In arguing for more government spending and higher taxes, Democrats have been advancing two competing arguments about America’s expenditures on infrastructure.
One was invoked by President Obama last month when he told small business owners, “Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen.” In other words, government spending on infrastructure facilitates individual success.
This week, Massachusetts Senate candidate Elizabeth Warren, who had popularized this argument on the Left before Obama made it a national campaign issue, released an ad bemoaning the fact that “China invests 9 percent of its GDP on infrastructure” while America “is at just 2.4 percent.” (That includes state and local spending.)
So, while Obama’s argument suggests that a big part of what government does is provide infrastructure for businesses to succeed, Warren’s point is that infrastructure is actually a very small part of what government does.
The arguments are not necessarily contradictory. It could be that infrastructure investments helped build businesses, but now that infrastructure has fallen into disrepair. However, this still leaves liberals with a broader problem.
Obama and Warren are both pushing the idea the United States cannot afford to spend more on infrastructure, because wealthier Americans who made their fortunes as a result of that infrastructure aren’t paying their fair share of taxes.
In reality, however, wealthier Americans have been paying more than their fair share of taxes, and the taxes that they have been paying are more than enough to finance the federal government’s infrastructure spending.
In 2009, according to the Congressional Budget Office, the top 1 percent of income earners earned 13.4 percent of income in the U.S., but paid 22.3 percent of all federal taxes. Given that the government collected $2.1 trillion of revenue in 2009, this would translate into roughly $468 billion in taxes paid by the top 1 percent. That same year, according to the CBO, the federal government spent $87 billion on transportation and water infrastructure. Put another way, the taxes paid by the top 1 percent in 2009 were more than five times what the federal government spent on infrastructure that year — which includes some stimulus spending.
The reason the federal government couldn’t spend more than $87 billion on infrastructure was that most tax dollars were tied up paying for major entitlement programs. In 2009, spending on Social Security, Medicare, Medicaid, unemployment insurance and other mandatory welfare state programs gobbled up more than 99 percent of tax revenue collected by the federal government. That left just $12 billion to spend on infrastructure, education, national defense and all other federal programs before the federal government had to rack up more debt.
The reason why Americans cannot do the “big things” that Obama likes to talk about — such as constructing the Hoover Dam and the interstate highway system — is that they are too busy paying for the welfare state, which was expanded by trillions of dollars when Obama signed his 2010 national health care law.
This week, the Obama campaign announced that Warren would be given a prominent speaking slot at the Democratic National Convention, just before former President Bill Clinton formally re-nominates Obama. This is a sign that he intends to make his “you didn’t build that” argument a central part of his campaign.
Republicans would be wise to use this as an opportunity to remind the public why the United States can no longer afford an open-ended welfare state, no matter how much the federal government confiscates from wealthier Americans.
Philip Klein ([email protected]) is a senior editorial writer for The Washington Examiner. Follow him on Twitter at @philipaklein.
