The $1 Trillion Infrastructure Bill Spends a Lot More Money on the Same Old Highway Programs

“The $1 trillion infrastructure bill that President Joe Biden signed into law..dumps a lot of new money into existing highway programs to be spent by state departments of transportation (DOTs).
The price tag of the bill—which includes $550 billion in new spending, $110 billion of which is earmarked for highways and bridges”

“by mostly topping off existing programs, it will largely maintain a status quo where some states deploy their highway dollars effectively, while others continue to set them on fire in the hopes that that will produce better roads.”

“That would include places like New Jersey, which ranked last in a report on state highway performance released by the Reason Foundation today.

The Garden State, per the report, spent $1,136,255 per mile of state-controlled road in 2019 while also having some of the worst urban congestion and pavement conditions in the country.

That’s well above more cost-effective states like Virginia. It managed to spend only $34,969 per mile of state-controlled roads while also having above average pavement quality and slightly worse-than-average congestion. (Virginia ranked second overall in the Reason highway report, right behind North Dakota.)”

“Feigenbaum says part of New Jersey’s high expenditures can be chalked up to the high design quality of its highways, which have generally wider lanes and straighter curves in order to improve safety. (It ranks fourth in the Reason report in terms of overall fatality rate). But he also says a lot can also be explained by a cronyist state DOT that’s dominated by political appointees.

A state like Virginia has been able to keep up road quality while keeping overall road spending in line by having a more professionally run DOT, he says. It also makes heavy use of public-private partnerships, whereby private companies put in their own capital to rebuild or expand highways in return for being able to charge tolls on the lanes that they build, says Feigenbaum.

In keeping with its “spend more on the same old programs” nature, Biden’s new infrastructure bill does remarkably little to advance public-private partnerships or expand the interstate tolling that supports them.

The infrastructure bill does increase the amount of private activity bonds (tax-exempt bonds issued by a private company to fund an infrastructure project) that can be issued from $15 billion to $30 billion. It also reauthorizes a handful of limited programs that allow states to use tolls to reduce congestion or rebuild bridges. But it leaves in place a general prohibition on tolling interstate highways.

The overall trend in highway spending over the past decade has been higher spending and marginally improved roadway quality, says Feigenbaum, with some states standing out for either their innovations or their wastefulness.

The new infrastructure bill will likely produce more of the same.”

The bipartisan infrastructure law is both historic and not nearly enough

“About $550 billion of the $1.2 trillion law is new spending, which will be spread out over five years. The remaining $650 billion in the bill would have been allocated for existing transportation and highway programs under previously planned funding.
The new money in the bill will go toward a wide range of projects, including road repairs, high-speed internet services, and investments in electric buses. Notably, the infrastructure bill was backed by both Democratic lawmakers and some Republicans, and was the culmination of years long attempts to advance infrastructure legislation that’s spanned presidential administrations.

While it’s a landmark investment, the legislation only authorizes a fraction of the funding required to tackle the entirety of the US’s infrastructural challenges. Across specific categories of the bill, including lead water pipe replacement and broadband, it’s likely to take much more than what’s already been allocated to fully solve issues of access, safety, and equity. The bill includes $15 billion specifically for addressing lead pipes, for instance, while experts believe it will take $60 billion to actually replace every lead pipe in America.

Still, the passage of this bill — which contains critical funding that the country has needed for decades — is significant, and an important down payment for future investments.”

States have the power to make or break the infrastructure law

“Now that President Joe Biden has signed the Infrastructure Investment and Jobs Act (also known as the bipartisan infrastructure framework, or BIF) into law, the federal government faces a new challenge: getting the funds out to states and cities.

In the coming months — and years — federal agencies will distribute billions of dollars for everything from bridge repairs to public transit expansions to bike paths. Most of this money will go directly to state governments, which will have significant discretion over which projects they’d like to fund.”

