The last thing America needs is a $1.2 trillion Washington infrastructure boondoggle, festooned with pork, waste and the usurpation of virtually every other institution’s proper function. That is, capital expenditures that properly are the business of the private sector, utilities, train passengers, airport users, motorists, state and local taxpayers and everyone else except the Federal government.
For instance, the bill contains $77 billion for renewing the electric power grid, including thousands of miles of new high efficiency transmission lines. But why can’t utilities and their rate payers handle those investments rather than future taxpayers who will have to service the Federal debt?
As it happens, annual constant dollar spending by major U.S. electric utilities on the power transmission system has increased from $9.1 billion (2019 dollars) in 2000 to $40.0 billion in 2019. That’s a not too shabby 8.1% annual growth rate – or approximately 4X the actual growth of real GDP during the period
Of course, the above is only for the high voltage long-distance transmission, connecting power plants to the local distribution grid. The latter, in turn, carries the electricity to homes and businesses and includes station equipment that lowers the voltage, neighborhood power lines, poles and towers, line transformers, meters that measure customer electricity use etc.
Constant dollar spending for the capital and O&M costs of the distribution system was $57.4 billion in 2019, which, again, was no starvation budget as it represented a 2.5% real growth rate since the year 2000.
All told, major US utilities are now spending $100 billion per year on transmission and distribution systems. Since the 4.2% real growth rate for these purposes over the past two decades represents more than twice the growth rate of real GDP, it might be wondered what’s not to like?
Why do the taxpayers need to top-up what the ratepayers are already properly absorbing as the actual users of these systems?
Indeed, when you look at total capital spending by US electric utilities including for power plants, annual spending now stands at about $132 billion, up from just $60 billion in 2006. So what’s at issue is not investment neglect by the utilities and their customers or claims of dilapidated power lines and plants, but the wrong kind of investment in the eyes of the Green New Deal socialists who rule the roost in the Washington Dem party.
That is to say, these folks insist the current CO2 concentrations in the atmosphere of 0.040% are too high and demand that they be rolled-back to what they claim to be the pre-industrial level of 0.027%.
Never mind, of course, that scientist estimate that CO2 levels were 10 times higher than today during the Cambrian era 500 million years ago when today’s fossil fuels were being grown above ground, only to be buried and transformed into hydrocarbons by time, pressure and heat; nor, apparently, should any weight be given to the views of scientist who are not on government grants or payrolls, who believe that atmospheric carbon dioxide level fluctuations over long stretches of time are a consequence of underlying natural cycles of earth temperature change and ice pack levels, not their cause.
In any event, the reason there is $73 billion for the electric grid is because owing to Ohm’s Law and other physical properties of electrical power about 69 trillion BTUs are lost each year in power transmission and distribution. And this loss can be reduced marginally if you throw enough capital and technology at the problem in the form of super-conducting transmission lines and more efficient switching and distribution equipment.
Another word for such capital substitution, of course, is far higher consumer power bills. And that’s essentially the reason why state utility rate commissions have not gone full retard green. It not for lack of financial resources, but because when you put a monthly surcharge on consumer electricity bills for the purposes of obtaining infinitesimal and unnecessary reductions in atmospheric carbon dioxide concentrations, the American public overwhelming says no dice.
Likewise, the bill would invest $17 billion in port infrastructure and $25 billion in airports to address repair and maintenance backlogs, reduce congestion and emissions near ports and airports and promote electrification and other low-carbon technologies. Yet, again, why are Federal taxpayers footing the bill, not airport users in the form of the ticket tax and port users in the form of charges by port authorities for services rendered?
The answer is that they already are. Between 2013 and 2017, for example, airport infrastructure spending averaged about $14 billion per year, of which $3.1 billion came from Federal ticket taxes, $3.2 billion from the Airport Improvement grant program funded by fuel taxes and another $7.7 billion from airport imposed landing fees, concessions and other passenger levies.
To be sure, airlines, local politicians, civic boosters and chambers of commerce always want more such infrastructure investment, but what’s the sweat? The industry says it needs an average of $22 billion per year over 2019-2023 – so let them raise the ticket tax, fuel levies, lending fees and concession off-takes.
At the end of the day, passengers would pay these user fees, as they should. Nor would it be an undue burden compared to the alternative of free money from Washington, which will someday be paid with compound interest by unknowing taxpayers, born and unborn.
Indeed, during the last full year of normal airline traffic in 2019, the US air traffic system generated 763 billion passenger miles. So even if the whole $22 billion industry “asked” is actually required, it would amount to just 2.9 cents per passenger mile.
Accordingly, a 100% user paid airport infrastructure policy would levy a $21 charge on tickets between New York and Chicago and $71 on ticket between New York and LA. That’s not the end of the world, and is far, far superior to Federal pork.
