Biden is now proposing another $2 trillion in spending, this time for infrastructure. He apparently recognizes that we can’t borrow‐and‐spend forever, so his plan is financed by a massive corporate tax increase rather than debt. Nonetheless, his plan makes no sense because of three major contradictions.
The first is that Biden’s corporate tax increase would undermine America’s infrastructure because most of it is owned by the private sector, such as the broadband network and the electric grid. While Biden would subsidize broadband by $100 billion, the electric grid by $100 billion, manufacturing by $300 billion, and electric vehicles by $174 billion, corporations in those industries would slash their own investment in the face of Biden’s large tax hike. It would be a wasteful circular flow of cash from corporations to Washington in higher taxes, and then back to politically favored corporations in subsidies.