The bipartisan infrastructure legislation moving through Congress could end up on President Biden’s desk before we know it. The $1 trillion bill has reportedly cleared major hurdles in the Senate and will soon land before the House of Representatives. The president would almost certainly sign the bill, which has his support, and its bipartisan passage would represent a political victory for the Biden administration.
At least, at first.
The promised long-term economic benefits from the sweeping $1 trillion expenditure will likely never materialize, according to a new Ivy League analysis. This runs directly against the president’s promises that it would create jobs and stimulate the economy. Indeed, Biden has insisted that the government spending plan will “create millions of good-paying jobs.”
“This bill makes key investments to put people to work all across the country,” the president said. “It’s going to put Americans to work in good-paying union jobs building and repairing our roads, bridges, ports, airports.”
He additionally claimed that the plan is a “blue-collar blueprint” for economic opportunity because, supposedly, 90 percent of the jobs created “will not require a college degree.”
This rhetoric is likely to appeal to many Americans. But the aforementioned analysis, by the Wharton Business School, pours cold water on the president’s rosy promises. In stark contrast to “millions” of good jobs created, the Ivy League analysts project that the plan would have a net zero effect on employment, wages, and economic growth over both the medium-term (by 2031) and the long-term (by 2050).
Despite these meager results, the legislation would still add a whopping $351 billion to the national debt. For context, that’s roughly $2,449 in new debt per federal taxpayer.
Why would the plan create zero net jobs?
Well, as the analysts explain, it would indeed create some jobs via public works investment. This is what Biden and other advocates focus on. But there are also significant costs, since the resources invested in government infrastructure spending are ultimately not going toward private-sector investments that would otherwise have occurred. When the Wharton analysts compared the outcomes with these costs in mind, they found no actual net benefit.
This revealing analysis reminds us of the timeless principle explained by Henry Hazlitt in his classic work Economics in One Lesson. The scholar explained why public works schemes are not inherently the job-creating programs that politicians claim.
The politicians, like Biden in this case, focus on the tangible, seen benefits of their proposed spending, like the infrastructure jobs created. But they routinely overlook, downplay, and deny the unseen costs of such projects, misleading the public by only presenting them with half of the cost-benefit analysis. Hazlitt aptly explained this phenomenon with the example of a government bridge-building program.
“For every public job created by the bridge project a private job has been destroyed somewhere else,” he wrote. “We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing. But there are other things that we do not see, because, alas, they have never been permitted to come into existence.”
“They are the jobs destroyed by the [money] taken from the taxpayers,” Hazlitt continues. “All that has happened, at best, is that there has been a diversion of jobs because of the project. More bridge builders; fewer automobile workers, radio technicians, clothing workers, farmers.”
Of course, this debate over job creation exists as just one part of the infrastructure debate. Biden is still free to argue that his proposed spending is otherwise necessary. But modern Ivy League analysis and timeless economic principles alike debunk the president’s argument that the bipartisan infrastructure bill will create millions of jobs.
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The post An Ivy League Analysis Just Destroyed Biden's Biggest Argument for the Bipartisan Infrastructure Bill was first published by the Foundation for Economic Education, and is republished here with permission. Please support their efforts.