Republicans, Deficit Spending and Infrastructure.

An N700 series shinkansen train at speed on the Tokaido Shinkansen with Mount Fuji behind by
tansaisuketti via Wikipedia

President Joe Biden has proposed a large infrastructure plan meant to bring the nation to the 21st century. The package also includes increasing corporate taxes and closing loopholes. This is to prevent companies from paying zero taxes, as some do. This program is also going to rebuild infrastructure around the country. It’s not just roads and bridges, nut sewage plants, and water distribution systems. This is about competent government investing in the things we need to grow the economy in the future. This includes the green energy distribution of the future and high-speed railways.

We have not invested in this way since at least the 1960s. There are several projects that were essential for the country’s economy. The Tennessee Valley Authority of the Great Depression brought electricity to southern states. The Interstate Highway System of the 1950s connected the country. The 1960s saw a space program that benefited the nation with computers, Teflon, the MRI at the hospital, among others. We made infrastructure abs basic science part of who we were. Then came the seventies, the eighties abs the conservative revolution of the 1980s

One of the promises of Donald Trump was to rebuild American infrastructure We found ourselves at a moment in time when the term infrastructure week became a joke. Now it is a serious proposal meant to bring the country to the future. Instead, fiscal reform became a reality. The tax cuts of 2017 were supposed to benefit the middle class, but in reality, were very good for the upper taxpayers. Corporate taxes, in particular, went down, and the federal deficit grew. Why Republicans found their fiscal center once again. It’s a pattern that has been ongoing since the 1990s. Democrats fix it, Republicans balloon it, and then complain about it.

in reality, the fiction that wealth would trickle down, create jobs or bring money back to the United States from tax shelters did not happen. It never has, whether it is the 1980s during the Reagan revolution, or the 2000s under George W Bush, or for that matter Donald Trump the last four years. Then there is the example of Kansas. Her governor passed a massive tax cut in 2012. Since states cannot run a deficit, the state got into real fiscal trouble. According to the Center for Policy and Budget Priorities:

Kansas’ 4.2 percent private-sector job growth from December 2012 (the month before the tax cuts took effect) to May 2017 (the month before they were repealed) was lower than all of its neighbors except Oklahoma and less than half of the 9.4 percent job growth in the United States.

Likewise, the number of Kansas residents reporting income on their federal tax returns from a partnership or “S corporation” (two of the main types of businesses that the tax cuts exempted from income tax) grew by 4.1 percent between 2012 and 2015, well below the 5.4 percent growth for the United States and below all of Kansas’ neighbors except Missouri.

There is more. State revenue crashed. It was a textbook example that the supply-side does not work. The state had to increase sales taxes to try to make up some of the revenue. This is a very regressive tax. In the end, residents elected a Democrat to office. All the theories of supply-side proved to be vaporware, just as they are at the federal level. They are less noticeable since the feds can run a deficit. For Kansas however, the financial crisis led to four-day school weeks and the degradation of other state and local services.

That Kansas was a failure did not deter Republicans. It’s not the supply side. It has to be Kansas and Governor Brownback. Nor are they bothered by successes to a more Keynesian approach to the economy. Whether this is the New Deal, or Bill Clinton leaving a surplus and a growing economy to President George W Bush. Let’s be clear though. Clinton’s approach was far more neoliberal than classic mid-century economics since the age of big government was over. However, his tax legislation was far more progressive than anything Republicans have done since at least Reagan. Their orthodoxy does not allow them to reconsider even when faced with disasters such as Kansas.

What did Bush do? He immediately cut taxes, which led to a recession. Without 9–11, he likely would have been a one-term president. The stimulus to the economy from increased military spending led to lackluster growth. The lack of regulations, especially on Wall Street (for which we can blame Clinton) almost led to a second great depression in 2008 with the Great Recession. Not only was housing at risk for millions of Americans, but the American auto industry was also on the line. It was government intervention, as tepid as it was, that saved that industry.

That Congress passed a stimulus package that led to the greatest peacetime expansion, with a tax increase and no Republican support after Barack Obama came to power, goes against the grain of this ideology. The America Rescue Plan was also passed with no Republican support. The party of fiscal responsibility (when it's convenient) denounced both since, in their view, they were fiscally irresponsible and would blow the deficit. That the federal deficit going down when Donald Trump took over in 2016 matters little. One of his campaign promises was to get rid of the deficit. Instead, it ballooned into the stratosphere as it did after Bush’s tax cut.