The infrastructure law aims to clean up pollution in your community

“a bipartisan infrastructure bill that includes $350 billion to address long-ignored environmental threats. The Infrastructure Investment and Jobs Act is the largest sum in recent memory directed at cleaning up pollution, from replacing lead pipes to capping methane-spewing oil wells.
The funding could make a serious dent in air and water pollution for certain communities by preventing runoff from abandoned mines and cleaning up old, toxic manufacturing sites. People who live near busy roadways, airports, and ports may benefit from the boost to electric vehicle charging stations, school buses, and cranes that will replace gas- and diesel-burning cars and equipment.

Other investments will improve public health more indirectly: One of the law’s major provisions includes expanding transmission that can move more clean energy across the grid. By increasing the mix of renewables, states and the utilities they regulate ultimately would need to burn fewer fossil fuels to power the economy.

The biggest criticism of the new law is what it leaves out: Environmental advocates say the funding only meets a fraction of the nation’s needs for addressing water and air pollution, and falls far short of the transformative change Biden promised on the campaign trail.

This is also not the transformative climate bill that climate activists had hoped for.”

Congress Finally Passed Biden’s Inefficient, Deficit-Hiking Infrastructure Bill

“The bill is also larded up with provisions that will make infrastructure projects more costly for taxpayers. That matters, of course, because if you inflate the cost of building a bridge and you have a fixed amount of money to spend on new bridges, you’ll get fewer bridges.

For example, the bill’s “Buy American” provision is nothing more than performative patriotism and a handout to politically powerful unions. By mandating that materials used in road, bridge, and rail projects come primarily from the United States, Congress will effectively hike prices and engage in arbitrary protectionism.”

“The infrastructure bill could have been an opportunity to reform other federal rules that unnecessarily drive up the cost of building infrastructure. Like the Davis-Bacon Act, which requires that most workers on federally subsidized building projects are paid the local “prevailing wage” negotiated by unions even if the workers themselves are not unionized—and only about 13 percent of construction workers are part of a union. The Davis-Bacon Act rules can increase the costs of infrastructure projects by as much as 20 percent.

Similarly, the infrastructure package could have suspended or eliminated parts of the National Environmental Policy Act (NEPA) in order to streamline environmental reviews of infrastructure projects. Currently, NEPA reviews take more than four years on average, and they are frequently used as tools to block development for reasons that often have little to do with the environment.”

How Biden’s infrastructure win falls short in one big area

“The bill, H.R. 3684 (117), is historic in its scope with $550 billion in new money funneled into hard infrastructure, from overhauling bridges to supercharging Amtrak’s most popular rail corridor in the Northeast. But it falls far short of Biden’s original vision, which promised to dramatically reduce the climate impacts of transportation, the single largest source of pollution. In the end, the final product was the victim of the bipartisan focus it took to get the bill done and is an example of the razor thin governing majority Democrats must navigate.”

How Democrats Could Hide $2 Trillion in New Spending With Budget Gimmicks

“Democrats are reportedly considering a one-year extension of the expanded child tax credit, which pays parents $3,000 annually for every child (and an extra $600 for kids under age 6) and is paid out as a refund even for families that owe no federal taxes. Previously, Biden’s plan called for a five-year extension of the child tax credit. As I wrote in September, the five-year extension was a budget gimmick designed to make the tax credit appear to be roughly $700 billion less expensive than it otherwise would be within the standard 10-year budget window. In short, Democrats were signalling that the expanded child tax credit would be permanent, but they were only accounting for half of what it would actually cost to make it permanent.

A one-year extension would be mashing that same “gimmick” button even harder.

In a similar way, Democrats are also reportedly considering a shorter-than-planned extension of the expanded Obamacare subsidies made available during the pandemic. Instead of being extended permanently, those provisions would technically expire after three years—even though everyone knows they are likely to be extended past that sunset date.

“These proposals don’t actually shrink the package; they just shorten it,” says Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), a nonprofit that advocates for balanced budgets. The CRFB estimates that the twin “blatant budget gimmicks” involving the child tax credit and Obamacare subsidies could hide between $1.5 trillion and $2.4 trillion in future spending, depending on other trade-offs in the final package. Even if the final bill is $1.9 trillion and requires no new borrowing on paper, the CRFB warns that the actual price tag could be as much as $4 trillion with much of the hidden cost financed by adding to the deficit.”

