Forward Act is step backward

The U.S. House of Representatives recently passed what was labeled an infrastructure funding bill, the Moving Forward Act.

All the Democratic members of Arizona’s delegation voted for it. (All the Republican members voted against.)

Rep. Greg Stanton proclaimed particular pride of authorship. He is a member of the Transportation and Infrastructure Committee which put the thing together. It’s a dubious distinction.

There is, first of all, the mind-boggling cost. Democrats peg the price tag at $1.5 trillion. That’s on top of the $3.4 trillion in additional stimulus House Democrats had previously passed. Which would be on top of the $3 trillion or so in stimulus Congress has already enacted.

Right now, the Fed is buying up the equivalent of whatever additional debt Congress and the president rack up. That, however, can’t continue indefinitely and in unlimited quantities, despite what some progressive economists are peddling.

And there are some days of reckoning around the corner. The Medicare hospitalization trust fund is projected to go broke in 2026. That’s just six years from now. The Social Security retirement fund is expected to hit the wall just eight years after that.

The federal government needs to be preserving some fiscal headroom to deal with payroll taxes and Treasury IOUs no longer covering promised senior benefits. House Democrats are spending like there is no tomorrow. But tomorrow always comes.

Next, there is a conflating of federal and local responsibility for infrastructure — to be fair, generally a bipartisan sin.

Virtually all infrastructure is local and the responsibility for it ought to be local. Roads, bridges, water and wastewater systems and the like are all located in a particular place, in a particular state, county and, in most cases, city. Pooling money, or borrowing it, at the federal level to disperse to myriad local governments confuses accountability. If a road or bridge needs repair, who is responsible? In the current system, the answer is no one.

There should be a federal responsibility for the system of interstate highways that stitch the country together. Other than that, infrastructure should be up to state and local governments.

But there’s seemingly no project so small or local that House Democrats don’t think it should be a federal concern – again, generally a bipartisan sin. In his bragging press release, Stanton cited making a transit project in Flagstaff and Tempe’s streetcar eligible for federal funding as accomplishments.

But the Moving Forward Act isn’t really, or at least not exclusively, an infrastructure funding bill. In significant part, it is an attempt to divert private capital to achieve political objectives.

The new and expanded tax credits in the bill are too numerous to recite. There are over a score of them just for green energy. There is tax-exempt financing for private development offered through a variety of programs. There is the New Markets Tax Credit, the Historic Tax Credit, the Low-Income Housing Tax Credit and the Neighborhood Investment Tax Credit.

All green energy tax credits currently scheduled to expire are continued and, in many cases, expanded. And some new ones are created.

My favorite is a new tax

credit

for purchasing a used electric vehicle. I’m not making that up. There is already a generous tax credit for purchasing a new electric vehicle, which the bill continues and enhances. That theoretically increases the supply of them. What public policy purpose is served by giving a tax credit to the second owner is unclear.

This tax-credititis is a conceit of politicians that they can more productively deploy capital than neutral private capital markets. And a way of moving their spending off the books.

Now, Republicans are only marginally better than Democrats on these matters, if that. President Trump also wants a big infrastructure spending program. Senate Republicans are contemplating another stimulus bill, even as doubts mount over the effectiveness of what’s already been enacted.

In reality, there is not a major political party in the United States today that stands for fiscal responsibility, a respect for our system of federalism with distinct roles for the national and local governments, and a neutral role for government in the allocation of private capital.

That’s a big problem.