How The Clinton and Sanders Infrastructure Plans Measure Up

How will Clinton and Sanders' plans measure up to Warren's tests?

Do They Offer Corporations A "Repatriation" Tax Break?

Here's one key point to pay attention to regarding any plan for corporate tax "reform": There is a huge pot of money sitting offshore that giant corporations have moved out and kept out of the country thanks to a loophole that allows them to avoid paying the taxes due on those profits until it is "repatriated" -- brought back to the US. The amount being kept out of the country is now over $2.1 trillion, with $620 billion of taxes due. Another $90 billion is added to this pot of taxes due each year.

There are two ways this money can be brought back so the country can use the resulting tax revenue:

1) The corporations can be told to bring it back and pay the taxes they owe on these "offshore" profits. This brings $620 billion of revenue to the government immediately, and another $90 billion each year thereafter.

2) Politicians can offer an "incentive" to bring the money back, in the form of a cut in the taxes due. This is a trick because it "generates" revenue but actually brings less than the $620 billion owed, the rest being pocketed by the corporations.

This is the key point to watch for in Clinton and Sanders' plans for funding infrastructure. Do they require the corporations to pay what they owe now or do they hand them tens or hundreds of billions by letting them repatriate the profits at a lowered tax rate?

The Politics Of Passing Anything

It is interesting to examine the Clinton and Sanders' infrastructure plans in light of what is needed by the country, and the fact that a Republican Congress is unlikely to allow any infrastructure plan (or anything else) to pass.

Republicans on Monday immediately came out in opposition to Clinton's proposal, calling it more government spending. The Republican National Committee called it a "spending binge" and said Clinton "wants to treat Americans' tax dollars like every day is Black Friday."

With Republicans opposed to any investment in America's infrastructure, the proposals are measures of political positions, not measures of what the country should be able to do.

The need is $3.6 trillion by 2020, according to the American Society of Civil Engineers' (ASCE) most recent Infrastructure Report Card. That what ASCE says is needed just to catch up to basic standards. (Note that the ASCE total is both federal and state investment.) This need is $1.6 trillion more than currently budgeted -- again, just to catch up to basic standards, never mind catching up to the rest of the world by upgrading to things like high-speed rail.

Sanders proposes $1 trillion towards this, Clinton proposes $275 billion, plus loans generated by both candidates' infrastructure bank plans.

Why So Little?

Why does Clinton propose spending so much less than the needed amount? The second paragraph of her plan says, "Estimates of the size of our 'infrastructure gap' register in the trillions of dollars." Following the fourth paragraph, a new section begins, "That's why Hillary Clinton is announcing a five-year $275 billion dollar infrastructure plan." That sums up Clinton's less-than-courageous proposal.

Republicans are not going to allow any infrastructure spending to pass anyway, so why not take a strong stand? And why not enter into negotiations with a solid progressive position to fall back from? Like her proposal for a $12 minimum wage while Sanders, labor and most progressives propose $15 -- with Republicans allowing neither to become law -- her $275 billion infrastructure proposal appears to be some sort of signal to voters that she is to the right of and perhaps less "scary" than Sanders. But it is also a recipe for little, if any, incremental improvement at a time when the people and the country clearly need transformative reform.