When the COVID-19 pandemic hit America’s shores, online shopping surged to levels never seen before. In March of this year, U.S. consumers spent $78 billion online, up a staggering 49% in March of 2020. Similarly, U.S. e-commerce sales jumped 39% between the first quarter of 2020 and the first quarter of this year, to $199 billion. Before the pandemic, e-commerce sales were growing at a little more than 10% annually.
Where are Americans spending the majority of their dollars online? Amazon, of course, the everything store. Amazon is, by far and away, the largest online retailer in America with respect to net sales and, by 2025, Amazon is expected to supplant Walmart as the biggest U.S. retailer in total sales.
Without a doubt, the vast majority of people would not want to live through another global pandemic; not to mention the over 3 million people who lost their lives due to COVID-19. However, the hell that most of us have lived through over the past year, has not been bad for everyone. Amazon’s founder and CEO, Jeff Bezos saw his net worth rise by $75 billion in 2020 as more and more people flocked to his everything store.
In the first quarter of 2021, Amazon posted revenue of more than $100 billion for a second quarter in a row. Amazon’s $108.5 billion in revenue was up 44% year-over-year and allowed Amazon to report more profit in the past 12 months than it has in the previous three years. For perspective, among American companies, Amazon joins only Apple, Exxon Mobil and Walmart in having reported quarterly revenue above $100 billion.
Amazon’s success would not be possible without its ability to deliver the billions of dollars worth of goods that Americans purchase from their site around the clock. Since its inception, Amazon has relied upon third party delivery companies to ship its packages to your door. However, over the past decade, Amazon has been steadily growing its own logistics operation.
In 2019, Morgan Stanley estimated that Amazon delivered more than half of all their packages shipped in the U.S. through their cargo aircraft and delivery vehicles. In addition, the investment bank calculated that Amazon would deliver roughly 6.5 billion packages a year by 2022, far exceeding UPS at around 5 billion packages per year and FedEx at around 3.5 billion packages per year.
Today, Amazon’s transportation fleet, Amazon Air, has more than 70 aircrafts and files hundreds of daily flights to at least 36 cities in the United States. On the ground, more than 400,000 drivers now deliver goods for Amazon through their delivery service partner program.
Whether utilizing their own in-house logistics operation, or a third party delivery service, Amazon depends on the infrastructure of the United States to get you your purchases. Amazon would not have estimated sales of over $360 billion in 2021, if they did not rely on the roads, bridges, tunnels and airports that connect America from coast to coast.
The impending problem for Americans and all the businesses that operate here, is that America's infrastructure is falling apart. A 2019 report by the World Economic Forum found that among the wealthiest countries, America’s infrastructure ranked 13th, behind the likes of Singapore, Japan, Germany, France and the UK. Compounding the problem is the fact that the U.S. has done little to to reinvest in our infrastructure. Public domestic investment as a share of the U.S. economy has fallen by more than 40% since the 1960s. While China spent over 5.5% of their gross domestic product on transportation infrastructure investments in 2018, the U.S. spent just .52%.
According to the American Society of Civil Engineers, many of America’s roads, bridges, airports, dams and levees are in terrible shape. Around 42% of all bridges in the U.S. are at least 50 years old, and 46,154, or 7.5%, are structurally deficient. With regard to U.S. roadways, 43% are in poor or mediocre condition, resulting in motorists paying an additional $1,000 yearly in wasted time and fuel. Not to be forgotten, America’s water infrastructure system is also in great need of repair. It is estimated that a water main break happens every two minutes in the U.S., resulting in the loss of billions of gallons of treated water each day.
If the U.S. does not reinvest in its infrastructure, ASCE estimates that by 2039, the U.S. will lose $10 trillion in economic growth and more than 3 million jobs. Furthermore, exports will decline by over $2 trillion and every American household will bear an additional $3,300 cost yearly from increased fuel consumption, lost time and extra car repairs.
Thankfully, both political parties realize the importance of repairing America’s infrastructure so that the U.S. continues to remain competitive globally and our economy continues to grow. Oh wait, that was the America of yesterday. Today, Republicans in Washington like to claim they are for infrastructure investments, but when it comes to actually voting for new infrastructure spending, they run for the hills.
During the 2016 presidential campaign, then-candidate Trump promoted his plan for “a great national infrastructure program” that would create “millions” of new jobs. While Hillary Clinton called for $275 billion in infrastructure spending, Trump said he would spend $800 billion to $1 trillion.
After Democrats regained the House in 2018, Speaker Pelosi (D-CA) and other Democratic leaders went to the White House to negotiate the finer points of Trump’s infrastructure bill. After meeting with the President, Speaker Pelosi (D-CA) and Senator Schumer (D-NY) emerged from the White House to compliment the President and announce that he had agreed to pursue a $2 trillion infrastructure plan. The leaders said they would meet again in three weeks to discuss how to pay for the bill. However, at the following meeting, things took a very unexpected turn.
