CBO Estimates Infrastructure Bill Would Add $256 Billion to Deficits - WSJ

S E E D E D   C O N T E N T

WASHINGTON—Congress's nonpartisan scorekeeper found that the roughly $1 trillion infrastructure bill would widen the federal budget deficit by $256 billion over 10 years, countering negotiators' claims that the price tag would be covered by new revenue and saving measures.

The score was released as the Senate advances amendments for the bill this week and didn't create any immediate obstacles to final passage of President Biden's economic agenda.

Members of the bipartisan group that negotiated the infrastructure bill, which would provide roughly $550 billion in spending above expected federal levels, had said they expected the analysis from the Congressional Budget Office to differ from their own. They have said that some of the measures they are using to cover the cost of the bill, including repurposing Covid-19 aid, wouldn't count the same way toward CBO's official estimate.

Sens. Rob Portman (R., Ohio) and Kyrsten Sinema (D., Ariz.), two of the lead negotiators for the package, released a statement Thursday calling on lawmakers to support the legislation.

"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," the pair said.

Whether Republicans find that argument convincing will influence the level of support the bill ultimately receives. Seventeen Republicans joined all 50 Democrats  on the first procedural vote  on the bill last week. While the support of that group of Republicans appears solid despite the CBO score, additional Republicans have indicated that the official score would inform whether they ultimately support the bill.

Some Republicans attacked the legislation after the release of the CBO score.

“The massive infrastructure bill is NOT, as its authors claim, ‘fully paid for,’” said Sen. Marco Rubio (R., Fla.), who has previously opposed procedural motions on the bill, in a tweet.

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.

They ultimately settled on repurposed coronavirus aid, along with delaying a Trump-era Medicare rebate rule and a series of accounting maneuvers to argue that the bill wouldn’t add to the deficit.

Mr. Portman on Thursday said he agreed on the need to  clarify a provision  that seeks to raise money through tougher tax enforcement of cryptocurrency transactions. The cryptocurrency industry says the provision is overly broad and could discourage innovation in the fast-growing sector.

One of the biggest discrepancies between the CBO score and lawmakers’ estimates of the cost lies in the Covid-19 aid. Lawmakers had said they would save roughly $210 billion by repurposing those funds, while the CBO score gives lawmakers credit for reducing outlays by roughly $13 billion over 10 years with the cuts.

Another shortfall stems from the estimated economic growth the package could spur. Lawmakers said the bill could generate $56 billion in revenue based on new economic growth it generates. CBO didn’t estimate the macroeconomic impact of the bill in the cost estimate released Thursday.

On the spending side, the bill provides a variety of infrastructure goals with generous supplements to their typical federal support. Those include $110 billion to roads and bridges, nearly $40 billion for transit and $55 billion for water infrastructure. The bill also authorizes hundreds of billions of spending on a variety of existing infrastructure programs, bringing the total cost to roughly $1 trillion.

Marc Goldwein, senior vice president and senior policy director for the Committee for a Responsible Federal Budget, said the CBO score doesn’t account for the impact that authorized future spending could have on the deficit, too. He estimated the bill will ultimately increase deficits by $350 billion over 10 years.

The CBO projected last month that the federal budget deficit for this fiscal year  will reach about $3 trillion . That would be nearly $130 billion less than the 2020 deficit but triple the 2019 shortfall.

The release of the CBO score comes as lawmakers are haggling over the schedule for the coming days, with some senators hoping to begin a weekslong recess originally scheduled to start next week. Senate Majority Leader Chuck Schumer (D., N.Y.) is also pushing for Democrats to approve the budget outline of a $3.5 trillion antipoverty and climate package before the break.

“Our goal is to pass both a bipartisan infrastructure bill and a budget resolution during this work period. And we will stay here to get both done,” Mr. Schumer said Thursday.

Lawmakers are expected to hold additional amendment votes on the bill before moving to final passage, with the exact timeline still up in the air. The Senate could vote on final passage as soon as Thursday night, if senators agree to waive certain procedural steps, though lawmakers said the vote could still slip into the weekend. Many Republican members are expected to travel to Wyoming on Friday for the funeral of the late Sen. Mike Enzi (R., Wyo.)

“I think people are seeing this is the ticket to getting out of here on a timely basis,” said Sen. John Cornyn (R., Texas) on the possibility of accelerating the vote process.

Moving forward the $3.5 trillion proposal will be key to securing Democratic support for the infrastructure bill in the House. House Speaker  Nancy Pelosi  (D., Calif.) has said she only supports giving the infrastructure agreement a vote after the Senate passes the broader spending plan, possibly delaying House consideration of the bill for weeks.