So, President Biden will probably sign his infrastructure spending bill at some point this week. Nice work I suppose if you you believe it was all about infrastructure. I, for one, don’t.
The Progressive faction of the Democratic Party opted out of signing for passage saying that they couldn’t in good conscious sign on to this bill if their own money grab wasn’t passed as is. The political process at work and I give the left a little credit for standing their ground even if that ground is very shaky at the moment.
I have brought this up before and now that it will actually be enacted I stand by what I said. There really is not a lot of true infrastructure in this bill and yes I do know that the new definition is not the same as the old definition but expanding the actual meaning of something like infrastructure could end up costing us more than anticipated.
Let’s take a peak under the hood and try and figure out how some items fit into “Infrastructure”
Climate Mitigation is one open ended term. What is it exactly? I think it’s funding for communities that are continually impacted by climate change. Ok. Sounds good by why must it be connected to climate change, why not just fund improvements without attaching a hot button topic like climate change? Keeping the left happy I guess. Not really a big deal because it is needed and it technically is infrastructure improvement. Just don’t get why it needs to be attached to climate change. I do have one last thought that just occurred to me. There has been flooding in this country since the Vikings landed 1,000 years ago in Newfoundland and before. Rivers overflow, extreme high tides happen when there is a full moon and so on. It is a fact of life. I am not ignoring climate change, I am just stating that the issues we face now are the same issues our forefathers faced. “It wasn’t as bad then as it is now” Oh really? The ten biggest floods in history happened before 1966.
The closing of the broadband gap is an item I have mentioned before and it is going to be 65 billion dollars of wasted money. Love them or hate them, Elon Musk, Jeff Bezos and to a lesser extent, Richard Branson, have been conquering space at a rapid clip. Lost in all the hullabaloo of their manned space flights is the fact that Blue Origin and Space X (Virgin Galactic as well) have been putting satellites in space with the specific purpose of linking underserved areas with the World Wide Web. They aren’t doing this for fun, there will be profit in it and this is a perfect example of the private sector doing things successfully. Spending billions to hardwire the remote reaches of Montana or spending millions to hook up 20 farms in Nebraska is not money well spent. It is stupid.
Another dumb example of using government money to do what the private sector can and will do better is creating a network of electric charging stations around the country. Tesla and other car manufacturers have to be thrilled by this. They can save the money they thought they would have to spend to build these stations and use it somewhere else. Good for them but the reality is, they would do it better and they would make money while the government has a roughly 30% chance of doing it right and a 100% chance of it costing the taxpayers more in the end. Let the private sector do what it does best.
One last thing that has me scratching my head is the environmental remediation component. Granted it’s only around 17 billion dollars but haven’t we been doing this for years and haven’t we been funding this program endlessly. Is this adding to the programs in place or is it some new funding? I am not sure but this is another slippery slope thing because within this little ditty is some blatantly vague language about capping gas and oil wells and shutting them down permanently. To understand the genesis of this item you will have to go back 25-30 years when the oil industry shut oil and gas wells down because they felt they had gotten out of the what they were going to get. It isn’t like they poured concrete down the drill holes and moved on. They just shut production down. Somewhere in the late ‘90’s a new breed of drillers started extracting more oil out of these abandoned wells and new technology made it cost effective and along with fracking, allowed the US to become energy independent for the first time in decades. Fracking is really not an environmentally sound way of extracting oil but it works and it has increased the United States reserves by billions of barrels of oil. Reopening oil heads, on the other hand, while messy at times, still works and still can produce a tremendous amount of oil. However, the Biden Administration, in its short sightedness has decided that oil production of any kind is no good and we need to wean the people of the United States off of its dependency. So, we will do everything we can to kill the oil industry in this country and that will force people to go electric.
I don’t know. There are over 80 million cars registered in the US. 97% are gas powered and while the number is shrinking due to less drivers on the road and more electric vehicles, it is still a very significant number. These cars all need fuel and cutting US production (and increasing foreign imports) has done nothing but make it more expensive for every citizen to live.
I get global supply changes and geopolitic situations that impact short-term supply and demand. We have lived with that for 40 years plus. This is different. This is our own government forcing its people to buy foreign. Capping wells that technology can make viable is another dumb move and it can eventually weaken the US further and be at the mercy of mostly unstable trading partners.
I realize that my Monday columns are normally geared to investing but I thought the passage of this inaccurately named bill merited me breaking tradition.