As Senate consideration of the trillion-dollar infrastructure plan continues to unfold, policy wonks finally have bill text to inspect — lots of it. The newly-released 2,702 pages of legislative text adds significant detail especially about the plan’s supposed “offsets,” which supporters have said in the past make the plan “fully paid for.” But that text and new analyses of the legislation reveal it is far from paid for, despite the continued claims of bill supporters.
The first revelation is that one multi-billion-dollar offset touted as recently as last week doesn’t even exist. There is no policy in the bill that seeks improved recovery of fraudulent pandemic unemployment benefit payments, which some have estimated could total an incredible $400 billion or more. Last week, news accounts suggested as much as $50 billion in savings might be found by better recovery of those misspent funds. But as the nonpartisan Committee for a Responsible Federal Budget (CRFB) says tersely of that would-be policy, “provision removed.”
The second revelation is that $53 billion in supposed “savings” from states ending federal pandemic unemployment benefits sooner than expected is linked only to “findings” language buried on page 2441 of the mammoth bill. Findings are typically bland statements of fact without legislative effect, such as “Electronic mail has become an extremely important and popular means of communication.” The similarly pedantic passage in the infrastructure bill suggests the Congressional Budget Office (CBO) “reduced its projected cost of the extension of expanded unemployment compensation as enacted in the American Rescue Plan Act of 2021” by a total of $53 billion — due primarily to states opting out of paying federal benefits. The implication is that money is somehow available to cover new infrastructure costs.
Except it isn’t. The supposed savings “already occurred,” as CRFB describes. Even The Washington Post calls supporters’ accounting “fuzzy math.” And the spending in question was all added to the deficit in the first place. It’s impossible for Congress to authorize increased deficit spending, take back some of that spending, and then suggest the “savings” can pay for something else without increasing the deficit. As then-Budget Committee Chairman (and subsequently House Speaker and current AEI Fellow) Paul Ryan once suggested, you might as well plan to cover the moon in yogurt and then claim large “savings” from deciding not to do that.
But there’s an even more objective flaw in supporters’
argument that lower-than-expected recent spending can pay for more infrastructure
projects in the future: the far-higher-than-expected spending on the very same
unemployment benefits since the start of the pandemic.
Congress has passed three major laws creating and subsequently extending pandemic unemployment benefits: the March 2020 CARES Act, which CBO projected would provide $268 billion in benefits; the December 2020 Consolidated Appropriations Act, which was expected to add another $119 billion; and the March 2021 American Rescue Plan, which was estimated to add yet another $205 billion. Take $53 billion off the last estimate, as the findings of the infrastructure bill suggest, and CBO has projected a total of almost $540 billion in spending on federal unemployment benefits and associated costs since the pandemic started.
Meanwhile, the latest Department of Labor tally of actual spending on those federal benefits through July 31, 2021 (which is thus missing a month of spending ahead) shows almost $630 billion has been spent on these temporary federal programs. That’s almost $90 billion more than CBO projected in its three estimates. That means that while costs may be less than expected this year, they were far greater than expected last year. Did any of those past cost overruns have to be paid for? Of course not — they were just added to the deficit.
That bigger picture shows how short-term “savings”
infrastructure bill supporters claim from states rejecting federal unemployment
benefits are actually swamped by far larger cost overruns involving the same
benefits last year. In effect, there’s no consequence when total pandemic spending
outruns projections, but if it ever temporarily falls short of projections, it
can be party time with the supposed “savings.”
These missing policies and outright gimmicks are significant reasons why less than half of the bill’s overall costs are now offset, according to CRFB. As their latest review notes, offsets are now, at best, running at $250 billion — compared to $540 billion in total new spending in the legislation.
The post The incredible shrinking infrastructure pay-fors appeared first on American Enterprise Institute – AEI.