Thursday, August 5, 2021

CBO says the "hard" infrastructure will add to the deficit? So what!

Thursday afternoon, the Congressional Budget Office came back with their score on the "bipartisan" infrastructure package that is scheduled to debated and voted on in the US Senate in the coming days.

The Congressional Budget Office estimates that over the 2021-2031 period, enacting Senate Amendment 2137 to H.R. 3684 would decrease direct spending by $110 billion, increase revenues by $50 billion, and increase discretionary spending by $415 billion. On net, the legislation would add $256 billion to projected deficits over that period.

The legislation would provide $382.9 billion in contract authority (a form of mandatory budget authority) for a variety of transportation programs over the 2022-2026 period. Under the rules governing baseline projections that are specified in the Balanced Budget and Emergency Deficit Control Act of 1985, this estimate incorporates an assumption that the contract authority of about $79.9 billion that would be provided in 2026 (the final year of the authorization) would also be provided in each subsequent year. CBO therefore estimates that an additional $399.6 billion in contract authority would be available over the 2027-2031 period, for a total of $782.5 billion over the 10-year period. Over the 2022-2031 period, that total would be $196.5 billion more that the amount in CBO’s July 2021 baseline.

So basically a jump in the deficit of $25 billion a year - or less than 1% of the $3 trillion deficit that we are slated to have in the 2021 Fiscal Year. THE HORROR!

By the way, that extra authority for highway projects starting in 2026 means the plans to spend that amount are set aside, but the money needs to be formally allowed to be spent. Likely because this is basically folded into a new highway/transit bill that sets the rules and base funding levels for the next 5 years. But as you can see, even if that $79.9 billion a year is continued, that's not even $20 billion a year of extra authorized highway spending.

When calculating the deficit numbers, CBO neglected to look into the effects of the main benefit of the infrastructure package - more jobs
Enacting this legislation would create macroeconomic effects that in turn would cause budgetary feedback. CBO has not estimated those effects or their budgetary consequences for this legislation.
So the CBO says the deficit will grow due to more spending, but they're not accounting for the deficit reduction that will come from more/better jobs and less poverty. Seems like quite a big oversight, isn't it?

You can bet dishonest GOPs who added nearly $2 trillion in deficits for their GOP Tax Scam will be crying crocodile tears about how we can't afford $256 billion for actual work that improves our economy. Well, there is a best option for improving our economy and reducing the deficit at the same time - reverse the Tax Scam's giveaways to the rich and corporate.

When GOPs refuse to do that, laugh them out of the Capitol. Then pass the small infrastructure bill anyway, and get to work on the real change in our priorities with the bigger bill.

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