Infrastructure Bill Irresponsibly Throws Money at Past Problems
(AP Photo/Patrick Semansky, File)
Infrastructure Bill Irresponsibly Throws Money at Past Problems
(AP Photo/Patrick Semansky, File)
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Surprisingly, Congressional Democrats have managed to stop squabbling long enough to pass one of their priorities, the infrastructure bill. But though this is being touted as a victory for moderates and bipartisanship, the truth is that this legislation does little more than contribute to irresponsible deficit spending with minimal economic benefits.

A $1.2 trillion government spending package is a policy that was designed for last year and has failed to adapt to the times. In 2020, the pandemic had shut down businesses and the economy was hibernating well below its potential, facing an output gap of 15 percent of potential GDP. Congress had an appetite for a significant spending package, even one that added to the debt — after all, one of the reasons why fiscal responsibility in normal years is so important is to preserve the capacity to respond in times of crisis.

But that response has already happened, and more. Not only did Congress pass the $2.2 trillion CARES Act early on in the pandemic, but it continued to pass more spending throughout 2020. By the end of the year, Congress passed $3.4 trillion in relief across various packages.

By that point, the economy had largely recovered. The output gap was a far more modest 1.7 percent of potential GDP, or about $380 billion. Real GDP grew at a 4.0 percent annual rate in the final quarter of 2020, a number which would grow to 6.4 percent in the first quarter of 2021. The strategy of “relief” over “stimulus” had worked, and the economy was largely returning to normal.

But the new Democrat-dominated Congress had gotten a taste of truly unbridled spending, and it did not want to give it up simply because it was no longer necessary. Thus Congress passed another relief package, almost as large as the CARES Act had been: the $1.9 trillion American Rescue Plan Act (ARPA).

This package was chock-full of wildly excessive spending, best exemplified by the $350 billion in state, local, and territorial aid sent to governments that had already realized by that point that their cries of doom and gloom were overblown. This “emergency” aid was so unnecessary that ARPA even included a controversial provision preventing states from using the funds to pay for tax cuts — a provision that would have obviously been pointless had states desperately needed the funds.

After the passage of ARPA, Congress was already set to run deficits exceeding $3 trillion dollars in 2020 and 2021, and $12 trillion over the coming decade. At the same time, the constant flow of government money into the economy has led inflation to reach its highest rate in more than 30 years at 6.2 percent.

That’s the context in which Congress just decided to pass a $1.2 trillion spending bill. What’s more, it’s not even money that’s well-used — the Penn-Wharton Budget Model estimates that the infrastructure bill would basically have no discernible impact on economic growth, regardless of the time horizon, even as it adds substantially to the national debt.

What’s more, it probably won’t solve most of the issues Americans think of when they think of infrastructure. The pothole by your house is probably the responsibility of your state or local government, while traffic on I-95 or I-5 won’t disappear overnight (especially if we maintain the archaic Jones Act and other cost-increasing policies).

Like any legislation, there are elements in the infrastructure bill that are positive, but the package is marred by its gimmicky, phantom pay-fors.

Even more worrisome, the hits don’t appear to be done just yet since the President and Congressional leaders want to follow up with another big-spending bill called “Build Back Better.” Though Democrats have pared down the reported cost of their $3.5 trillion BBB bill to $1.75 trillion, much of this decrease is due to timing tricks that mask the bill’s true budget impact. Even $1.75 trillion would be irresponsible to pump into an overheated economy that is already set to receive a $1.2 trillion infrastructure spend.

Congressional Democrats throwing money at an economy suffering primarily from inflation and a rapidly expanding national debt are failing to take the first action to help get out of a hole: stop digging. It’s long past time to stop exemplifying the money printer meme and start being responsible custodians of American taxpayers’ money 


Andrew Wilford is a policy analyst with the National Taxpayers Union Foundation, a nonprofit dedicated to tax policy research and education at all levels of government. 

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