(Washington Insider Magazine) -Congress approved Friday’s $1.2 trillion infrastructure package. This is a crucial part of President Joe Biden’s economic agenda.
Over five years, it will invest $550 billion in new federal infrastructure investments in America. This includes everything from roads and bridges to broadband, water, and energy systems. Experts believe money is essential to ensure safe travel and the efficient transportation of goods and production throughout the country. The American Society of Civil Engineers awarded the nation’s infrastructure a C- rating earlier in the year.
Democrats claim that the bill can be paid for by various measures and without increasing taxes. The Congressional Budget Office brushed aside many of these pay-for provisions and found that the bill would increase the deficit by $256 billion over the next ten years. It is significantly less than Biden’s $2.25 trillion proposals in March, also known as the American Jobs Plan.
Here’s what the infrastructure bill includes:
Funding to build roads and bridges
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The bill proposes to invest $110 billion in roads and bridges and significant infrastructure projects. This is significantly lower than the $159 million Biden requested in his American Jobs Plan.
According to the bill text, $40 billion is included for bridge replacement, repair, and rehabilitation. According to the White House, it would be the most significant single-purpose bridge investment since creating the interstate highway network in the 1950s.
According to the White House, $16 billion is included in the deal for major projects too complex or large for traditional funding programs.
According to the White House, 20% of America’s major roads and highways are in poor condition. Forty-five thousand bridges are also in poor shape. The investments would focus on climate change mitigation and resilience, equity, and safety for all users, including cyclists, pedestrians, and other bicycles.
The package also includes $11 billion to support transportation safety. This program will help states and localities decrease crashes and fatalities, particularly for cyclists and pedestrians. It would provide funding for safety measures involving highways and trucks and pipelines, and hazardous materials.
It also contains $1 billion to connect communities, many of which are disproportionately Black neighborhoods. These communities were reportedly divided by highways or other infrastructure. It will finance planning, design, demolition, reconstruction, and maintenance of street grids, parks, or other infrastructure.
Money to travel and train
According to the bill text, the package would provide $39 million to modernize public transportation. This is less than the $85billion Biden originally wanted to invest in transit infrastructure and expand them to meet riders’ demand.
According to the White House, these funds would repair and upgrade existing infrastructure and make stations more accessible for all users. They also provide transit services to new communities.
The package includes $12 billion in partnership grants to support intercity rail service, including high-speed rail. According to the bill text, the deal would also invest $66 million in freight and passenger rail. According to the White House, the funds would be used to eliminate Amtrak’s maintenance backlog, modernize Northeast Corridor lines, and provide rail service to regions outside of the Northeast and mid–Atlantic.
This funding is lower than the $80billion Biden had originally planned to send to Amtrak, which he used for years to return to Delaware from Washington DC.
According to the White House, it would still be the largest federal investment made in transit and passenger rail in the history of the United States since Amtrak was founded 50 years ago.
Broadband upgrade
According to the bill text, the bill would make a $65 billion investment in improving the nation’s broadband infrastructure. Biden originally wanted to invest $100 Billion in broadband.
It also seeks to lower the cost of internet service for households by requiring federal funding recipients to offer affordable plans at a low price. This creates price transparency and increases competition in areas that don’t have adequate providers. According to the White House factsheet, it would also establish a permanent federal program to help more low-income households get the internet.
Upgrading ports, airports, and waterways
According to the White House, the deal would see $17 billion invested in port infrastructure and $25 million in airports. This will address maintenance and repair backlogs, reduce congestion, emissions near airports, and promote electrification.
It’s similar to Biden’s original funding proposal.
Electric cars
According to the White House, the bill would provide $7.5 million for zero- and lower-emission buses, ferries, and other transportation. It aims to transport thousands of electric school buses across the country.
According to the bill text, another $7.5 billion would be used to build a national network of plug-in electric vehicle chargers.
Improving water and power systems
According to the White House, the bill would spend $65 billion to repair the electric grid. The White House stated that the bill calls for the construction of thousands of miles of new power lines and the expansion of renewable energy.
According to the bill text, it would allocate $55 billion for water infrastructure upgrades. The White House stated that it would replace lead service pipes and lines so that communities could have clean drinking water.
