U.S. infrastructure bill to be decided by CBO

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WASHINGTON, Aug. 3 - The future of the bipartisan U.S. infrastructure bill presented on Sunday and a far-larger partisan tax and spending bill to follow will be heavily influenced by a pair of obscure agencies on Capitol Hill: the Congressional Budget Office and the Joint Committee on Taxation.

Their estimates of various components and benefits of the budgetary costs and benefits of various components of the infrastructure plan, with its $550 billion in new spending, have been a crucial part of negotiations; they'll examine trillions of spending on the mammoth reconciliation bill to follow and their work may help decide which Congress members are on board

As soon as the 2,702 - page bipartisan Infrastructure Investment and Jobs Act was released, the agencies began combing through its text https: www.epw.senate.gov public cache files ea 1 eb 2 ef 4 - 56 bd - 45 f 1 - A 260 9 d 6 EEE 951 bc 96 F 8 A 7 C 77 D 69 BE 09151 F 210 EB 4 DFE 872 CD. The infrastructure package is a top legislative priority for President Joe Biden.

A CBO spokesperson declined comment on the timing of the CBO score for the legislation. Typically, the agency releases such estimates within days so that senators would likely have it in hand before a final vote later this week.

The CBO employing about 260 financial analysts and public policy analysts was created by the Budget Act of 1974, which revamped the federal budget process to provide the new House and Senate Budget committees with objective, impartial information about budgetary and economic issues according to CBO's website.

Unlike some other government agencies, it does just that, outsiders say.

CBO is one of the true non-partisan, unbiased referees, which is exactly what we need right now, said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a group advocating fiscal restraint. The CBO director is appointed pro tempore by the speaker of the House of Representatives and the Senate president of the House of Representatives. The current director, Phillip Swagel, a former University of Maryland economist who served in the Bush administration, was jointly appointed by Democrats who controlled the House at the time and Republicans who controlled the Senate at the time.

In its role, the Joint Committee on Taxation has a mandate for non-partisan analysis, but its focus is solely on the revenues effects of tax provisions in legislative and other activities.

Formed in 1926 partly in response to a senator's charges that tax dollars were being lost to favorable treatment of large corporations, the committee has a staff of 69 economists, lawyers, accountants and other analysts.

JCT released its estimation https: www.jct.gov 20021 or www.jcx 33 - 21 of the handful of tax changes in the federal infrastructure bill on Monday, with estimates that they would add $51 billion to U.S. tax revenues over a decade.

About $28 billion would come from advanced requirements for brokers to report information on digital asset transactions, subjecting more of these to capital gains taxes. $8.2 billion would come from the early termination of a COVID 19 tax credit to help struggling firms retain employees.

Another $14.5 billion comes from the restoration of an excise tax on certain toxic chemicals that expired in 1995 to help pay cleanup costs.

The CBO figures will be incorporated into the JCT estimates of the bill's economic spending and revenue provisions, including their effects on overall growth.

Last week, lawmakers were touting $522 billion in pay-fors, including $205 billion in repurposing existing COVID 19 relief funds and a White House estimate of $50 billion in recouping fraudulently collected unemployment benefits over the past year – a provision which has already drawn some skepticism.

I am very confident that CBO is not going to score all of it as savings, but how short of the $550 billion they will be is unclear, said Shai Akabas, director of economic policy at Bipartisan Policy Center, a centrist think tank in Washington.

The key issue here is how the agency might include dynamic scoring, the effects of revenue from macroeconomic growth benefits of tax or spending legislation.

Lawmakers last week cited an earlier CBO analysis that estimated $56 billion in new revenue generated over a decade by improved infrastructure, which is used by the best investments.

CBO and JCT have built up their capacity to model such outcomes in recent years, said Doug Elmendorf, who headed the CBO from 2009 to 2015.

While transformative scoring should be applied to dynamic legislation like the infrastructure plan, most bills do not meet that test, said Elmendorf, Dean of Harvard University's Kennedy School of Government.

A limitation for the agencies is that they apply empirical research developed largely by universities or think tank, they don't create it and research in some areas is less developed. While there is ample evidence for the social benefits of reducing highway traffic delays, there is relatively less for broadband internet access and macroeconomic spending.

And some improvements, such as getting home 30 minutes early from the office or the economic opportunities from a better education don't translate to the 10-year budget window that constrains CBO.

Elmendorf says the goal of policy is not to maximize GDP, it's to maximize people's wellbeing, said Mr. Williams.