If you think an infrastructure plan means roads and bridges, think again. Only $115 billion of President Biden’s so-called infrastructure plan, called the American Jobs Plan, costing taxpayers $2.25 trillion, covers traditional infrastructure. Instead, the plan includes the “greening” of the U.S. electric sector, massive subsidies for wind and solar that their proponents insist are already competitive with fossil technologies, electric vehicle incentives for cars that are currently used by higher income families, electric grid enhancements for the massive renewable onslaught, and many other items. Biden’s spending plan, if passed by Congress, would provide:
- $115 billion for roads and bridges, $85 billion for public transit, and $80 billion for Amtrak and freight rail, and $42 billion for ports and airports. Congress has already awarded transit agencies nearly $70 billion in emergency assistance, including $30.5 billion Biden signed into law in March.
- $100 billion for broadband and $180 billion for research and development
- $400 billion for increasing home-health care, $213 billion for affordable housing, $100 billion for job training, $100 billion for retrofitting public schools, and $25 billion for child-care facilities
- $45 billion for elimination of lead pipes from the nation’s water supplies
- $300 billion to promote advanced manufacturing, including a four-year plan to restock the country’s Strategic National Stockpile of pharmaceuticals, including vaccines, in preparation for future pandemics.
- A 10-year extension to tax credits for wind, solar and other renewable energy projects, making those clean energy tax credits refundable—a direct-pay option that renewable developers have sought—rather than a credit against their tax burden, i.e. entities without tax liability could claim the credits and get a check from taxpayers.
- Funds for electric vehicle rebates, 500,000 charging stations and electrifying at least 20 percent of school buses, with $174 billion in government funding for the electric vehicle initiatives, including $46 billion in federal procurement programs for government agencies to buy fleets of electric vehicles. The plan calls for replacing 50,000 diesel transit vehicles.
- Extension of tax incentives for motorists to buy electric vehicles, which are currently valued at as much as $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. They also want to target the credit to middle- and lower-income motorists, who currently are least likely to purchase an electric vehicle because they are up to $10,000 more expensive than gasoline vehicles, making up just 2 percent of new car sales and one percent of all vehicles on U.S. roads and are known to have poor range. Biden wants to provide consumers with point-of-sale rebates and tax incentives to buy American-made electric vehicles, although there is no mention of the essential parts of the cars, which are typically manufactured abroad.
- $100 billion for in 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. Biden believes this tax credit will help encourage the buildout of about 20 gigawatts of high-voltage capacity power lines.
- Creation of a “Clean Electricity Standard”—a federal mandate requiring that a certain percentage of electricity be generated by zero-carbon energy sources like wind, solar and possibly nuclear power. The mandate would have to be enacted by Congress.
- $35 billion in research and development programs for new technologies, of which $15 billion would be for projects that demonstrate emerging energy technologies like carbon capture and storage, advanced nuclear and hydrogen.
- Expansion of a tax credit that supports the underground storage of carbon dioxide and revamping the carbon-capture tax credit so it benefits retrofits of existing power plants.
- $10 billion for the creation of a Civilian Climate Corps to cap orphan oil wells and abandoned mines, among other duties.
Biden American Jobs Plan Spending
Impacts of Biden’s Infrastructure Plan on the Electric Grid
This massive undertaking is not only unnecessary, but it is a waste of taxpayers’ money that Americans will spend decades or more to repay as well as incur higher electricity rates. The current electric grid is reliable and resilient because it is dependent mostly on technologies that can produce power 24/7—unlike the wind and solar arrays that Biden wants to replace them with that require massive and expensive battery storage capacity, which stores the excess power when the wind is blowing and the sun is shining to be used later when there is no wind or solar power being produced. The electric grid requirement alone would require thousands of miles of high voltage power lines and cost trillions of dollars to build. The expenditure is made necessary because our current grid is responsive to demand, whereas the new generating sources produce energy when they feel like it.
But no matter how much Biden spends on this endeavor, it will not prevent blackouts. A 100 percent renewable electric system nationwide could actually turn state blackouts into enormous catastrophes and cost. Sometimes, interconnections will prevent blackouts and at other times, interconnections will spread them, where with each failure the demand on the rest of the system becomes so great that electric generating equipment shuts itself down to prevent damage. With a system of inherently intermittent, and generally unpredictable renewables, the chances of local outages are high. There have been power failures just about everywhere a grid has had any significant reliance on wind and solar that were much less than 100 percent renewable. German industrial companies had to buy back-up systems, run with fossil fuels, so that their equipment would not be damaged by brownouts and blackouts despite renewables having less than a 50-percent market share.
Texas did not have many interconnections, but as it happened the rest of the United States was also facing higher weather demand and could not have provided more power to Texas. In the February blackout, as regional systems failed, more pressure would have fallen on the equipment still generating electricity to generate more and a national blackout could have resulted. A power failure on that scale would cost trillions of dollars and take weeks or even months to repair. Like Germans, Texans and Californians are buying generators run on fossil fuels—at least those who can afford them. The least able to afford them will suffer without power.
Impacts on the Manufacturing Supply Chain
The supply chain for manufacturing electric vehicles, wind turbines and solar panels has been severely impacted by the lockdowns caused by the coronavirus pandemic and further exasperated by the February freeze affecting petrochemical facilities in Texas and the vessel blockage at the Suez Canal. Further, the supply chain of rare earths and other critical minerals needed to produce these commodities are dominated by China, who has 37 percent of proven reserves, produces 63 percent of global output, and is housing about 85 percent of the processing capacity. China has warned that it will cut exports if countries get on its bad side and has experience doing so. In 2010, China cut its rare earth exports by 40 percent and cut off supplies to Japan over a territorial dispute, causing prices to soar. So, Biden’s made-in-America initiative could go by the wayside if U.S. manufacturers cannot get the components they need.
An option is to open mines in the United States, but the very people who are promoting the parts of the Green New Deal that constitute the Biden plan are also opposed to modern mining. Moreover, China’s out-sized control of mineral markets essential for “green energy” means they can adjust prices to make new mine investments difficult in other parts of the world, including the United States.
Impact on Low-Income Families
Electrification is costly for low-income families. Every dollar counts for families who rent and are working to achieve home ownership. Utility costs can be a burden for new homeowners, and studies show that low-income families can spend up to four times more, as a share of their income, on energy bills than well-off families. Over 50 percent of homes in the United States are currently heated by low-cost natural gas, and gas also fuels appliances such as water heaters, clothes dryers and stoves, which operate more cheaply than their electric counterparts. Biden’s electrification program will put already struggling low-income families at a disadvantage.
Conclusion
The president’s spending bill is being sold as an infrastructure bill to fix 20,000 miles of roads and 10,000 bridges. But what it really does is cover a hodgepodge of items that Biden says will address climate change and racial inequities by raising corporate taxes over 15 years, thereby increasing prices for all Americans. It is a plan to build government back bigger than it has ever been. This proposal is just the first of a two-step release of the president’s agenda, which could cost taxpayers as much as $4 trillion over a decade. The next phase, theoretically paid in part through tax increases on wealthy individuals, would be known as the “American Family Plan.”
The president said that he wants to position America to compete against China and other rivals in the race for the industries of the future, like semiconductors and advanced batteries. But, instead of building back the American economy better, he is building China’s economy back better, at the expense of the American taxpayer, as China dominates the supply chains of needed materials to make the components of so-called “green” technologies. Increasing dependency on China for our basic energy systems is a strange way to increase America’s competitive edge with China, and instead may make the poor poorer, drive manufacturing overseas, and reduce the number of good jobs in the United States.
