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Infrastructure and the Costs of Republican Opposition

Republicans are faced with a choice on infrastructure: negotiate a bipartisan bill or take responsibility for whatever Democrats pass without them.

With Democrats and the administration ready to move on infrastructure, it’s important to look at why the Republican opposition and obstruction is so damaging to legislation and to the country.

As it stands, the early posture of conservatives is that it’s too expensive to do the bill that Democrats will propose. They wish to portray Democrats as going on a debt binge (spending binge if paid for) that will harm the country in the future. Some moderate Democrats fear that attack. But perhaps it is based on true conservative convictions about spending and debt. If so, all the more reason Republicans should work to make any infrastructure bill bipartisan.

The hard truth of infrastructure is years of underinvestment, along with challenges that will only get worse including climate mitigation and reducing carbon pollution. The truth is that doing a single big bill now isn’t the solution—there is no one-and-done. We need steady and shifting investments over years as we should have been doing all along. But the political reality is that it’s very hard to get that kind of regular, orderly, sane investment done.

While the Democrats are planning tax increases to pay for the costs of their efforts, and while some tax increases and changes are needed, what’s really needed is for Republicans to take some responsibility here.

The Republicans have a choice:

  1. Try to obstruct the infrastructure efforts altogether.
  2. Work with Democrats on infrastructure.

In the former case, either they block the bills or not. If they succeed, the country suffers from underinvestment, which hurts the economy doubly. It hurts from the missed revenue going to infrastructure projects, and it hurts from the revenue and efficiencies that the infrastructure would bring.

The first case’s alternative, Democrats passing it alone, means a bigger bill, bigger tax changes, and real benefits both now and from the infrastructure changes. But it also makes it harder to have any kind of regular expectation of investment that the country really needs. And while the Democrats will do a decent job, without Republican input the results will not be as well-targeted as they could be.

In the second case, the devil and its sneakers are in the details. But it probably means a smaller bill with a different mixture of projects. It means smaller tax changes, perhaps less short-term ambition. But it still wins on the double-boost of some spending and some infrastructure gains that have long-term benefits to the economy. It also keeps the door open to a more regular cadence for investment that we should be doing.

An analogy: your family garage needs to be cleaned. If you clean it yourself, you’ll tackle as much as you can and it will be cleaner. But if your partner helps you clean it, the division of labor will change, what gets cleaned will change. In the end, the two-person cleaning will be a better job than you cleaning it alone. But neither will be as good as if you both help clean it regularly.

Most importantly, if you clean the garage solo, you might throw out or hide some things your partner will miss! The Republicans are elected to represent their states and constituents. They need to participate. If they don’t? Later, when they’re looking for the socket wrench? Tough! You had your chance.

Consider the best-case of bipartisan cooperation. The smaller bill would still be at least a trillion dollars. It would be paid for by tax changes. It would provide lesser amounts on the big targets like fixed infrastructure, manufacturing, housing. But it would still be a lot of money, in no small part because of decades of neglect.

But it would also come at a time when some of those things may be in flux anyway. Affordable housing, for example, may become more available in some cities as commercial real estate gets converted in the post-pandemic environment, assuming some permanence in a shift to work-from-home. Perhaps, perhaps not. But even if it doesn’t, it makes more sense to build housing in phases, to ensure it gets built in the right places. (It’s badly needed, but also because of the neglect it needs to be done more carefully.)

The world does change, and part of the reason for continuous investment is to adapt to those changes. It is cheaper to spend regularly than it is to spend all at once, but obstruction makes that impossible and thus drives the debt higher, the very thing opposed by the obstructions.

There will not be a perfect bill, but Republicans who try to claim whatever passes was Democrats going on a spending binge will be met with questions like: in that case, why didn’t you negotiate for a smaller bill? If Republicans truly believe these packages are too big, they are the ones in a position to negotiate. They have the opportunity to shape these bills. They should make use of that chance to try to get their own ideas out there.

There are some other reasons:

  1. Practice and talent development. If the Republicans don’t learn how to negotiate, they won’t be as effective at it in the future. If they don’t learn to legislate infrastructure, they will be in the same spot as they are with healthcare: no ideas, nothing to offer.
  2. There are moderate Republicans who don’t want to always have to point at the good things Democrats did and pretend they helped when they didn’t.
  3. The moderate Republicans will continue to be overshadowed by their rambunctious counterparts, which makes elections harder for the moderates.
  4. There are a number of ways to save money by lowering costs, which are less likely to be forced if the Democrats go it alone, meaning spending more for less.

Oh, and there’s that old dusty thing in the corner that says “right thing to do.”

The High Price of Non-regulation

The cost of slashing regulation must account for the cost of paying for the things that regulation would prevent.

The Republican Unified Government (RUG), high off the fumes of kerosene they have bathed over the regulatory state, should open a window and call their accountants.

Regulation has a cost (nearly $900 billion for the past eight years, according to one study). But burning the check on externalities and leaving consumers unprotected has a cost, too. The RUG should be wary of its plan to abolish the sensible regulation alongside the onerous.

Consider the concept of healthcare, of medicine. When doctors diagnose an illness, it incurs a cost. That worker may need time off to recover, or may suffer under the side-effects of their prescription. The business may pay out some money to cover treatments. They may have to make accommodations for the worker’s weakened state, temporarily or permanently.

But the alternative, a worker dying on the job, the fear of other workers that they will arrive in the same state, is untenable. Worse, to fire someone for an illness, undermines the argument that employment is a stable, dependable method for allocating value to the individual.

Or consider food regulations, whether from the FDA or the USDA. Those hard-won protections of food quality arose from public outrage at the contaminated foodstuffs that people were buying. Maggoty bread and spoiled meat may fit with the latest RUG-endorsed diet fad (“The That Food Looks Rancid Diet”), but most Americans want wholesome meals for them and theirs.

No. Slash-and-burn regulatory policy will result not in record gains, record wealth, but will instead only hasten the adoption of stricter regulation in the years that follow. It will hasten migration to the states that hold fast to their own regulations, as millions in places like Flint, Michigan start to recognize that it’s not worth it to live somewhere with poison water.

The cost of incompetent government is too high, and the Muralists are teeing themselves up to be a memory that will echo for generations against the emergence of any future RUG.

Things that are properly regulated stipulate a “pay me now or pay me (more) later” arrangement. Just like with health insurance, paying up front is cheaper and easier than paying in the rear-view. The RUG would do well to study the problem and only eliminate or recast regulations that fail the obvious test of appropriateness.