Then again, what is lurking in this extra $5 billion per year (for five years) airport infrastructure subvention is a not very hidden dollop of Green New Deal cash to promote de-carbonization that neither the airlines, the airport authorities, the city fathers or passengers wish to pay, even though Bernie and AOC are demanding it.
In the case of the $17 billion for ports, the Green New Deal backdoor is blatantly obvious. US ports are booming with business like never before and can charge customers damn well whatever they please to defray both operating costs and any capital spending projects – needed, nice to have or just plain trophy features to boost local pride.
As is well known, shippers are already paying more than 5X the rates of just one year ago on China to LA routes, with similar escalations at other ports. Accordingly, the idea that shippers can’t pay for needed local port infrastructure is preposterous on its face. What they are not keen about paying, undoubtedly, is for greening the ports in a manner that satisfies the Washington alternative energy lobby.
The bill would also invest $66 billion in passenger and freight rail and a further $39 billion to “modernize” public transit. The funds would purportedly eliminate Amtrak’s maintenance backlog, modernize the Northeast Corridor line and bring rail service to areas outside the northeast and mid-Atlantic regions. Included in the package is $12 billion in partnership grants for intercity rail service, including high-speed rail.
Needless to say, there are no greater economic white elephants in America today than the godforsaken Amtrak rail system and the perennially loss-making urban transit systems. They shouldn’t be given one additional dime on top of the $20 billion already being appropriated each year for Amtrak and mass transit.
That is to say, over the 5-year horizon of the bill, existing appropriations would total about $100 billion. So what the bipartisan infrastructure bill would do is more than double the waste to $205 billion over the next half decade.
Why? You guessed it. These utterly inefficient modes of moving people within cities and between cities are purportedly greener than automobiles and airplanes. So notch up another taxpayer contribution to the Green New Deal.
This is getting monotonous, of course, but it does beg the question. What in god’s name are 19 Republicans doing shilling for a Green New Deal that even Sleepy Joe never endorsed during the campaign, and which is the handiwork of the hard core socialist left that these dudes speechify against every time they find its necessary to go back home to show their faces to the voters?
The short answer is that by and large these 19 mostly RINO (Republican In Name Only) Senators have been on the public teat for so long they have long ago lost any principles of Federalism, small government, fiscal rectitude and the lead role of private free enterprise they may have once upon a time possessed.
For instance, there is actually $65 billion in the bill for improving the nation’s broadband infrastructure, which surely warrants a WTF response. The cable and telecom industries are rolling in so much excess cash flow that they can afford to spend tens of billions every quarter on dividends and stock buybacks. Yet these Republican geniuses apparently now agree that its copacetic for the taxpayers to top up the massive CapEx budgets already being implemented by these quasi-utilities.
For want of doubt, it turns out that the 19 GOP senators have spent a combined 628 years on the public teat. And the very most senior among them is Senator Charles Grassley, who your editor first saw shuffling around the US House floor when he worked on Capitol Hill 45 years ago – at which point Chuck Grassley had already been on the public payroll for 26 years!
Thus, we have the distilled wisdom of Senator Grassley, who spent 16 years in the Iowa House of Reps (1959-1975), six years in the US House (1975-1981) and 40 year in the US Senate (1981-2021):
There is NO mileage tax or amnesty in the bipartisan senate infrastructure bill. It doesn’t raise taxes. We kept those things out. My focus is investing in infrastructure for Iowa’s future: roads, bridges, locks&dams, airports, rural broadband etc…..
There you have it. Grassley represents a form of degenerate Republicanism evolved over 62 years on the public payroll which is about as lame as it gets. Never support a tax, never cut a spending program and never miss an an opportunity to bring the pork back home.
In this case, his Iowa voters should be paying local taxes not looking to Washington to fix the hundreds of one-horse “Bridges of Madison County” that dot the state; and if they want faster internet, they should pay for it on their cable bills. But even principles that basic are too much for Washington lifers like Grassley to grasp.
Accordingly, the nation’s rotten fiscal estate is essentially beyond redemption. The Democrats are now and always have been aggressive statists, whether employing the explicit rhetoric of socialism or not. And now they have a Republican “opposition” that is so politically and intellectually bankrupt that it can’t get out of its own way.
Then again, perhaps one day voters will understand that when you are on the public teat for decades, your sell-by date has already long passed.
Years On The Public Payroll Among The 19 GOP Senators Who Gave Sleepy Joe His Green New Deal Boondoggle:
Grassley: 62 years;
McConnell: 54 years;
Blount: 36 years;
Burr: 27 years;
Capito: 21 years;
Hoeve: 21 years;
Murkowski: 23 years;
Portman: 32 years;
Rish: 51 years;
Sullivan: 28 years;
Tillis: 19 years;
Wicker: 45 years;
Graham: 39 years;
Collins: 46 years;
Cramer: 28 years;
Cassidy: 15 years;
Fischer: 21 years;
Romney: 19 years;
Crapo: 37 years.
Reprinted with permission from David Stockman’s Contra Corner.