Corporate Tax

Infrastructure summer season: non-partisan invoice strengthens corporate giants

If the passage of the Infrastructure Investment and Jobs Bill on Tuesday results in any significant part of President Biden’s Build Back Better agenda through a budget vote, it will usher in a new age of government investment and intervention in the economy, and a reversal of the decades Public spending setbacks. But in a different sense, the IIJA – and possibly the accompanying Law of Reconciliation – also continues a tradition from Clinton and Obama’s years of avoiding major battles with corporate interests. It is not enough for democratic lawmakers to learn how to spend again if they continue to shy away from breaking power.

One of the clearest examples of this is the use of broadband in the IIJA. On the face of it, it’s an investment of 65 billion. But how much of that money is actually being used to achieve these goals, and how much is going into the coffers of incumbent telecommunications companies that have refused to spend a lot of money on rural and low-income investments for decades?

Biden’s original proposal in the American Jobs Plan, which gave broadband $ 100 billion, would have restructured the US broadband market. It promised to bring coverage to the nation and increase the minimum speeds that make up the “broadband” Internet. Importantly, it promised to prioritize “supporting broadband networks owned, operated, or affiliated with local governments, nonprofits and cooperatives,” which are less constrained by profit motive than those Telecommunications and more willing to serve for universal purposes. And it said it would override a number of laws in nearly two dozen states that prevent cooperatives or municipal broadband networks from competing with incumbent incumbent providers.

Unfortunately, none of that made it into the final proposal. The US $ 42.45 billion government grant is primarily allocated to “unserved” areas, which are defined as areas with no access to broadband of at least 25/3 megabits per second (Mbps), which has been the standard minimum since 2015 . “Underserved” areas, in contrast, set at 100/20 Mbit / s, this is the level that the scholarship holders should achieve; the original proposal was looking for a higher speed. Because “underserved” areas get the money first, areas where incumbents already operate, “even if they are underserved”, are unlikely to qualify for big bucks.

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Smaller nonprofits, electrical cooperatives, and muni broadband operations are not a priority; The new language clearly states that “the program does not favor any particular company or provider”, and the text of the law confirms this on page 2.058. Worse still, the bill does not repeal state laws that restrict local broadband.

AT&T and Comcast can conquer this money pot as in the past without significant broadband introduction in unserved or underserved areas. As I wrote in my book Monopolized, the Connect America Fund and the Federal Communications Commission (FCC) provided at least $ 4.6 billion in subsidies for broadband expansion between 2015 and 2020, but this had little impact on the expansion. The IIJA grants ten times as much, but the monopoly telecommunications companies are adept at picking and picking neighborhoods to expand and only conquering the more profitable pockets.

A provision by the FCC to prevent “digital redlining” (picking and choosing) got the bill, along with $ 14.2 billion for a $ 30-a-month voucher program to low-income users to help pay for broadband; and $ 2.75 billion to teach untrained people how to use the Internet. Of course, such subsidies and training also benefit the existing telecommunications companies that offer broadband. The requirement for grant recipients to offer a “low” price (with no actual dollar figure) and reveal their broadband tariffs is nice, but it is difficult to make a comparison when there is only one provider, as is often the case with many Municipalities.

Perhaps slightly less money is being wasted compared to previous federal broadband efforts. But without the competitive elements, you’re still hoping that the broadband operators who snatch the government grants – and given the lobbying that will go into it, the incumbents would have to be given preference – actually do the job. The giant telecommunications companies have declared themselves satisfied with the bill after initially fighting against it. Because the structure of the heavily monopolized market remains intact; Congress failed to implement significant structural reform.

As in the past, AT&T and Comcast can conquer this money pot without any significant broadband introduction in unserved or underserved areas.

In a way, this is the price the Democrats paid for a bipartisan infrastructure bill – and a price has been won in other areas as well. Despite the original plan to offset expenses through corporate tax rate increases, virtually no industry or wealthy person will need to raise taxes by a penny. (The only one who could, cryptocurrency broker, made a huge stink and received a compromise that didn’t make it into the bill due to procedural complications but will likely be implemented in the future.) Climate action has been rolled back and transit finance cut to the oil – and to support the gas industry. The larger efforts to privatize infrastructure have been graciously curtailed, but the management consulting industry has been given a lucrative contract to write reports on major transportation projects. The $ 66 billion granted Amtrak will not help much if the monopoly freight railways that control many of the corridors are not challenged.

It would be more worrying if this trend followed the reconciliation package for the Democrats only. If the Democrats stick to their guns, at least $ 1.75 trillion in compensation will have to be found – tax hikes for the business and the rich, savings by letting Medicare negotiate prescription drug prices. Free adult education centers are striking against the business model of the profit-oriented university industry, whose profile of prospective students is similar to that of adult education centers. In other cases, American corporations will provide some of what may be $ 3.5 trillion in public spending. The private equity industry in particular now controls a staggering portion of the nursing industry – not just nursing homes, but hospice care, home nursing, and childcare facilities as well. I heard they line up in meetings to get their share of the reward. In fact, according to an analysis by the Center for Responsive Politics, nearly 2,000 companies and organizations have advocated some aspects of infrastructure laws.

None of this is to say that spending $ 3-4 trillion on restoring public investment, rebuilding infrastructure, and helping families is bad. The realization that government can play an important role in improving productivity, promoting the common good and solving the climate crisis is a real breakthrough at a level we have not seen since the Great Society and New Deal initiatives. But much of these investments were made to circumvent real corporate power issues that had preoccupied smaller initiatives of this type for decades. Federal funds channeled to consultants and large established industries will not keep their promises.

This problem is something that all groups that have hailed the selection of various anti-monopoly appointments now have to contend with. The Biden administration was prepared to show itself against the power of the corporations in terms of personnel, but not with legislative policy. The broadband regulations stuck on page 2,058 may not be as sexy as slogans about the dissolution of Google and Facebook. But they are far more important for the question of whether large corporations will continue to dominate our economy and our lives.

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