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Experts: Infrastructure bill will cost hundreds of billions more than White House estimates

Tax Foundation President Scott Hodge predicts that new spending in the bill could ultimately total more than $800 billion over 10 years.

Published: August 2, 2021 4:32pm

Updated: August 3, 2021 10:53am

Federal budget and tax experts told Just the News that the $1.2 trillion bipartisan infrastructure bill will end up costing hundreds of billions of dollars more than initially estimated by the White House and the lawmakers involved in the negotiations. 

The bill currently includes an estimated $550 billion in new spending on top of reauthorized baseline transportation spending, resulting in an approximate total cost of $1.2 trillion.

"This is a roughly five-year $550 billion plan," said Tax Foundation President Scott Hodge. "If you assume that all the spending was renewed for a full ten years, then the cost would be over $1 trillion. However, we now have to consider how sufficient the offsets are that they are proposing to cover those costs. The Committee for a Responsible Federal Budget is suggesting that only about $200 billion of those offsets are real and achievable over a decade. I tend to agree with them, but suspect the number could fall well below that."  

Hodge predicted that new spending in the infrastructure bill could ultimately total over $800 billion during a 10-year-period instead of the advertised $550 billion.

"There are a lot of ifs in this assessment," he said. "If all of the spending were renewed for a decade, and if the achievable offsets are realized, the cost to taxpayers could top $800 billion over a decade, not including the interests costs on the new debt to pay for the spending. We're talking about real money."

Marc Goldwein, senior vice president and senior policy director for the Committee for a Responsible Federal Budget, said the budget "offsets" that the bipartisan group of senators and the White House are counting in their cost estimate for the bill are not accurate.

"There may be another $70 or $80 billion of indirect costs in the bill, and what I mean by that is, highway bills are five years, and that's embedded into this, money for highways and transit, but whatever your last year is, that becomes your new starting point for the next highway bill," Goldwein said.

"So if you increase spending in year five by $10 billion, you've effectively increased spending by $10 billion in year 6, 7,8, 9 and 10," he continued. "So when we look at that, it looks like the bill is actually going to kind of increase total costs by somewhat over $600 billion, inclusive of that. We don't know the exact number, but it's probably $70 billion, maybe $80 billion more of spending.

Goldwein said the White House and the senators involved are "significantly overstating" the offsets in the cost estimate of the bill.

"Basically, if you look at their numbers for offsets, you should remove the $53 billion for repurposing unemployment benefits, $67 billion for spectrum [auction sales], and about $160 billion for repurposing COVID relief," Goldwein said. "And the reason I removed those three things is all three of them are essentially taking credit for something that's happened in the past.

"They're taking credit for the fact that some programs cost less than an original score, and there's no money sitting in an account somewhere for them to repurpose. It's just the fact that it ended up coming in at less than the original cost. The way offsets work is the question is, how much money is your bill saving relative to what would happen otherwise? Their bill is saving nothing in those categories."

Goldwein said the negotiators are "cherry-picking" when it comes to claiming offsets to pay for the legislation.

"If you look at all COVID relief, yes, unemployment benefits for the American Rescue Plan cost $50 billion less than we thought, but unemployment benefits for the CARES Act cost over $100 billion more," he said.

Goldwein added that the paid sick leave tax credit costs $90 billion less than anticipated, but the Medicaid expansion costs are $120 billion more.

"So you can't just cherry pick and take the things that cost less, but not also look at the things that cost more," he said.

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