Infrastructure Plan Will Add $400 Billion to the Deficit, CBO Finds

The Congressional Budget Office (CBO) just published its score of the recently unveiled bipartisan Infrastructure Investment and Jobs Act. Though its estimates are complicated to decipher, they show the legislation would directly add over $340 billion to the deficit and cost nearly $400 billion when including indirect effects from a higher transportation spending baseline; neither figure includes interest.

As CBO explains, the direct spending, appropriations, and revenue provisions in the legislation would have a net cost of $256 billion. On top of this, the legislation would increase highway and transit "contract authority" by roughly $90 billion over five years and set the stage for a $196 billon increase over a decade.

Taken together, CBO shows the legislation would authorize $566 billion of spending and tax breaks, which translates to $517 billion of costs over the next decade. Offsetting revenue and spending provisions would save about $206 billion in budget authority and generate $173 billion of actual savings.

On net, the legislation would cost over $340 billion based on its direct effects. This is roughly in line with our prior estimate of the bill.

Provision Budget Authority Deficit Impact
Surface transportation spending (CA) $71 billion $69 billion*
Transit spending (CA) $19 billion $19 billion*
Additional transportation spending $184 billion $162 billion
Energy and water spending $89 billion $76 billion
Broadband spending (NTIA portion) $48 billion $48 billion
Other discretionary spending $139 billion $130 billion
Other mandatory spending and tax breaks $16 billion $14 billion
Subtotal, Gross Costs $566 billion $517 billion
Repurpose COVID funds -$43 billion -$22 billion
Delay Medicare Part D rebate rule -$51 billion -$51 billion
Apply unused Unemployment Insurance funds $0 $0
Sell spectrum and apply proceeds from previous sales -$10 billion -$10 billion
Require information reporting for cryptocurrency transactions -$28 billion -$28 billion
Extend fees on Government-Sponsored Enterprises -$21 billion -$21 billion
Reinstate Superfund fees -$14 billion -$14 billion
Extend mandatory sequester -$21 billion -$9 billion
Extend customs user fees -$6 billion -$6 billion
Sell Strategic Petroleum Reserve oil -$6 billion -$6 billion
Reduce spending on discarded medications -$3 billion -$3 billion
Apply pension smoothing -$3 billion -$3 billion
Subtotal, Offsets -$206 billion -$173 billion
Subtotal, Direct Net Costs $360 billion $343 billion
Increased Transportation Spending Baseline (CA) $106 billion $55 billion*
Total Net Cost $466 billion $398 billion

*CRFB outlay estimate based on CBO contract authority.

CA = Contract Authority

Figures may not sum due to rounding.

Source: Congressional Budget Office and Joint Committee on Taxation.

The total cost of the legislation would be somewhat higher – roughly $400 billion – due to indirect baseline effects. The legislation effectively includes a five-year highway bill that increases spending above current levels. CBO assumes that spending will persist in years six and beyond, resulting in roughly $55 billion of additional spending by our estimates.

The Committee for a Responsible Federal Budget will publish additional analysis of this legislation in the coming days.