The plan would directly add $256 billion to the deficit over the next 10 years, the Congressional Budget Office found, although budget experts say that probably understates the cost of the package overall. That is because the plan would also approved roughly $90 billion of spending in new “contract authority” over five years, funding that would be authorized but would not be spent until appropriators decide where it goes.
Overall, the net impact of the bill on the deficit would be approximately $350 billion over 10 years, said Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, a nonpartisan group, citing the CBO score.
“The CBO score is hard to parse, but the upshot is there’s about $350 billion of net deficits from this bill,” Goldwein said.
The report came as lawmakers were still racing toward swift passage of the bill.
The bill would devote hundreds of billions of dollars to upgrading much of the nation’s infrastructure, from its roads and bridges to its electric grid and lead water pipes, among other public works projects.
Lawmakers involved in the deal have repeatedly insisted that the measure would be paid for with new sources of revenue and other budget changes.
A White House official, speaking on the condition of anonymity to reflect internal dynamics, said there was agreement within the bipartisan group to not judge the cost of the measure by the CBO score.
Congressional Republicans objected to tax hikes on the rich or corporations, while also eventually ruling out other measures proposed by the White House, such as stepped-up IRS enforcement on tax cheats. The White House, meanwhile, ruled out higher taxes on Americans earning under $400,000, including a proposed gas tax.
Negotiators settled on measures that experts say partially obscure the true budgetary impact of the plan. For instance, negotiators previously said their measure would raise $65 billion from the proceeds of selling the spectrum used by telecommunication companies — even though that sale occurred in February.
“The discrepancy is that the [negotiators] are taking credit for things that happened in the past as if they are new savings,” Goldwein said earlier this week. “CBO scores the effect of your legislation on the budget. [The negotiators] are taking credit for things that will have no effect on things on the budget, because they already occurred.”
Republicans who helped broker the deal, such as Sens. Rob Portman (R-Ohio) and Susan Collins (R-Maine), are expected to vote for the package despite the CBO score. But it is unclear how many other Republican senators would vote against the bill based on the CBO findings.
“A handful of Republicans have indicated that their support is contingent on the bill not adding to the deficit,” said Brian Riedl, a budget expert at the Manhattan Institute, a libertarian-leaning think tank, and a former Portman aide. “A several-hundred-billion-dollar shortfall could legitimately imperil that support.”
Riedl said increasing the deficit by about $100 billion would be “survivable” — but not even paying for half the bill could prove a much more serious political problem.
Earlier this week, the nonpartisan Joint Committee on Taxation — another congressional body that scores proposed tax changes — found that the bill’s tax measures would raise approximately $51 billion over 10 years.
The largest two new funding measures included about $28 billion from new information requirements for cryptocurrencies and $15 billion in fees on Superfund sites.
The federal deficit topped a record $3 trillion last year amid the surge of federal spending authorized to respond to the coronavirus pandemic. Interest rates have remained at historic lows, which makes federal borrowing cheap. Many economists believe infrastructure spending can help alleviate inflationary pressures by improving the nation’s productivity. But Republicans and tax experts warn that long-run U.S. deficits could spiral out of control, particularly if the Federal Reserve raises interest rates and dramatically increases the cost of federal borrowing.