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Congress builds infrastructure on financial sand

Critics of massive new spending plans say they are “paid for” through gimmicks

Rob Portman speaks at a news conference with other senators who helped negotiate a bipartisan infrastructure deal. Associated Press/Photo by J. Scott Applewhite

Congress builds infrastructure on financial sand

After months of heated debates and late-night negotiations, the bipartisan infrastructure deal finally passed a Senate test vote of 67-32 on Wednesday night. The bill moves to a lengthy debate process next, which allows senators to propose amendments. The Congressional Budget Office (CBO) will assess the most recent funding proposals to determine whether they adequately pay for the deal.

The $1.2 trillion proposal provides $550 billion in new spending for physical road infrastructure improvements, public transportation, clean energy efforts, expanded broadband access, and more. An infrastructure agreement of this size has not passed since 2015—when Joe Biden was the vice president—but Biden wants more: an additional $3.5 trillion infrastructure plan that Republicans are united against and that carries a price tag so high some Democrats may oppose it. The plans to pay for the spending bill are also coming under scrutiny.

The proposal that passed the Senate test vote includes a five-year funding package, the largest section of which—$110 billion—is appropriated for new roads, bridges, and other major projects. A group of 10 negotiators from both parties led talks on the plan for months. GOP lead negotiator Sen. Rob Portman, R-Ohio, assured the country that the deal is “more than paid for”—an important condition for many legislators and economists who worry about a combination of a struggling economy and piling debt.

But some economists say the proposed ways to pay for the spending are gimmicks. Negotiators plan to pull roughly $205 billion from unused and repurposed COVID-19 relief funds. The bipartisan deal will also delay Trump-era Medicare rebates and collect $53 billion from unused unemployment insurance aid from states. The second-largest funding element for the deal, negotiators said, stems from an expected $56 billion in economic growth.

“Those extraneous COVID relief funds were not going to be spent anyway," said Brian Riedl, a senior fellow at the Manhattan Institute. “Rescinding them does not reduce spending relative to what was already going to happen.” Revenues from economic growth projections are also questionable. The process for funding a budget through expected growth is called dynamic scoring, something Democrats typically decry as a Republican tactic to project higher revenues from tax cuts. Riedl says the current plan will not provide the growth the government expects.

Marc Goldwein, senior vice president and policy fellow at the Committee for a Responsible Federal Budget, criticized lawmakers for “cherry-picking” savings and taking credit for previous offsets. For example, the $53 billion from unemployment benefits is not saved; the programs simply cost less than expected and states closed them early. At the same time, Medicaid expansions cost more than originally anticipated. “They are taking credit for something that already happened and pretending it’s a savings they can use for the future,” Goldwein said.

Treasury Secretary Janet Yellen raised another complication on Monday when she reminded Congress that the country is approaching the debt ceiling of $3 trillion. The country’s borrowing authority expires on July 31, forcing Congress to either raise the ceiling, cut spending, or increase taxes. Riedl said the politically unpopular move is to cut spending: “For pure fiscal responsibility and sustainability, they need to rein in the spending trend. We’re likely to get broader tax increases because all this debt is unsustainable.”

Lead Democratic negotiator Sen. Kyrsten Sinema, D-Ariz., meanwhile, said she does not support the additional $3.5 trillion bill and will work to amend it. To pass the bill via the budget reconciliation process, Democrats need 51 votes—their entire caucus plus a tie-breaking vote by Vice President Kamala Harris.

Goldwein sees more politics than feasible policies in current infrastructure plans. Biden promised to fund the reconciliation bill by raising taxes on corporations and those who earn over $400,000 per year. Goldwein pointed out taxes on corporations affect workers when wages take a hit. He also doubts higher taxes for select populations can resolve the debt ceiling: “There just isn’t enough money from high earners alone to tax them to fix our fiscal situation and fund all these new benefits. At some point, we need to get serious about reducing or slowing spending.”

Carolina Lumetta

Carolina is a WORLD reporter and a graduate of the World Journalism Institute and Wheaton College. She resides in Washington, D.C.


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