Infrastructure investment is great when it’s paid for. This bipartisan infrastructure package’s pay-fors are either completely phony or don’t quite cut the mustard. Thread:
1. CLAIM: $205 billion from repurposing unused COVID relief funds. FACT: We should be repurposing COVID relief funds, but reshuffling money we borrowed in the first place doesn’t count as a pay-for.
2. CLAIM: Funding from recouping fraudulent enhanced federal unemployment payments.
FACT: Just like the “tax-gap,” estimates for how much fraudulent UI was paid and how much can be recouped is conjecture.
Repurposing money the federal government previously wasted doesn’t count.
3. CLAIM: $49 billion in savings from delaying the Medicare Part D rebate rule.
FACT: Raising drug prices on seniors is not a pay-for, it’s wrong.
4. CLAIM: $53 billion from states returning unused federal enhanced unemployment benefits.
FACT: Repurposing unused COVID relief funds we borrowed in the first place is not a real pay-for.
5. CLAIM: $56 billion in economic growth I’m glad CBO is using dynamic scoring to take into account economic effects, which they should have done on the Tax Cuts and Jobs Act.
Tax cuts create far more growth in the economy than federal spending. This is a rosy estimate at best.
6. CLAIM: $8.7 billion from mandatory sequester.
FACT: Wishful thinking. These “mandatory” sequesters never get done because D.C. doesn’t follow any of our own budget rules.
7. CLAIM: $6 billion in sales from Strategic Petroleum Reserve. FACT: This is liquidating an asset we previously paid for, and we will have to pay to replace.
8. CLAIM: $3 billion in savings from reducing Medicare spending on discarded medications FACT: $2.8 billion is estimate of Medicare drugs thrown away every year due to single use vials.
Setting aside concerns about safety, this dollar amount will certainly not reach $3 billion.
9. CLAIM: $2.9 billion interest rate smoothing options for defined benefit pension plans
FACT: Interest rate smoothing is a creative accounting gimmick that rears its head in Washington every few years.
It was a gimmick then, it’s a gimmick now.
This $550 billion of spending is on top of the baseline which already isn’t paid for.
The Highway Reauthorization has a $100B deficit.
Real pay-fors in this bill (future spectrum auctions, Bitcoin tax, GSE fees, and a Superfund tax) should be used to cover that shortfall.
Even if these rosy CBO estimates are accurate, that still leaves us a day late and several hundred billion dollars short.
The bipartisan infrastructure bill is NOT paid for.
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