August 26, 2021

Bipartisan Infrastructure Bill Less than 40 Percent Paid For

The Senate recently passed the bipartisan Infrastructure Investment and Jobs Act, which would provide new federal investment for infrastructure over the next five years. The legislation also includes various provisions that lawmakers claim will fully pay for the additional spending, but a cost estimate from the Congressional Budget Office (CBO) indicates that those pay-fors will not offset the full cost of the legislation, which will therefore add to the federal debt in the coming years.

What Are the Budgetary Offsets Proposed in the Infrastructure Package?

CBO expects the bipartisan package to increase discretionary spending by $415 billion and mandatory spending by $10 billion. Offsetting provisions are projected to reduce outlays by about $120 billion and increase revenues by about $50 billion.

CBO estimates that the bipartisan infrastructure plan will provide $172 billion in offsets


The largest offsets in the package are:

In total, CBO expects those provisions to provide $172 billion to offset the cost of the legislation.

The bipartisan infrastructure package will offset two-fifths of its costs, according to CBO


According to CBO, the legislation’s pay-fors will offset only about 40 percent of the total cost; the legislation will therefore increase federal deficits by $256 billion over the next decade.

CBO projects that the bipartisan infrastructure plan will add $256 billion to federal deficits over the next decade


CBO did not estimate the potential macroeconomic effects of the legislation, which lawmakers claim would include productivity and tax revenue increases to help pay for the additional spending. Lawmakers also claimed savings from lower-than-expected spending for unemployment compensation and other COVID-related relief that CBO had already accounted for in its baseline.


Despite lawmakers’ claims, analysts anticipate that a large portion of the spending called for by the infrastructure package will need to be deficit financed. While it is commendable that lawmakers at least partially offset the new spending in the Senate version of the bill, it’s clear that the legislation at this stage falls short of being fully fiscally responsible. As the bill moves through the legislative process, lawmakers should look for ways to strengthen it by engaging on additional options to offset new spending and by fully paying for their priorities.

Related: What Economic Effects Can We Expect from the Bipartisan Infrastructure Bill?

Image credit: Photo by Mark Wilson / Getty Images


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