Joe Manchin won’t support a key climate program. Alternatives won’t be enough.

“A key climate policy designed to phase out fossil fuels will likely be cut from Democrats’ upcoming reconciliation package due to opposition from Sen. Joe Manchin (D-WV), who has reportedly refused to back the measure as negotiations over the budget bill continue.

According to the New York Times’s Coral Davenport, who first reported the news on Friday, Manchin, who chairs the Senate Energy and Natural Resources Committee, will not support the sweeping clean electricity program widely seen as the centerpiece of the bill’s climate plan.

The $150 billion program — officially known as the Clean Electricity Performance Program, or CEPP — would reward energy suppliers who switch from fossil fuels like coal and natural gas to clean power sources like solar, wind, and nuclear power, which already make up about 40 percent of the industry, and fine those who do not.

Experts believe the program is the most effective way to slash US carbon emissions significantly enough to prevent the global temperature from rising by 1.5 degrees Celsius, a threshold which would have drastic consequences for the planet if exceeded.”

“Manchin’s home state of West Virginia is one of the largest producers of coal in the US, and Manchin himself benefits financially from the coal industry.

Manchin’s spokesperson, Sam Runyon, told the New York Times that Manchin opposed the CEPP because he couldn’t support “using taxpayer dollars to pay private companies to do things they’re already doing.””

“Manchin is correct in saying that some companies are indeed changing over to sustainable electricity production; currently, almost 40 percent of electricity generated in the US comes from a clean energy source, either nuclear or renewable. But corporations are ultimately concerned about their bottom line, and the carrot-and-stick approach of the proposed clean electricity program incorporates that reality by incentivizing companies to make the drastic changes necessary to address climate change — and penalizing them if they don’t.

The other reason a clean electricity program could prove key to addressing climate change is that it creates a national standard, as opposed to the patchwork of municipal and state legislation and individual efforts currently in place. Among other impacts, the program would help bring lagging areas up to speed with the ambitious targets set by the Biden administration, which call for 80 percent of the nation’s electricity to come from renewable sources by 2030, and 100 percent by 2035.”

The Bipartisan Infrastructure Bill Will Add More Than $250 Billion to the Deficit. Does Anyone Care?

“The Congressional Budget Office (CBO), the legislature’s nonpartisan number-crunching agency, says the bipartisan infrastructure bill would add about $256 billion to the deficit over 10 years. The real figure is likely to be higher, because the package contains a few gimmicky elements that are designed to trick the CBO’s forecasting metrics.

The biggest of those gimmicks is the promise that Congress will reallocate more than $200 billion of COVID relief funds to cover infrastructure costs. It remains unclear exactly what unused COVID funds will be redirected, and the bill only rescinds $50 billion in actual budget authority from previously passed COVID relief bills, according to an analysis by the Committee for a Responsible Federal Budget (CRFB).

Other proposals to save and redirect federal dollars to pay for the infrastructure bill are also unlikely to materialize. Take the $49 billion lawmakers plan to “save” by further delaying an already-delayed Trump administration regulation altering how prescription drug discounts are applied by health insurers. “Because the Congressional Budget Office projected that the so-called rebate rule would increase federal spending in Medicare and Medicaid by about $177 billion over a decade, due to a rise in Medicare premiums (and therefore, taxpayer-funded subsidies for Medicare premiums), lawmakers get to count a further delay in the rule (beyond the Biden administration’s one-year delay) as ‘savings’ for the federal government,” explains the National Taxpayers Union.”

“When you filter out the gimmicks designed to game the CBO score of the infrastructure bill, the CRFB says the package will probably add $340 billion to the deficit over 10 years.”

“But as the CBO’s report makes clear, actually paying for the infrastructure makes those benefits bigger than they otherwise would be. A fully offset infrastructure package would boost GDP by an estimated 0.11 percent over the next 30 years while a deficit-financed package would barely break even. That’s because, as the CRFB notes, running higher deficits to pay for infrastructure spending will reduce private investment over the long term and, thus, lower future economic growth as well.”