COVID-19 Doesn’t Justify Massive, Debt-Financed Infrastructure Spending
For Immediate Release
House Democrats yesterday released a sizeable highway and infrastructure bill, just as President Trump is also reportedly considering his own infrastructure package meant to help stimulate economic growth. Some infrastructure spending could make sense as part of the COVID-19 economic recovery, and a new highway bill is needed. But any stimulus package should be narrowly tailored to the current crisis, while any large-scale highway package should include adequate funding to cover its costs. The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
"The federal government has already borrowed trillions of dollars to combat the current economic and health crisis, and we’ll likely need to borrow more. But politicians must not use this global tragedy as an excuse to skip out on paying for the basic needs of the country.
"The nation’s borrowing capacity is not infinite and should be reserved for the measures that will most help to stabilize the economy and deal directly with the hardships associated with the pandemic. That includes strengthening the public health response, assisting families and businesses impacted by the pandemic-related disruptions, aiding states and localities temporarily strapped for revenue, and supporting a strong economic recovery. It doesn’t, however, include borrowing for a highway bill that lawmakers couldn’t figure out how to pay for, extending special-interest tax breaks that were slated to expire, or borrowing for massive new infrastructure projects that have nothing to do with the current crisis.
"There are plenty of options available to fund the highway bill and other infrastructure, including increasing the gas tax, adopting a vehicle miles traveled fee, enacting a carbon tax, or cutting spending elsewhere.
"Today’s low interest rates give policymakers the opportunity to spend now and offset the costs over time. But without offsets, low-cost debt will be rolled over as interest rates rise. As the Congressional Budget Office and others have found, borrowing for these costs would undermine much or all of the long-term economic benefit of infrastructure spending.
"Massive amounts of borrowing will be needed to combat the current pandemic and economic crisis. That’s not an excuse for borrowing to cover ordinary spending. Lawmakers should not use this national emergency to take the easy route when it comes to shoring up our nation’s infrastructure."
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