The U.S. Senate is on the cusp of passing a massive $1.2 trillion bill for infrastructure. While there’s a substantial amount for roads and bridges, most of the bill is for far more than traditional infrastructure, as I explained last week. And, much of the bill is an exercise in woke virtue-signaling, as my colleague Carrie Sheffield opined.
To make $1.2 trillion palatable to the American public, the bipartisan coalition of senators who negotiated the bill claimed that it would be “fully paid for.” They lied.
This bill is not fully funded, but will add significantly to our nation’s burgeoning debt. Gimmicks, tricks, and creative accounting can’t hide the fact that Washington will spend massively now and stick our grandkids with the bill.
What they told us
Some of the most ardent voices in support of this bill have claimed time and again that this $1.2 trillion bill is not just an important investment, but fiscally responsible because it is fully paid for in various ways that do not include tax increases.
The lead negotiators of the bill said this:
“It’s paid for. We do it without raising taxes.” — Republican Senator Rob Portman of Ohio.
“So, we’ve taken a lot of time to ensure that we were paying for this package, and doing so in a way that was responsible and that was defensible,” — Democratic Senator Kyrsten Sinema of Arizona
Other leading voices reiterated the same promise:
“This is paid for. Our infrastructure bill is all paid for.” — Democratic Senator Joe Manchin of West Virginia said on Aug. 1.
“This is a bill which is paid for.” — Republican Senator Mitt Romney of Utah
Surely, if they said it, it must be true, right? Wrong.
Various analyses poked holes in the pay-fors and suggested that unused COVID-relief funds just would not be enough to cover the costs of the hundreds of billions of dollars in new spending. They were right.
The nonpartisan Congressional Budget Office (CBO) released its analysis of the $1.2 trillion infrastructure package and exposed the lie that this bill is paid for.
The CBO found that it would add $256 billion to projected deficits over the next decade. While the bill would decrease direct spending by $110 billion and increase revenues by $50 billion, it would also increase discretionary spending by $415 billion.
The math is simple, but how lawmakers arrived at a fully paid-for conclusion is through a bag of tricks. As the Wall Street Journal’s Editorial Board explained:
A couple of examples highlight the fiscal flim-flam. The bipartisan group of Senators tried to claim as “savings” some $53 billion in unemployment benefits that states won’t spend as anticipated. But CBO notes that the “lower outlays” had already been counted in its baseline and so don’t now amount to a “reduction in spending.”
CBO also didn’t credit $106 billion in supposedly unused Covid paid- and family-leave tax credits, and only a portion of what Senators claimed were $67 billion in savings from a Covid employer tax credit. Of the $210 billion of “unused” Covid funds Senators ultimately claimed they were “repurposing,” CBO gave them credit for about $21 billion.
CBO also didn’t buy the claim that spending in the bill will yield a magical return of 33% on investment, producing faster economic growth and additional tax revenue of $53 billion. Some infrastructure spending on particular projects might improve economic productivity. But $66 billion more for Amtrak and related rail projects? You’ve got to be kidding.
Debt isn’t the only concern
It will fuel more inflation, give Washington greater control over our economy, and enact some of the far-left Green New Deal.
An interesting WSJ op-ed highlights that this spending bill will make inflation worse by raising the prices of goods and increasing compliance costs and new regulations.
Meanwhile, WSJ’s Kimberley Strassel explained that “The bill is better viewed as step one of President Biden’s Green New Deal, giving his appointees and federal bureaucrats tens of billions with which to remake the economy… The bill similarly gives the feds unprecedented and centralized control over chunks of the economy.”
This $1.2 trillion bill is out-of-control, irresponsible spending, and this is just the start.