That tax cut was passed by Republicans under the illusion that it would help the middle class. That it did not, and that it led to business failures and fewer startups is also a reality. That the tax cuts did not do any of what they told us they would do is exactly what happened. According to Forbes (and many others):

At the same time, federal budget deficits rapidly jumped. After falling precipitously in the immediate aftermath of the Great Recession, the deficits quickly grew again in 2018 (see figure below). The increase in deficits was driven heavily by a sharp drop in corporate tax revenue — not surprisingly, given the massive corporate tax cuts in the legislation.

So here we are. Republicans have decided to fight anything that may help the middle class. These range from the American Rescue Plan, to the infrastructure package presented by President Biden. Mind you, the infrastructure used to be bipartisan, since building infrastructure is good for everybody. People are needed to build roads, and bridges, as well as broadband internet, changing out lead pipes and building the electric infrastructure for the future. For some reason, Republicans are narrowly defining infrastructure as only the roads and bridges that sorely need repairs or replacement. Their major objection is that the taxes attached to the package reverse the tax cuts of 2017, which would help to reverse the deficit, in time.

We find ourselves fighting another deficit, which was set in place by the Republican religion. Republicans hate competent government because this goes against their ideology of small to no government Realize, many members of congress still require staff to read Atlas Shrugged, and adhere to Objectivist ideology, which is at its very heart a justification of pure greed. That this leads to a selfish society where everybody is for oneself is beside the point. Or that such a society is not consistent with a working society. It is also is dysfunctional at best, not consistent with a working society at worst.

This allows them to protect the economic elites that donate money to them, while at the same time whining that the rest of society are moochers and takers. These donors expect them to protect their interests and a growing oligarchy.

This is deep within the current ideology of the GOP. We need to confront this as a nation because a large minority believes in this libertarian view of the world. They simply do not believe in taxes. Therefore lowering taxes by hook or crook is meant to stop taxation. For most Republicans taxes is akin to theft. The government can never be trusted with this. Oh never mind that world-class internet, in rural areas, will help the country's economic position the same way the Tennessee Valley Authority did with the electrification of rural America during the great depression. Examples such as TVA are in the last, we are told.

Investing in roads and bridges and the next generation infrastructure, like electric charging stations, will get the nation ready for the next energy transformation. Lack of imagination is what keeps people stuck in the past, which is precisely what Republicans argue for. They are also supported by many companies still stuck in that past. Chiefly, the modern incarnation of the Republican Party has totalitarian tendencies with shades of oligarchy. Infrastructure, and chiefly access to it, can be a social leveling factor. For example, building broadband where it does not exist can allow for quality remote learning or new businesses. Moreover, in time it could make broadband Internet cheaper. As is, we pay some of the highest prices for broadband in the west.

Changing lead pipes for clean pipes will lead to fewer neurological disorders in urban cores. This is critical since we pay a price as a society for maladies such as Attention Deficit Disorder and other neurological conditions tied to lead in water. That this affects mostly inner urban cores where minorities live is hardly accidental. It goes to the inequality that we know is systemic in the nation. However, lives will be changed for the better.

This will also lead to more investment and creativity. We could see a new generation of businesses and employment tied to these new technologies. For example, the gas infrastructure that fuels the modern American car culture will be replaced by electric charging stations, and perhaps restaurants or rest stations tied to them. This is what happened with gas stations in the 1950s, as interstates took hold.

We also need high-speed rail to connect areas of the country isolated from air travel or even traditional rail. It will work well to connect the Northeast corridor, as well as the West Coast with high-speed rail. All this will allow us to be more competitive with nations that have invested in this infrastructure. For example, the Chinese have been building these networks for decades, and that has benefited them greatly. So has Europe. We are still running Amtrak with 1950s era rail.

That a major political party is opposed to this is telling. They seem to be stuck in a paradigm that has been wrong for many decades. They still believe that if they give more money to the wealthy, it will inevitably trickle down to the masses. This started at the beginning of the Gilded Age but took off during the 20th century. Ayn Rand is at the heart of the current opposition to any government or government program. They pine for an era when there were no taxes, no rights for labor to organize, and no national program. Republicans pine not for the 1950s, but the 1870s

Historian by training. Former day to day reporter. Sometimes a geek who enjoys a good miniatures game.

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