On Thursday, Senate Minority Leader Mitch McConnell (R-KY) said that Republicans would not support President Biden’s $2.5 trillion infrastructure bill, explaining that the bill would exacerbate the debt and increased taxes would hurt the economy.
“That package that they’re putting together now, as much as we would like to address infrastructure, is not going to get support from our side. Because I think the last thing the economy needs right now is a big, whopping tax increase,” McConnell said, according to Politico.
“You’re either alarmed about the level of national debt and the future impact of that on our children and our grandchildren or you aren’t,” McConnell added. “My view of infrastructure is we ought to build that which we can afford, and not either whack the economy with major tax increases or run up the national debt even more.”
The Biden administration claims that corporate tax rate changes will “more than pay for the mostly one-time investments in the American Jobs Plan.” However, according to the Biden administration’s optimistic estimates, the proposed corporate tax hikes will take until 2036 to generate that much revenue.
Only 5 percent of the bill is directed towards infrastructure, with the rest of the bill fulfilling items on the Democrats’ wish list under the guise of being labeled an infrastructure bill. For example, The Washington Post reported, “nearly 20 percent of the bill goes toward expanding caregiving for the elderly and disabled by building more care centers and expanding access to home-based care, and another 13 percent goes toward boosting the U.S. manufacturing sector with large investments in semiconductors and green energy.”
Biden has claimed that the bill would create jobs and be the largest “investment in American jobs” in decades. However, when the government “creates” jobs, it is only misallocating money from the private sector to the less efficient public sector; meaning the number of jobs “created” by the government will be offset by jobs lost in the private sector.
The non-partisan Tax Foundation estimates that Biden’s proposed corporate tax hike would “reduce long-run economic output by 0.8 percent, eliminate 159,000 jobs, and reduce wages by 0.7 percent. Workers across the income scale would bear much of the tax increase. For example, the bottom 20 percent of earners would on average see a 1.45 percent drop in after-tax income in the long run.”
According to an analysis from the Congressional Budget Office, federal investments increase output at half the rate of private sector investments, 5 percent compared to 10 percent. The Tax Foundation explains, “In other words, a $100 million federal investment would increase GDP by $5 million, whereas the same private investment would boost GDP by $10 million.”
