President Biden’s Infrastructure Plan and Its Benefits

In the midst of emerging from the pandemic, it is important to look at the next steps to get the economy back on track. Within his first hundred days in office, president Joe Biden announced his lofty infrastructure plan. President Biden noted that this plan “is a one-in-a-generation investment in America” that has the potential to redefine the country (Tankersley, 2021). This extensive plan will inject money directly into the economy and could possibly be changing the United States for the foreseeable future. When considering what steps to take forward, it is crucial to analyze what the long term results are. So far, implementations like stimulus checks have provided a degree of short-term, immediate relief to some, but such policy action is not something that will help them get jobs and prosper growth. Families are able to pay for their immediate expenses to support themselves, but the checks are not providing them with secure jobs with stable income. In contrast, the infrastructure plan aims to create jobs for millions of Americans and improve the current crumbling infrastructure. According to the World Economic Forum, at its current state, the United States’ infrastructure is ranked 13th among other rich countries, with the score having gone down in recent years (Duncan). The United States is behind countries like Switzerland and Singapore, but this doesn’t have to be the case. White House correspondent for the New York Times, Jim Tankersley, stated that this plan has the potential to “create millions of jobs in the short run and strengthen American competitiveness in the long run,” demonstrating that this is a plan for the future, not just a small fix (Tankersley, 2021).

Secretary of Transportation, Pete Buttigieg, recalled this plan as a “common sense investment” that will create jobs and help alleviate the budget deficit (King, 2021). Such an investment in public good will benefit everyone, not just a small group of people. President Biden notes that it will also set up the United States to be “more competitive around the world,” especially against those with fast-growing economies like China (King, 2021). 

This plan will require a lot of money, around $2 trillion, and will take place over the span of 8 years with even more years of repaying after that. Like any investment, there is the potential for both risk and reward. The largest source for concern and opposition to this large amount of government spending is the fear of inflation. The Fed wants to maintain an inflation rate of 2%, but with this large amount of money being injected into the economy, people fear that prices will skyrocket. This has also caused members in the senate to be hesitant in approving the plan so quickly. Senate Minority Leader and Senator of Kentucky, Mitch McConnell, is among those who are skeptical of the plan as he remarks that “if it’s going to have massive tax increases and trillions more added to the national debt, it is not likely” that he will support the plan unless the budget is lowered (Robertson, 2021).

As a sign of optimism, when responding to this risk, Treasury Secretary Janet Yellen says that “I think there’s a small risk and I think it’s manageable,” showing that it may not be as big of a problem as people may think (Czuczka, Condon, 2021). If there is any increase in inflation, they will just increase interest rates to slow the economy down. This approach shows that the Fed is becoming less concerned about inflation since they are waiting until they actually see it happening. The Biden Administration has shown they care more about putting people back to work than inflation, so they have prioritized job creation without a plan to deal with inflation. This prioritization is what has made the many wary, there is not a plan from the administration side to combat the potential risk of inflation. Additionally, recent trends show that the Phillips Curve displaying the inverse relationship between inflation and unemployment has been flattening overtime. This suggests that with low levels of unemployment that there will be a smaller increase in inflation. 

There is a direct trade off between jobs and inflation. In many cases, the United States has put maintaining inflation at the expense of maintaining high levels of employment. By providing more jobs for workers, especially those without college education, has the potential to transform the United States to become more competitive. The United States must strike a balance employing Americans and upholding confidence in financial markets. This proposed infrastructure plan focuses on employment and also implementing other policies that can bring long-term benefits. For example, some of the elements of the plan include money for electric vehicle incentives, electric grid and clean energy (buildings and utilities), research and development, climate technology, clean energy, and the National Science Foundation (Parlapiano, 2021). These investments acknowledge the present and future issue of climate change that will have serious consequences if not addressed immediately. 

This large investment in infrastructure could change the future. President Biden says this is “the largest American jobs investment since World War II,” proving that this is no small measure (Tankersley, 2021). Infrastructure quite literally serves as one of the foundations of society, so it is important to tend to these. The United States must proceed with caution if the senate approves the bill, but must simultaneously remain optimistic about this long-overdue plan that can transform the country and its people.

References

Czuczka, T., & Condon, C. (2021, March 14). Yellen Says U.S. Inflation Risk Remains Small, ‘Manageable.’ Bloomberg. www.bloomberg.com/news/articles/2021-03-14/yellen-says-u-s-inflation-risk-remains-small-manageable. 

Duncan, I. (2021, April 30). Here's How U.S. Infrastructure Compares to the Rest of the World. The Washington Post. www.washingtonpost.com/transportation/2021/04/30/us-infrastructure-ranking/. 

King, N. (2021, April 1). Buttigieg Says $2 Trillion Infrastructure Plan Is A ‘Common Sense Investment.’  NPR. www.npr.org/2021/04/01/983314962/biden-administration-says-infrastructure-plan-is-costly-but-worth-it. 

Parlapiano, A. (2021, April 28) Biden's $4 Trillion Economic Plan, in One Chart. The New York Times. www.nytimes.com/2021/04/28/upshot/biden-families-plan-american-rescue-infrastructure.html. 

Robertson, C., & Fandos, N. (2021, May 1). Biden's Expansive Infrastructure Plan Hits Close to Home for McConnell. The New York Times. www.nytimes.com/2021/05/01/us/politics/mcconnell-brent-spence-bridge-infrastructure.html. 

Tankersley, J. (2021, March 31). Biden Details $2 Trillion Plan to Rebuild Infrastructure and Reshape the Economy. The New York Times. www.nytimes.com/2021/03/31/business/economy/biden-infrastructure-plan.html.