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Only 40% of Biden’s Infrastructure Bill Paid For, According to Congressional Budget Office
For years, the shabby state of American infrastructure has gone neglected by our elected officials. For instance, the Swiss nonprofit, The World Economic Forum, released a study in 2019 which compared the competitiveness of 141 countries’ economies through various metrics, including infrastructure. The United States, the richest country on Earth, came in 13th.
Also of note, is The American Society of Civil Engineers’ infrastructure report card, which is issued every four years. Their findings in 2021 were not very reassuring, rating the country’s infrastructure a C-. This low score, in part, is due to “an estimated 6 billion gallons of treated water lost each day…43% of our public roadways in poor or mediocre condition…and an additional 10,000 miles of levees whose location and condition are unknown.”
America needs an infrastructure overhaul, that much is clear. Joe Biden’s Administration is only the latest to try bridging the partisan gap to get an infrastructure bill passed in Congress.
According to the White House, the 2021 Infrastructure Investment and Jobs Act includes “around $550 billion in new federal investment in America’s roads and bridges, water infrastructure, resilience, internet, and more.”
The White House release of the bill further breaks down how the money will be spent. A brief overview includes:
- $110 billion of new funds for roads, bridges, and major projects
- $11 billion in transportation safety programs
- $39 billion of new investment to modernize transit, and improve accessibility for the elderly and people with disabilities
- $66 billion in rail to eliminate the Amtrak maintenance backlog, modernize the Northeast Corridor, and bring world-class rail service to areas outside the northeast and mid-Atlantic
- $7.5 billion to build out the first-ever national network of EV chargers in the United States
- $5 billion in zero emission and clean buses and $2.5 billion for ferries
- $17 billion in port infrastructure and $25 billion in airports
- $55 billion clean drinking water investment
- $65 billion high speed internet investment
The Infrastructure Investment and Jobs Act is an ambitious plan to refresh America’s crumbling infrastructure and use the weight of the federal government to bring America into a modernized “Green Economy.”
But according to the nonpartisan Congressional Budget Office (CBO), this bipartisan legislation is not entirely paid for and would add hundreds of billions of dollars to the federal deficit.
The legislation also includes various provisions that lawmakers claim will fully pay for the additional spending, but a cost estimate from the Congressional Budget Office (CBO) indicates that those pay-fors will not offset the full cost of the legislation, which will therefore add to the federal debt in the coming years.
The Congressional Budget Office analyzed the six core offsets that legislators have cited as paying for the additional spending brought by the infrastructure bill. These include:
- A Delay in Medicare Part D Rebate Rule
- Cryptocurrency Tax Enforcement
- Extending Higher Fees Charged by Loan Servicers, Fannie Mae & Freddie Mac
- Reinstate “Superfund” Fees Charged on Certain Chemicals
- Repurpose Unspent Covid-19 Funds
The CBO estimates that this infrastructure legislation would increase discretionary spending by approximately $415 billion and mandatory spending by $10 billion.
The avenues to offset this spending outlined above would result in approximately $120 billion in “reduced outlays” and $50 billion increased revenues according to the CBO. The two largest sources of savings are the delay in Medicate Part D Rebate, which would postpone the requirement of drug manufacturers to pass on rebates offered on their drugs to the consumer until 2026, and tougher cryptocurrency tax enforcement.
The Medicare savings are estimated to be worth $51 billion and the CBO projects that cryptocurrency taxes could bring in an additional $28 billion in revenues.
But ultimately, the analysis of the CBO concludes that despite the claims of elected officials that this infrastructure plan is paid for, only about 40% of the costs are offset. This means that the national debt will accrue at least another $256 billion over the next decade if the bill is not altered. This analysis did not, however, look at the potential macroeconomic impacts of this legislation, which lawmakers have cited as a theoretical source of increased tax revenue, including the jobs created by the infrastructure projects themselves and the long-term job growth in the burgeoning Green Energy sector.
While the cost of this infrastructure plan may well be worth it, Democrat lawmakers have insisted on voting on this bill in addition to additional multi-trillion-dollar spending bills which may ultimately derail the infrastructure initiative altogether in the short term.
Image Credit: Photo by Scott Blake on Unsplash
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