Opinion | Joe Biden’s Infrastructure Plan, explained

The American Jobs Act updates Iowa’s infrastructure for the 21st century.



President Joe Biden and Transportation Secretary Pete Buttigieg meet with a bipartisan group of House members on infrastructure in the Oval Office of the White House in Washington, D.C., on Thursday, March 4, 2021. (Oliver Contreras/Pool/Getty Images/TNS)

Shahab Khan, Opinions Columnist

President Joe Biden’s American Jobs Act is the latest example of the gradual shift in macroeconomic thinking as the era of austerity is coming to an end.

Since the beginning of the pandemic, the federal government has injected trillions into the economy, and the Biden Administration is looking to add to that with the $2 trillion infrastructure plan.

This plan will not only repair America’s hard infrastructure, as it ensures that the country’s soft infrastructure is ready for a new century.

Iowa’s congressional delegation needs to support the bill as it will greatly improve Iowa’s lackluster infrastructure and prepare the state for the 21st century.

The state of Iowa is falling apart. Iowa’s hard infrastructure ranks the 9th worst in the country as 20 percent of bridges and 9 percent of roads are structurally deficient.

When it comes to soft infrastructure, Iowa is faring much better but still needs improvement. The state’s K-12 educational system ranks near the middle of the pack and our state’s pandemic response showed that Iowa health systems are not ready for a sudden crisis.

The American Jobs Act improves Iowa’s hard and soft infrastructure in a few key ways.

The plan provides billions of dollars that will go to fixing aging roads and bridges, education, support for research and development, and billions for the caretaking economy.

While the repairs for hard infrastructure are much needed, the support that the bill gives to soft infrastructure is crucial.

With the rise of automation in the manufacturing and retail industries, Biden and his advisors have realized that most people are going to be employed in domestic fields.

Furthermore, the bill’s emphasis on research and development will ensure that the country’s universities and private sector are paramount leaders in innovation.

However, Republicans have criticized the tax hikes on corporations and the wealthy that will partially fund the bill.

This concern is moot.

From a policy standpoint, while lower taxes do have a temporary stimulative effect, most of the recent literature shows that low tax rates for wealthy individuals is not a sound policy for sustained economic growth.

As for the corporate tax increases, most economists point out that the raise from 21 to 28 percent will have a minuscule impact on business investments.

A more interesting argument against the American Jobs Act is the idea that the fiscal stimulus provided by the plan will cause the economy to overheat, meaning that the economic stimulus will cause an increase in inflation.

That being said, structural factors such as automation and firms’ abilities to absorb higher costs without raising prices have kept inflation at bay. Even if inflation exceeds the Federal Reserve’s 2-percent target rate, the Federal Reserve has the ability to restrict the money supply, and thus, rein in inflation.

The American Jobs Act will give Iowa’s infrastructure a much-needed update for the 21st century.

Not only does the plan ensure that our road and bridge systems are up to standards, but it also provides critical services for our populations.

While the economy runs the risk of overheating, the Federal Reserve possesses the monetary tools to reign in and keep inflation in check.

Overall, the American Jobs Act is a win for Iowa and a win for America.

Columns reflect the opinions of the authors and are not necessarily those of the Editorial Board, The Daily Iowan, or other organizations in which the author may be involved.