8-year delay underestimates cost of Biden spending plan by $ 2.2 million: experts

President Biden set an unusual eight-year timeframe for its plan to spend around $ 2.2 trillion on Infrastructure projects and other political goals, raising questions among critics as to whether its administration cuts costs.

Biden and White House advisers say the increase in corporate tax rates will cover the cost of infrastructure and employment spending over a 15-year period. But the eight- and 15-year timelines deviate from the standard 10-year window typically used for scoring budget proposals.

By tying the spending plan to an eight-year period of “mostly one-time investments”, the Biden administration could misjudge the long-term fiscal impact of new training and care programs that are supposed to be permanent, according to Robert Krol, economist and senior researcher affiliated with the Mercatus Center at George Mason University.

“It may have reduced the total cost of the plan, the total dollar amount,” Krol said. “But it’s really fragile, because a lot of this stuff is going to be permanent. In my opinion, whether it’s eight or ten years, I guess that will underestimate the cost over time, ”he said.

Chris Edwards, director of tax policy studies at the conservative Cato Institute, estimated that the true cost of Biden’s plan would reach more than $ 2.75 trillion over a 10-year window. “Presumably they counted the expenses over eight years and the taxes over 15 years to pretend it was paid,” he said.

Budget and tax proposals of the size Biden envisioned are typically part of an administration’s annual budget plan, which estimates costs over 10 years.

Former President Donald Trump’s 2018 “infrastructure” proposal called for $ 200 billion in federal spending over 10 years. Biden also calls his plan “infrastructure,” though it includes spending on a variety of budget items unrelated to roads and bridges. And the costs could extend well beyond 10 years.

WHAT IS IN BIDEN’S 2.2 T INFRASTRUCTURE AND TAX PROPOSAL?

The White House described the package as “mostly one-time investments” to be covered by corporate tax increases. But some of the policy initiatives, such as the billions allocated to research and development of emerging technologies, worker training and the ‘care economy’, have an uncertain end date, fueling the argument that the actual cost will end up being over $ 2.2 trillion. on the traditional budget window.

Dubbed the “America’s Jobs Plan,” Biden’s spending proposal includes $ 621 billion in allocations to upgrade the country’s roads, bridges and other transportation hubs and $ 650 billion for ” home infrastructure ”such as drinking water systems and broadband internet. An additional $ 400 billion in spending is planned for the “care economy,” including expanded care for elderly and disabled Americans and better wages for caregivers.

“Some items are clearly meant to be permanent additions to the budget, so you wouldn’t expect such things to gradually disappear over an eight-year period,” said Bob Bixby, executive director of the Concord Coalition, a budget non-partisan. policy cabinet.

BIDEN’S PLANNED TAX HIKES COULD BE “DEVASTING” FOR DEMOCRATS IN 2022

The eight-year timeframe used in Biden’s proposal “reflects when most investments are concentrated, and it is a time frame that makes the most sense for the implementation of these important investments and reforms,” ​​said an official in the Biden administration.

“The idea of ​​paying for initial investments like these over time is being used in private companies as it should be here – they are long term investments that will pay dividends for the country for years to come.” , added the manager.

As part of Biden’s proposed tax hikes, the corporate tax rate would drop from 21% to 28%. The plan would also increase the global minimum tax on U.S. corporations to 21% from 13%, among other changes to the tax code. The White House said the tax code overhaul would raise more than $ 2 trillion over 15 years, offsetting the eight-year spending program over time.

With tax dollars coming in only years later, Maya MacGuineas, chair of the Committee for a Responsible Federal Budget, said the program would lead to a $ 900 billion deficit in its first 10 years.

The US jobs plan could add about $ 1 trillion to federal debt over the next decade, according to the Washington Post.

Biden’s plan would eventually reduce the annual federal deficit through increased tax revenue, according to the White House.

“The outlook for a paid plan will be better, you just have to look at the numbers for that. But at some level, it’s kind of unnecessary, because they’re going to have to pass a bill, ”said Douglas Holtz-Eakin, who was director of the Congressional Budget Office from 2003 to 2005.“ This bill will be noted by the Congressional Budget Office and it will have 10 year tables for income and expenses and that will be it.

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With significant GOP support unlikely and a slim majority in the Senate, Democratic leaders could pass special budget reconciliation rules. The reconciliation would allow passage of Biden’s infrastructure plan by a simple majority vote.

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It is “plausible” to see the Biden administration’s use of an eight-year timeframe as an attempt to lessen the shock of the stickers from its high price tag, said Shai Akabas, director of economic policy at the Bipartisan Policy Center .

“There are reasons you would want the expenses and income schedules to roughly match,” he added. “Having said that, it’s refreshing to see that they at least come up with significant offsets and payments for their spending proposals because in recent years that has been the exception and not the rule.”

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