The White House stated that another $50 billion would make the system more resilient, protecting it against floods, droughts, and cyberattacks.
Environmental remediation
According to the White House, the bill would allocate $21 billion for Superfund cleanup and brownfield site cleanup, reclaim abandoned mine lands, and cap orphaned natural gas wells.
How Congress will pay it
The bill contains a variety of measures that will pay for the proposal.
Even though lawmakers claim the bill is self-sustaining, the CBO score revealed it would add billions to the deficit over ten years. It also found that many of its pay-for provisions wouldn’t raise as much money as Democrats claimed.
Bottom line, the legislation would add approximately $350 billion to the deficit when you consider $90 billion in spending on new contract authority. Marc Goldwein is senior vice president of the Committee for a Responsible Federal Budget. This nonpartisan group tracks federal spending.
The bill text and its 57-page summary show that lawmakers heavily relied on repurposing unused Covid-19 relief funds to pay for the legislation. According to the CBO, these measures would save approximately $22 billion instead of the $263 billion claimed in lawmakers’ claims, Goldwein stated.
The bill text highlights savings by rescinding unobligated funds for the Economic Injury Disaster Loan Program for small businesses and non-profit groups, the Payment Protection Program and the Education Stabilization Fund, as well as relief for airline workers.
The bill text also includes $53 billion. This is partly due to states choosing to end the pandemic unemployment benefit early to push the jobless back to work. Before the end of September, at least 24 states had stopped one of the federal unemployment programs. The improving economy also led to a decrease in the CBO’s unemployment forecast.
The agency also found that the Federal Communications Commission’s spectrum bidding would not generate as much money as the $87 billion claimed by lawmakers.
CBO stated that the bill would raise approximately $50 billion through new Superfund fees and changes to the tax reporting requirements regarding cryptocurrencies.
Summary: The savings are $49 billion, and the CBO report is close to $51 billion. Delaying the controversial Trump administration rule, which would fundamentally change how drugs in Medicare and Medicaid are priced and paid for until 2026, would result in more savings. This measure would effectively prohibit drug manufacturers from offering rebates to pharmacy benefit managers and insurance companies. Drug companies would instead be encouraged to offer discounts directly to patients at their pharmacy counter. It is expected that it will go into effect in 2023.
According to the summary, the infrastructure proposal also relies on $56 billion of economic growth due to a 33% return investment on long-term projects.
Biden stated that the bill would not raise taxes for people earning less than $400,000 per year. It also does not include any gas tax increases or fees on electric vehicles. Biden originally called for tax increases on corporations to finance infrastructure investments. However, this proposal was strongly opposed by Republicans and did not make it into the current package.
What’s the problem?
Biden’s proposal for spending $400 billion to support caregiving for the elderly and disabled Americans is not included in the bill. This measure was the second-largest in the American Jobs Plan.
His proposal would have increased access to Medicaid long-term care services, ending the waiting list for hundreds of thousands. People would be able to get care at home via community-based services or from their family members.
It would have also increased the wages of home-health workers who currently earn approximately $12 an hour. Additionally, it would have created an infrastructure that would allow caregiving workers to join a union.
The $100 billion budget for workforce development was also left out. This would have helped dislocate workers, provided assistance to underserved groups, and placed students on career paths before their high school graduation.
Also, the bill does not include $18 billion Biden’s proposal to modernize Veterans Affairs hospitals. These hospitals are, on average, 47 more years old than private-sector ones.
Also out are a bunch of corporate tax increases, which Biden wanted to use for the American Jobs Plan.
Biden’s original proposal was to raise the corporate income tax rate from 21% to 28%. It also increased the minimum tax on US corporations from 21% to 21%. To discourage companies from hiding profits in international taxes havens, the tax rate was calculated country-by-country.
It would also have imposed a 15% minimum income tax on the largest corporations’ income to investors. This is known as book income. The US would be less likely to merge or acquire a foreign business to avoid paying US taxes.
Some corporate tax-raising provisions are what Democratic lawmakers want to include in separate legislation aimed to expand our nation’s social security net.
