Pt. 1 of infrastructure is out of the Senate. Get it finalized, and go onto the bigger work

Well, we've finally got the first part of the infrastructure package out of the Senate.

A key part of President Joe Biden’s economic agenda, the agreement calls for $550 billion in new federal spending on top of about $450 billion in previously approved funds. The bill is an ambitious plan to upgrade and modernize the nation’s roads, bridges, water systems, broadband access, and electric grid, starting in 2022.

The bill calls for investing $110 billion for roads and bridges, $66 billion for rail, $55 billion for water and wastewater infrastructure, and $39 billion for public transit, in addition to billions for airports, ports, and the nation’s first network of electric vehicle charging stations.

It looks like part of the new investments will be paid for by raising fees on some types of transactions, as well as reallocating some funds in previous COVID relief programs that won’t be used up.

Lawmakers spent weeks negotiating how to pay for the bill after Biden opposed raising the gas tax or imposing electric vehicle fees and Republicans ruled out raising taxes on corporations or increasing the Internal Revenue Service’s enforcement capacity. In addition to the $28 billion expected to be raised by the new crypto reporting requirements, the bill will be paid for with about $210 billion in unspent Covid-19 aid and $53 billion in federal pandemic unemployment assistance that some states returned.

It’s a start, and according to a White House “fact sheet” that came out last week, it would give a sizable amount of extra money to help Wisconsin pay for their projects. (for the record, I think these numbers are the total amount sent to Wisconsin, not the added amount that comes from this bill).

Here's what the federal infrastructure plan could bring Wisconsin, according to a @WhiteHouse fact sheet: pic.twitter.com/MzWuRWGaWk

— UpNorthNews (@UpNorthNewsWI) August 9, 2021

All of that sounds pretty good to me. But it apparently wasn’t so good for Wisconsin’s senior US Senator.

.@SenRonJohnson on his vote against the infrastructure bill: pic.twitter.com/e3kzeCxDGg

— Jessie Opoien (@jessieopie) August 10, 2021

That tweet really hasn't aged well, given that we were reminded today that RoJo personally put a massive giveaway put into the 2017 tax bill that gave $215 million in deductions to some of Johnson's biggest donors. Without any regard for what that was going to do to the deficit.

And in general, it's amazing to me that Republicans like Ron Johnson have justified the Tax Scam and other tax cuts by claiming they will boost the economy by so much that they will “pay for themselves” (they almost never do). Yet when actual government spending and jobs are asked for, somehow there’s no added economic effect whatsoever, and we can’t add to the deficit.

I bring this up because the Congressional Budget Office didn’t account for these extra jobs and the related revenues when it scored the infrastructure bill, and claimed it would add to the already-large US budget deficit. I mean, someone’s gotta do work on these new projects, right? There are at least going to be some people getting more money from these added services and increased financial stability, won't they?

As long as the extra government spending doesn’t raise prices or interest rates by so much that it offsets those boosts in activity by hurting other places (it hasn’t so far), why should anyone care that much? Even if the deficit will go up, the effect that this bill will have on it will be tiny – barely $25 billion a year.

“Even though the impact on the deficit will be larger than we initially anticipated, the economic impact will still be modest because that spending will take a few years to ramp up and will in any case be spread over the rest of the decade,” Michael Pearce, senior U.S. economist at Capital Economics, wrote in a note to clients on Friday.

Asked about Republican opposition to the bill based on the CBO’s report, Sen. Bill Cassidy (R, La.), one of the bill’s negotiators, told CNN Sunday that most Republicans supported former President Donald Trump’s $1.5 trillion infrastructure bill, “and only 5% of it was paid for.”

And this one is well more than 5% paid for.

So now this bill goes over to the House, and I think they should pass it quickly. I understand when Speaker Pelosi and House progressives say there must be more than just this first bill when it comes to added investments. But that can be done with the regular budget debate next month. The threat of the debt and a government shutdown is going to focus a lot of people on completing the job at that time.

The key is getting this first step of “hard” infrastructure into law, and keep our foot on the gas when it comes to the economic recovery. After that, we can get going on the hard work of deciding how to right-size our economy and reorder our priorities for the 2020s.