Cost of Biden Infrastructure Plan Should Be Paid For

For Immediate Release

Tomorrow, President Biden will give a speech outlining his plans to expand physical infrastructure. A second part of the plan, focusing on child care and health care, will reportedly follow later in April. With the debt and deficit both headed toward record levels and the economic outlook improving, these new plans should be paid for rather than financed with additional borrowing.

Below is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:

Our country’s infrastructure needs an upgrade. But with a hopefully robust economic recovery around the corner, any plan to improve infrastructure should be paid for.

As the details come out, you’ll hear advocates claim these new investments will actually pay for themselves through new growth or that deficits don’t matter. That wasn’t true during the 2017 tax cut debate and it certainly isn’t true now.

Investing in reliable and resilient infrastructure can help the economy, but the research is clear that the return is fairly modest. In fact, analysis from the Congressional Budget Office and Penn Wharton Budget Model suggests that returns on debt-financed infrastructure investments could well be negative.

Since the start of the crisis, we’ve taken on more than $5 trillion in debt to fight COVID, with much of it being justified. But we also borrowed nearly $5 trillion before the crisis for tax cuts and spending increases that were not justified. We are becoming dangerously numb to borrowing massive amounts of money.

Strong nations borrow when necessary, not when it is politically convenient. It is important for the future health of the economy that we are willing to pay for our priorities.

###

For more information, please contact Ben Tomchik, Deputy Chief of Staff at tomchik@crfb.org.