The Congressional Budget Office projected on Thursday that the senate’s 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 Congress’s 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 nation’s debt. The findings could give pause to some Republicans who are loathe to raise taxes or add to deficits but have agreed to support the legislation. However the bill is likely to still 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 have projected could add hundreds of millions of dollars to the nation’s deficits. 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 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. 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 savings.
The Committee for a Responsible Federal Budget 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 that those savings had already occurred, so they should not count as an offset for the cost of the infrastructure bill, which it estimates would have a net cost of about $350 billion.
Figuring out how to finance the legislation had been 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 warned that their legislation contained financing mechanisms that wouldn’t be counted in the formal score, in an attempt to assuage concerns from Republicans.
Republicans have been expressing growing concerns about the cost of the Biden administration’s economic agenda, arguing that the flood of new spending would cause inflation and inflict grave economic damage. They have also declared they will not support a move to raise the statutory debt limit, which the Treasury Department says technically expired at the beginning of this month.
The C.B.O. said on Thursday, in a report that was unrelated to the infrastructure legislation, that it projected the federal budget deficit will hit $3 trillion this year and average $1.2 trillion per year through 2031.