President Joe Biden has drawn up a $ 2.25 trillion infrastructure plan. It has now become political football, Biden’s allies are promoting its virtues and Republicans are brutally pursuing it as a big-government hooliganism, unnecessarily raising taxes and public debt. In 1956, Republican, President Dwight D. Eisenhower. The Democrats introduced by Eisenhower have a playbook to help them navigate some of these.
By then, while Eisenhower had placed his considerable reputation and political conduct behind the federal funding of a national highway system, the oblivion over Russia’s nuclear attack on the United States was complete. He therefore cited the Federal Aid Highway Act as a national security measure and a way to evacuate cities more easily. The U.S. did not just build a 41,000-mile expressway; It launched the National System of Interstate and Defense Highways.
But Ike knows where the true value of the highway system lies. “Its impact on the American economy — the jobs it produces in manufacturing and construction, and the rural areas it opens up — is beyond reckoning,” he later wrote.
Ike is also practical. As a young military officer traveling in a military convoy across the US in 1919, he first saw how poor the country’s roads were. While leading U.S. forces in Europe during World War II, he impressed with the German Autobans and wanted to capture America. Franklin d. Roosevelt felt the same way during his presidency and sponsored federal highway law, although funding for it was anemic.
Ike and his allies in Congress have surpassed many critics of their highway move, with one describing it as “another climb into the stratosphere of New Deal Zitterbug Economics”. Senator Harry Byrd is opposed to using federal guarantee bonds to fund highways because of his autobiography. Called “almost pathological aversion to borrowing.” But bilateral support ruled the day. George HW Bush’s Republican father and Al Gore’s Democratic father are both supporters. In fact, Al Gore Sr. played a key role in shaping the financial aspects of the law. The 1956 bill allowed an initial expenditure of $ 25 billion (approximately $ 242 billion in today’s dollars), against an estimate of approximately $ 101 billion ($ 977 billion today). The total effort will eventually cost close to $ 114 billion over three decades (which has been adjusted for inflation, much less than that). The federal government has agreed to step in 90% of the bill, with the states taking the balance. The Highway Trust Fund, which financially assisted with the gasoline tax, paid for the government’s share.
Although it is difficult to quantify its exact economic impact, the American highway system clearly has many positives. It raised construction industries and workers and allowed goods to be transported to more places more quickly, cheaply and profitably. These gains contributed to increased productivity from the late 1950s to the early 1970s, while revenues in the S&P 500 companies increased.
In addition, roads have helped close economic gaps between states, especially in the southern belt of the country, where it has fueled the growth of new businesses such as Walmart Inc., Home Depot and FedEx Corp, while at the same time boosting workers’ incomes.
The highway system also has its disadvantages, no doubt. Excessive reliance on cars and trucks has harmed the environment. Suburban expansion, traffic jams, more travel, less investment in public transportation and getting out of many American cities are other scars. These issues do not argue against infrastructure investment; They reinforce the need to step back from the cost of ambitious public works to the unexpected unexpected fall.
A quarter of Biden’s American jobs plan, $ 621 billion, is earmarked for the classic infrastructure basics: repair and construction of bridges, roads, transportation, rail, ports and aviation. If Eisenhower’s highway law recognizes its economic impact, it will be well-spent money.
Biden will also have to deal with some legislative roadblocks that Eisenhower faced. Fears of a Russian nuclear attack no longer clearly pack the same public relations punch, but America now has a real economic competitor in the People’s Republic of China. The Chinese government has embraced the cost of infrastructure on a legendary scale, contributing to the expansion, which will track China to overtake the United States and become the largest economy in the world by the end of the current decade.
Republicans can support bold government programs that make America more competitive at home and abroad. But Biden and the Democrats can follow the effective playbook, which is definitely popular and has a strong track record. Eisenhowers. The US has built big things before – and can build big things again.
Timothy L. O’Brien & Nir Kaiser is a senior columnist and Bloomberg Opinion columnist covering the markets for Bloomberg Opinion respectively.