The Congressional Budget Office projected on Thursday that the Senateās bipartisan infrastructure bill would add more than $250 billion to the federal deficit over the next decade, confirming suspicions that the sprawling legislation would not fully pay for itself.
The analysis from Congressās official scorekeeper shows that about half of the proposed $550 billion in new spending on roads, bridges and broadband would be financed by adding to the nationās debt. 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. However, the bill is still likely to have sufficient backing to pass by the end of the weekend.
An estimate from the nonpartisan Congressional Budget Office was one of the last major obstacles for the legislation, which independent analysts had projected could add hundreds of millions of dollars to the nationās deficit. The C.B.O. ultimately calculated that the bill would add $256 billion to projected deficits from 2021 to 2031.
Proponents in both parties have contended that the measure is fully paid for, even as fiscal watchdogs have warned that lawmakers are using budgetary gimmicks to obscure the true cost.
A new analysis released by the University of Pennsylvaniaās 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. The legislation would have no significant impact on economic growth through 2050, the analysis concluded, contradicting the Republicans and Democrats who wrote it, who estimated that growth would generate $56 billion in savings.
In its report on Thursday, the C.B.O. said that it did not estimate how any macroeconomic effects of the legislation would influence the federal budget.
The Committee for a Responsible Federal Budget has also taken issue with the lawmakersā accounting. For instance, senators estimated $200 billion in savings from unused funds from earlier pandemic relief packages. But the committee said that 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, the senior policy director at the committee, said that the C.B.O.ās deficit projections were not capturing the additional spending that Congress would be authorizing in the bill and that the āoffsetsā did not appear to raise as much revenue as lawmakers anticipated. He estimated that, if enacted, it could actually add more than $400 billion to the national debt.
āItās a bit worse than I thought,ā Mr. Goldwein said.
Figuring out how to finance the legislation was one of the most fraught debates while negotiating the bill, after Republicans ruled out raising taxes and undoing elements of the 2017 tax law and Democrats balked at increasing fees for drivers. Negotiators have long said, in an attempt to assuage Republicansā concerns, that their legislation contained financing mechanisms that wouldnāt be counted in the formal score.
Republicans have expressed growing concern about the cost of the Biden administrationās economic agenda, arguing that the flood of new spending would cause inflation and inflict grave economic damage. They have also declared that they will not support raising the statutory debt limit, which the Treasury Department says technically expired at the beginning of this month.
Bidenās 2022 Budget
The 2022 fiscal year for the federal government begins on October 1, and President Biden has revealed what heād like to spend, starting then. But any spending requires approval from both chambers of Congress. Hereās what the plan includes:
-
- Ambitious total spending:Ā President Biden would like the federal government to spend $6 trillionĀ in the 2022 fiscal year, and for total spending to rise to $8.2 trillion by 2031. That would take the United States to its highest sustained levels of federal spending since World War II, while running deficits above $1.3 trillion through the next decade.
- Infrastructure plan:Ā The budget outlines the presidentās desired first year of investment in his American Jobs Plan, which seeks to fund improvements to roads, bridges, public transit and moreĀ with a total of $2.3 trillion over eight years.
- Families plan:Ā The budget also addresses the other major spending proposal Biden has already rolled out, his American Families Plan, aimed at bolstering the United Statesā social safety netĀ by expanding access to education, reducing the cost of child care and supporting women in the work force.
- Mandatory programs:Ā As usual, mandatory spending on programs like Social Security, Medicaid and Medicare make up a significant portion of the proposed budget. They are growing as Americaās population ages.
- Discretionary spending:Ā Funding for the individual budgetsĀ of the agencies and programsĀ under the executive branch would reach around $1.5 trillion in 2022, a 16 percent increase from the previous budget.
- How Biden would pay for it: The president would largely fund his agenda by raising taxesĀ on corporations and high earners, which would begin to shrink budget deficits in the 2030s. Administration officials have said tax increases would fully offset the jobs and families plans over the course of 15 years, which the budget request backs up. In the meantime, the budget deficit would remain above $1.3 trillion each year.
Source: Read Full Article