President Trump stormed out of his meeting with the Democrats and declared he would not work with them until they ceased investigating him. At the time, congressional Democrats were investigating Trump’s relationship with Russia. Following the President’s abrupt departure from the Cabinet Room, Speaker Pelosi (D-CA) reportedly turned to her colleagues, who were still sitting in the room, and said, “I knew he was looking for a way out...We were expecting this.” Any hope of an infrastructure bill under President Trump was officially dead.
Trump’s bait-and-switch on working with Democrats to pass an infrastructure bill, mirrors how today’s Republican leadership is addressing President Biden’s attempt to pass The American Jobs Plan.
In March, President Biden released his $2 trillion plan to revive America’s infrastructure. Biden’s plan would use a combination of spending and tax credits to, among other things, rebuild 20,000 miles of road, repair the 10 most economically important bridges in the U.S. and remove all lead pipes from the nation's water supply system. The plan also included funds to train millions of workers, support for eldercare and care for the disabled.
Following the release of Biden’s plan, some Senate Republicans offered a counter proposal. The Republican plan would cost $568 billion and focus very narrowly on fixing roads and bridges and a few other forms of “traditional” infrastructure. While Republicans have said their plan will be paid for, they have not explained how they will pay for it and have made clear they will not raise taxes on corporations or high net worth individuals.
No sooner did some Senate Republicans pitch their alternative infrastructure plan, did Senate Minority Leader McConnell (R-KY) announce that he is "100%" focused "on stopping" President Biden's administration. And, in case there was any doubt that Democrats might be able to peel off some moderate Senate Republicans to support their agenda, McConnell went on to say, "What we have in the United States Senate is totally unity from Susan Collins to Ted Cruz in opposition to what the new Biden administration is trying to do to this country."
Despite Leader McConnell’s comments about the uniformity of his Republican colleagues, some, including President Biden, argue that it is still worth trying to work with Republicans to pass an infrastructure bill. I am not one of those people and strongly believe this is a misguided strategy. Why? The answer to twofold. No Senate Republican will EVER vote for a tax increase and two, any Senate Republican who wants to take credit for the infrastructure bill will do so even if they vote against it.
Biden has promised that his economic agenda will not increase the national debt. In keeping with this promise, Biden has proposed paying for his infrastructure proposal by hiking the corporate tax rate from 21% to 28% and also raising the capital gains tax for those making over $1 million to 39.6%. By raising the corporate tax rate, Biden is working to undo the signature legislative achievement of President Trump and the Republican Party over the past decade.
In 2017, Congressional Republicans voted almost uniformly to pass a $1.5 trillion package that cut individual tax rates for eight years and slashed the top corporate tax rate from 35% to 21%. Every Senate Republican and all but 12 House Republicans, voted for the bill in the face of uniform Democratic opposition. While individuals of all income levels saw some tax cut, the bill overwhelmingly benefited the ultra wealthy and exploded the federal deficit to $984 billion, a 48% increase from 2017.
Republicans are also not worth negotiating with because they have learned to take credit for legislation that they vote against. Every Republican in Congress voted against President Biden’s $1.9 trillion COVID-19 relief bill, yet Republicans from New York and Texas to Indiana and Washington publicly took credit for the bill’s passage.
Congresswoman Elvira Salazar (R-FL) tweeted, “So proud to announce that the Biden Administration has just implemented my bipartisan COVID relief bill as part of @SBAgov policy,” despite the fact that she voted against the bill.
Not to be out done, Senator Wicker (R-MS) praised the billions in aid to restaurants in the COVID relief bill that he voted against. Without any shame, Senator Wicker tweeted, “Independent restaurant operators have won $28.6 billion worth of targeted relief. This funding will ensure small businesses can survive the pandemic by helping to adapt their operations and keep their employees on the payroll.”
The American people do not have time to deal with Republican saboteurs. The Senate Republican Leader has made it abundantly clear he wants President Biden to fail. Even if there are some Senate Republicans who genuinely want to pass an infrastructure bill, they will not raise taxes to do so. Should an infrastructure bill pass without being paid for, Republicans will bombastically blame Democrats with robing future generations of their freedom by enslaving them to China.
President Biden and the Democrats are right in concluding that reviving America’s infrastructure should be paid for by those who have benefited significantly from it. Amazon, for example, would not be able to rake in revenue of over $100 billion, quarter after quarter, if it were not for the infrastructure that connects America from sea to shining sea. Corporations large and small rely on America’s roads, bridges, power grid, drinking water and broadband to get the job done. President Biden should stick with guts and ensure that any infrastructure bill he signs is paid for with an increase in the corporate tax rate. President Biden should also remain committed to going after those largest corporations in America that pay no federal income taxes.
I have the utmost respect for President Biden’s desire to work with Republicans to address the problems confronting the American people. However, when it comes to fixing America’s infrastructure, the record is abundantly clear. Republicans say they want to take action, but when it comes time to hammer out the details of any infrastructure bill, they recoil. If President Biden wants to pass the infrastructure bill that America needs, he will collaborate with all wings of his party to reach a deal and pass it swiftly through reconciliation.
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