and have the best information. They are more likely to make smart decisions that improve local conditions. Any package signed into law should allow key decisions to be made at the state or local level.
Another smart reform would be to cancel unnecessary regulations that inflate the cost of infrastructure projects. Davis-Bacon wage mandates, for example, were adopted during the Great Depression, and increase costs to taxpayers. Our dollars would go further if Congress repealed such restrictions.
This debate is especially important to those of us in the Hispanic community, who were hit harder than most by the coronavirus pandemic and subsequent lockdowns. Latinos were three times as likely as white Americans to contract Covid-19, and almost twice as likely to die from it. Latino-owned small businesses had less cash on hand than others, and also saw a significantly lower approval rate for Payroll Protection Program loans. Even today, after months of recovery, Hispanic unemployment is above 7 percent – significantly higher than the rate for all workers.
Our community badly needs a strong economy to help rebound from the pandemic, make up lost income, and focus again on building the American dream. The costly new taxes and burdensome regulations included in the infrastructure package and fiscal 2022 budget will make that harder. And if Washington approves trillions of dollars of wasteful spending without even upgrading something as basic as transportation, we will all be worse off.
The infrastructure debate needs a reset. Instead of twisting arms in the hopes of passing a wasteful and costly spending plan, the president should focus on proposals that are effective and simple. And dollars should be targeted where they will do the most good. If he takes this approach, the president will find strong support both in Congress and the nation at large.
Daniel Garza is president of The LIBRE Initiative.