What's in the Bipartisan Infrastructure Investment and Jobs Act?
UPDATE 8/5: We have published a new summary of the bipartisan Infrastructure Investment and Jobs Act based on a recently published score from the Congressional Budget Office.
UPDATE 8/4: We have updated this summary to include revised costs and estimates of proposed offsets based on a factsheet from the bipartisan group, estimates from the Joint Committee on Taxation, and legislative language.
Recently, a bipartisan group of senators announced they reached a deal on an infrastructure spending package – the Bipartisan Infrastructure Investment and Jobs Act – that would add nearly $550 billion in new spending, including $284 billion for transportation infrastructure and $264 billion for other infrastructure areas such as power, broadband, and water. These figures come on top of extensions of current highway and other funding.
The framework claims $491 billion of offsets, and an additional $56 billion of savings from dynamic scoring, to pay for the bill. However, many of these pay-fors count savings that have already occurred. We estimate actual offsets will total roughly $200 billion before dynamic scoring.
The table below includes a top-level summary of spending increases in the bill, which are broadly similar to the original agreement but removed $20 billion for an infrastructure financing authority. The new agreement also includes $10 billion less in funding for public transit.
Proposed Spending in the Bipartisan Infrastructure Investment and Jobs Act
|Roads, bridges, and major projects||$110 billion|
|Passenger and freight rail||$66 billion|
|Public transit||$39 billion|
|Ports and waterways||$17 billion|
|Electric vehicles||$15 billion|
|Road safety||$11 billion|
|Reconnecting communities||$1 billion|
|Subtotal, Transportation Infrastructure||$284 billion|
|Power infrastructure||$73 billion|
|Water infrastructure (including lead pipes)||$55 billion|
|Resiliency and western water storage||$50 billion|
|Environmental remediation||$21 billion|
|Subtotal, Other Core Infrastructure||$264 billion|
|Total, Spending Provisions||$548 billion|
Reported offsets would come from repurposing COVID relief funds, lowering prescription drug costs, reducing the tax gap through cryptocurrency information reporting, selling spectrum frequencies, imposing or extending various fees, and other sources. As we argued in a recent press release, these offsets are a good start, but more payfors are needed.
Lawmakers claim these policies will save $491 billion and that the legislation will boost economic growth enough to generate an additional $56 billion of savings. This $547 billion of reported offsets would essentially cover the $550 billion of new spending. However, we believe actual savings would be closer to $200 billion before dynamic scoring, only covering about half of the new spending overall.
Proposed Offsets in the Bipartisan Infrastructure Investment and Jobs Act
|Policy||Claimed Savings||Actual Savings|
|Repurpose COVID funds||$210 billion||$40 - $50 billion*|
|Reduce Unemployment Insurance fraud||provision removed||provision removed|
|Delay Medicare Part D rebate rule||$51 billion||$51 billion|
|Apply unused Unemployment Insurance funds||$53 billion||$0 billion|
|Sell spectrum and apply proceeds from previous sales||$87 billion||$20 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||$9 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||gimmick|
|Subtotal||$491 billion||~$200 billion|
|Dynamic scoring||$56 billion||unknown|
|Total, Claimed Offsets||$547 billion||$200 - $250 billion|
*The legislation rescinds or reduces budget authority by $50 billion. However, not all of these reductions would result in outlay savings.
Source: Bipartisan Infrastructure Investment and Jobs Act summary, Joint Committee on Taxation, legislative text.
Some of the reported offsets come from counting savings that have already occurred. This includes $53 billion from expanded unemployment benefits costing less than originally scored, $67 billion from counting sales of digital spectrum that have already occurred, and roughly $155 billion out of the $205 billion of claimed savings from repurposing unspent COVID funds. In addition, the plan relies on pension smoothing, a policy universally maligned as a budget gimmick.
Though the bill also includes a number of real and important offsets, we believe they will ultimately raise or save a total of $200 billion over a decade. Depending on dynamic feedback effects, we believe the total savings will cover $200 to $250 billion.
Additional offsets should be added to prevent the Bipartisan Infrastructure Investment and Jobs Act from increasing the debt.