Opinion: How Biden’s New Deal can really make America great again
April 1, 2021 at 7:02 p.m. EDT
While Donald Trump claimed he wanted to “Make America Great Again,” President Biden is attempting to actually do it. The former president’s slogan got Americans thinking nostalgically about the 1950s and early ’60s, when the United States dominated the world and its economy produced rising wages for workers and executives alike. A defining feature of those years was federal investment in infrastructure, scientific research and education. (Think interstate highways, NASA and the massive expansion of public universities.) By contrast, Washington in recent years has mostly spent money to fund private consumption by giving people tax cuts or transfer payments. Biden’s infrastructure plan is the first major fiscal program in five decades that would focus once again on investment.
When you look at federal spending as a whole, it seems to have risen significantly over the past few decades. But the composition of that spending tells the real story — most of that increase is a result of sharp rises in entitlement programs such as Medicare and Medicaid. Core investment spending has actually dropped substantially. The United States used to spend as much as 3 percent of its gross domestic product on transportation and water infrastructure; that number is now closer to 2 percent. The United States used to be the world’s unquestioned leader in basic science and technology. China is now almost on par with it.
Biden’s plan harks back to the New Deal. During the Great Depression, the Works Progress Administration (WPA) built or improved almost 1,000 airports, creating the backbone of the modern airline industry. The president’s proposal will help create a modern electric vehicle system by funding a network of 500,000 chargers. The 1936 Rural Electrification Act brought electricity to rural areas. Biden proposes doing the same with high-speed Internet, which he argues is the equivalent in today’s economy. The New Deal was bigger (relative to the size of the economy at the time), but it is the only valid comparison with what the Biden administration is proposing.
Where the spirit of the New Deal is sorely needed today is in the cost, efficiency and transparency of these kinds of projects. The United States used to be able to build things with astonishing speed. The George Washington Bridge, the world’s longest suspension bridge when it opened in 1931 across the Hudson River from Manhattan to New Jersey, was built in four years, ahead of schedule and under budget. By contrast, just adding two miles of new subway lines and three new stations in Manhattan took, depending on when you start counting, 10 to 100 years and ended up costing $4.5 billion by the time it opened in 2017.
Building infrastructure in the United States is insanely expensive. The New York Times found that another project in New York, an expansion of the Long Island Rail Road, was the most expensive subway track on Earth, coming in at seven times the world average. New York is particularly bad — in a league of its own — but U.S. infrastructure often costs several times more than it does in Europe. Paris, Rome and Madrid have managed to build subway extensions for less. Yet those cities are hundreds of years older than any in the United States, and they have many unions and tons of regulations. So none of the usual excuses will do.
One recent study found that the cost of building U.S. interstate highways quadrupled from the 1960s to the 1990s, though material and labor costs have barely budged (after accounting for inflation). There are lots of reasons: multiple authorities (each with a veto), endless rules and reviews, and likely corruption. New York University scholar Alon Levy did a detailed analysis of the country’s crazy costs and concluded that there were at least eight reasons for them. Fundamentally, though, they concluded that the costs were so high because Americans were unwilling or unable to look around the world and try to learn from other countries. American exceptionalism has led to an exceptional, uniquely bad system for building infrastructure.
By contrast, the New Deal was surprisingly well-run. The WPA employed 3 million people at its peak, more than any private company. In today’s workforce that would be about 10 million people. The entire enterprise was skillfully managed by Harry Hopkins, a social worker-turned-bureaucrat who was one of Franklin D. Roosevelt’s closest aides. The vast Tennessee Valley Authority — spanning seven states and eventually comprising about 30 hydroelectric dams — was devotedly led by David Lilienthal, a crusading lawyer. Most of the funds appropriated for the New Deal were administered scrupulously by Interior Secretary Harold Ickes, another confidant of FDR. Each of these men developed a reputation for honesty, efficiency and reliability, which in turn made people believe that government could do big things and do them well.
For the Biden administration to truly be transformative, it needs to rival not only the ambition of the New Deal but also its impressive execution.
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