The Economy

CBO Says Infrastructure Bill Would Add to Deficit

A CBO analysis estimating a $256 billion hit to the deficit contradicts supporters' claims that the new spending in the bill would pay for itself.
Matthew HellerAugust 9, 2021

The Congressional Budget Office has cast doubt on the claim of supporters of the $1 trillion infrastructure bill that the measure would pay for itself.

In an analysis released on Thursday, the CBO estimated that over the next 10 years, the bill would decrease direct spending by $110 billion, increase revenues by $50 billion, and increase discretionary spending by $415 billion.

“On net, the legislation would add $256 billion to projected deficits over that period,” it said.

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Lead negotiators on the bill disagreed, arguing that the $550 billion in new spending would be financed in a way so as not to incur deficit-spending.

“The new spending under the bill is offset through a combination of new revenue and savings, some of which is reflected in the formal CBO score and some of which is reflected in other savings and additional revenue identified in estimates, as CBO is limited in what it can include in its formal score,” said Sens. Rob Portman. Ohio Republican, and Kyrsten Sinema, Democrat from Arizona.

But according to The Hill, the CBO score supports conservative Republicans who criticized some of the bill’s methods to fund programs as budget gimmicks.

“As much as half of the pay-fors are just fake,” said Sen. Mike Lee, a Republican from Utah.

As The Wall Street Journal reports, “Figuring out how to pay for the bill was central to the weeks of difficult negotiations between the bipartisan group of senators and the White House. Because the White House opposed raising the gas tax and Republicans ruled out raising taxes on corporations, lawmakers searched long and hard for acceptable measures to raise revenue and find savings for the bill.”

Among other things, lawmakers said they would save roughly $210 billion by repurposing COVID-19 aid, but the CBO estimated that the resulting net reduction in outlays would total only $13.8 billion.

Several Republican swing votes have said they wouldn’t have a problem with a cost analysis showing that the new spending was not fully paid for. Sen. John Cornyn of Texas predicted the bill would still pass the Senate but “I think we need to work harder to try and come up with credible pay-fors.”