There Will Be Boondoggles
On top of the trillions of dollars already spent on pandemic-related rescue and stimulus since last March, the Biden administration wants a $2.3 trillion package of loosely defined infrastructure spending. In doing so, it risks stimulating an economy that has already recovered, while undercutting America's long-term competitiveness.
STANFORD – Although US President Joe Biden’s $2.3 trillion infrastructure plan would be many times larger than previous such bills, only about one-third of it would meet even a broad definition of “infrastructure.” And the package comes on top of the $5 trillion-plus that has already been spent on COVID-19 relief and stimulus since last March, and will soon be followed by pledges for even more spending in the near term. What could possibly go wrong?
A lot. Responsible governance dictates that unrelated outlays be debated separately and on their own merits. There are some proposals in the Biden plan that I myself support. But as it is currently structured, federal spending would crowd out private and local government spending, with a substantial risk of boondoggles piling up along the way.
Politicians who seek ever more spending and regulation are banking on the public’s limited ability to wade through the details of massive omnibus bills. In doing so, they tend to pay little regard to the laws of diminishing returns and unintended consequences. But we should remember that the 2008 financial crisis followed a period of serial social engineering by the federal government (through banking mandates, sub-prime mortgage subsidies, and other measures) to promote home ownership.