The White House and Congress have been looking at a multitude of measures that would pay for the infrastructure proposal.
But while lawmakers claim the bill pays for itself, the CBO score found it would instead add billions of dollars to the deficit over 10 years.
The bottom line is that the legislation would directly add roughly $350 billion to the deficit, when taking into account $90 billion of spending in new contract authority, said Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, a nonpartisan group that tracks federal spending.
The CBO brushed aside several major provisions that lawmakers said would help pay for the bill, such as repurposing certain unused Covid relief funds and using the savings generated by certain states terminating pandemic unemployment benefits early. The agency found these measures would provide roughly $22 billion in savings, rather than the roughly $263 billion claimed by lawmakers, Goldwein said.
Also, the report found that the Federal Communications Commission’s spectrum auctions would generate far less than the $87 billion originally claimed by lawmakers.
The CBO also said that the bill would raise about $50 billion by imposing new Superfund fees and changing the tax reporting requirements for cryptocurrencies, among other measures.
According to the bill text and the 57-page summary of the bill released earlier this month, lawmakers leaned heavily on repurposing unused Covid relief funds to pay for the legislation. The bill text lists savings from rescinding unobligated appropriations for the Economic Injury Disaster Loan program for small businesses and nonprofit groups, the Paycheck Protection Program, the Education Stabilization Fund and relief for airline workers, among others.
Another item in the bill text is $53 billion that stems in part from states opting to terminate the pandemic unemployment benefits early to push the jobless to return to work. Some 26 states announced that they would stop at least one of the federal unemployment programs before they are set to end in early September — though Indiana and Maryland have had to continue the payments after losing court battles. Also, the Congressional Budget Office reduced its forecast for the unemployment rate because of the improving economy.
More savings would come from delaying a controversial Trump administration rule that would radically change how drugs are priced and paid for in Medicare and Medicaid until 2026, at the earliest. The measure would effectively ban drug makers from providing rebates to pharmacy benefit managers and insurers. Instead, drug companies would be encouraged to pass the discounts directly to patients at the pharmacy counter. It is currently expected to go into effect in 2023. The summary lists the savings as $49 billion and the CBO report as nearly $51 billion.
Also, the infrastructure proposal relies on generating $56 billion in economic growth resulting from a 33% return on investment on the long-term projects, according to the summary.
Biden said in a statement that the bill won’t raise taxes on people making less than $400,000 a year and does not include a gas tax increase or fee on electric vehicles. He initially called for raising taxes on corporations to fund the infrastructure investments — but that proposal did not make it into the latest package after strong opposition from Republicans.