Infrastructure Bill Would Add $256 Billion to Deficit, Analysis Finds
Despite the Congressional Budget Office’s estimate that nearly half of the legislation would not be paid for, senators were racing to move ahead with it.,
Infrastructure Bill Would Add $256 Billion to Deficit, Analysis Finds
Despite the Congressional Budget Office’s estimate that nearly half of the legislation would not be paid for, senators were racing to move ahead with it.
WASHINGTON — Republicans and Democrats rushed on Thursday to line up a Senate vote to pass the $1 trillion bipartisan infrastructure bill, working to clear away the final obstacles despite a finding by Congress’s official scorekeeper that the bill would add more than $250 billion to the federal deficit over the next decade.
The flurry of activity came after three days of plodding work on the package, which would devote $550 billion in new money to rebuild the nation’s crumbling roads, bridges and rail systems and fund new climate resiliency and broadband access initiatives.
It followed an estimate from the nonpartisan Congressional Budget Office on the cost of the legislation, which was one of the last major hurdles to passing it. The office calculated that nearly half of the new spending — $256 billion — would be financed by adding to the nation’s debt from 2021 to 2031, contradicting the claims of Republican and Democratic proponents that the measure would fully pay for itself.
Fiscal watchdogs have warned that lawmakers have used budgetary gimmicks to obscure the true cost, and the findings could give pause to some Republicans who are loath to raise taxes or add to deficits but have agreed to support the legislation.
Still, after three days voting on changes to the 2,702-page bill and with their August vacations tantalizingly close, senators in both parties appeared ready to move forward with the bill, a key component of President Biden’s agenda.
Their eagerness to do so reflected how, even as Republicans have assailed Mr. Biden and congressional Democrats for pursuing a $4 trillion economic agenda that they say will cause inflation and dire consequences for the economy, many are willing to borrow additional money to pay for a long-awaited infrastructure package that will benefit their states.
Mr. Biden and Democratic congressional leaders regard passage of the bipartisan infrastructure legislation as a precursor to their far more ambitious, $3.5 trillion budget plan that is expected to be packed with policies to address climate change, health and education. It will also include tax increases, and is likely to generate unanimous Republican opposition.
Once the bipartisan bill passes, Senator Chuck Schumer, Democrat of New York and the majority leader, has said he intends to take up a budget blueprint that would put Congress on track to pass that larger package unilaterally, using a process known as reconciliation that shields it from a filibuster.
In a statement defending the bipartisan bill after the word that it would worsen the nation’s debt, two of its leading authors, Senators Rob Portman, Republican of Ohio, and Kyrsten Sinema, Democrat of Arizona, insisted that there were $519 billion in offsets, which would leave only a tiny fraction to be financed by deficit spending.
“The American people strongly support this bipartisan legislation, and we look forward to working with our colleagues on both sides of the aisle and President Biden to get it passed through Congress and signed into law,” the two senators said.
But independent budget analysts countered that the plan would add substantially to deficits. An analysis released by the University of Pennsylvania’s Penn Wharton Budget Model on Thursday estimated that the legislation would authorize $548 billion in new infrastructure investments. Changes to the tax code would finance $132 billion of that, the analysis said, but the remaining $351 billion would be deficit spending.
Biden signs a bill awarding Congressional Gold Medal to officers who responded to Capitol riot.In a key moment for the 2022 midterms, census redistricting data will arrive next week.Senators rush to pass infrastructure bill as new analysis shows it would add $256 billion to deficit over the next decade.
The legislation would have no significant effect on economic growth through 2050, the analysis concluded, contradicting the bill’s authors, who have estimated that growth would generate $56 billion savings.
In its report, the Congressional Budget Office said it did not estimate any macroeconomic effects of the legislation on the budget.
The Committee for a Responsible Federal Budget, a nonpartisan fiscal watchdog group, has also taken issue with the lawmakers’ accounting. For instance, senators estimated $200 billion in savings from unused funds from earlier pandemic relief packages. But the committee said those savings had already occurred, so they should not count as an offset for the cost of the infrastructure bill, which it estimated would have a net cost of about $350 billion.
Marc Goldwein, senior policy director at the committee, said that the Congressional Budget Office’s deficit projections were not capturing the additional spending that Congress would be authorizing in the bill and that the offsets did not appear to raise as much revenue as lawmakers anticipated. He estimated that the bill could actually add more than $400 billion to the national debt.
“It’s a bit worse than I thought,” Mr. Goldwein said.
Figuring out how to finance the legislation had been one of the thorniest aspects of negotiating the bill, after Republicans ruled out raising taxes and beefing up I.R.S. enforcement of tax cheats and Democrats balked at increasing fees for drivers. Republicans have been expressing growing concerns about the cost of the Biden administration’s economic agenda, arguing that the flood of spending would cause inflation and inflict grave economic damage.
At least one moderate Democrat, Senator Joe Manchin III of West Virginia, has said he has concerns about inflation; on Thursday, Mr. Manchin wrote a letter to Jerome H. Powell, the Federal Reserve chair, declaring, “It’s time to ensure we don’t overprescribe the patient by further stimulating an already strong recovery and therefore risk our ability to respond to future crises.”
Republicans have also declared that they will not support a move to raise the debt ceiling, which the Treasury Department says technically was reached at the beginning of this month. The department is taking what it calls “extraordinary measures” to avoid breaching it, but that is projected to happen in October without action by Congress to raise it.
Some Republicans have hammered the infrastructure legislation for its budgetary gimmicks, arguing that they far outweigh the merits of the spending.
“If we weren’t going to provide real ‘pay-fors,’ then we should have just seen from them an admission from the outset: ‘We’re not going to pay for it,’ ” said Senator Mike Lee, Republican of Utah, at a news conference on Wednesday. “Instead, they said it’s going to be paid for, and then they release it and say it is paid for — only there are some asterisks next to that.”
After the report was released, Senator Rick Scott, Republican of Florida and the chairman of his party’s Senate campaign committee, said that while he supported investing in infrastructure, he feared that the bill would fuel inflation.
“We cannot afford this reckless spending,” Mr. Scott said.
The Congressional Budget Office projected in a separate report on Thursday that the federal budget deficit would hit $3 trillion this year and average $1.2 trillion per year through 2031.
The Biden administration has argued that because of low interest rates, the debt load is manageable.
“If we are going to make these investments, now is fiscally the most strategic time to make them,” Treasury Secretary Janet L. Yellen said in a speech in Atlanta on Wednesday.