Last week, President Biden unveiled his $2.25 trillion infrastructure proposal during a speech in Pittsburgh, Pennsylvania. Named the “American Jobs Plan,” the proposal is an unnecessary corporate welfare scheme that is seemingly designed to get the smallest return for taxpayer dollars. Hidden within the proposal are a bunch of items that are completely unrelated to infrastructure as well as a litany of special favors for progressive special interest groups. Much like the 2009 stimulus bill, the proposal focuses heavily on the “greening” of the transportation and electricity sectors through the massive expansion of subsidies that promote electric vehicles (EVs) and renewable energy sources.
The infrastructure plan seeks to transform the electric grid with the goal of putting the U.S. on a path to 100 percent carbon-free electricity by 2035. Biden’s proposal calls for the creation of a “Clean Electricity Standard” — a federal mandate requiring that a certain percentage of electricity be generated by zero-carbon energy sources. This would be coupled with a 10-year extension to tax credits for wind, solar, and other renewable energy projects. The proposal would also shift those tax credits to a direct-pay option rather than a credit against their tax burden, allowing entities without a tax liability to claim the credits as a direct check from taxpayers.
The plan also includes $100 billion for programs to update and modernize the electric grid, including the creation of an investment tax credit focused on electric transmission and permitting changes to promote the siting of new power lines along roads and railways. The goal of this tax credit is to encourage the buildout of about 20 gigawatts of high-voltage capacity power lines. The infrastructure plan would also spend $10 billion to establish a Civilian Climate Corps. This appears to be similar to FDR’s Civilian Conservation Corps — a New Deal–era jobs program that was focused on planting trees all over the country. The new version appears to be a similar make-work program, something that is completely unnecessary for taxpayers to fund seeing as several nonprofit organizations already do this exact thing.
Given that the administration sees Germany as its model, it’s clear that the goal of all of these proposals is to shift the U.S. towards expensive renewable energy. Germany is an interesting country to mimic as the country currently has the highest household electricity prices in Europe (43 percent more expensive than the average household in the EU), and an audit office recently warned of a looming energy supply shortfall as they prepare to close their remaining nuclear plants. All of this suggests that Biden’s plan to shift towards a grid that runs mostly on renewable energy will mean higher electricity prices for American energy consumers.
Here in the U.S., says Manhattan Institute senior fellow Mark P. Mills, “it would cost at least $5 trillion to build enough wind, solar, and battery systems just to replace all the power plants that currently burn natural gas and coal.” Keep in mind, none of this spending is doing anything to actually boost productivity or economic growth because that money will have been spent to produce the same quantity of the same product — kilowatt-hours of electricity. And once you account for the fact that, according to the Brookings Institution’s Samantha Gross, wind and solar generation “require at least 10 times as much land per unit of power produced compared to coal- or natural gas-fired power plants,” Biden’s plan to be like Germany doesn’t appear affordable or particularly green.
Even though EVs only make up 2 percent of new car sales and 1 percent of all the vehicles on U.S. roads, they are a main feature of Biden’s infrastructure plan. Under this proposal, $174 billion would go to funding electric vehicle initiatives, with a vast majority going to build 500,000 new charging stations. Of that amount, $46 billion would go to federal procurement programs for government agencies to buy fleets of electric vehicles.
The plan also includes an extension of tax incentives for consumers to buy electric vehicles. Currently electric vehicles are subsidized through federal income tax credits, which provide credits for new qualified electric vehicles of up to $7,500. Tesla and General Motors have both passed an existing 200,000-per-manufacturer ceiling at which the value of those credits currently phases down — a ceiling that some members of Congress want removed entirely.
According to a report by the Congressional Research Service, the majority of people who claim the electric vehicle tax credit (current EV subsidies) earn a much higher income than the national average. When you combine this with the fact that electric vehicles can cost up to $10,000 more than similar cars and trucks, it’s clear that the $174 billion for EVs is just another round of subsidies for high-income earners to continue to enjoy the consumption of luxury goods. If EVs are ready to compete with the internal combustion engine, then EV companies should have no problem building out the infrastructure that is necessary to support them. After all, the private sector built out the more than 136,000 gas stations that supply fuel to the majority of American motorists.
The energy and environment provisions of Biden’s new infrastructure plan are similar to the 2009 stimulus bill in that there is a lot of focus on green investment in both the transportation and electric sectors. Much like that bill, it is a plan that will greatly expand the scope of government and extend subsidies and special privileges to politically favored industries while passing the costs onto American taxpayers as a whole.
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