A new Penn Wharton Budget Model report could prove a headache for Republicans voting for the bipartisan trillion infrastructure bill. Supporters insist that the bill would pay for itself. The Penn Wharton analysis destroys that claim as based on wildly absurd economic assumptions.
While some members claimed the bill was entirely covered by existing of dedicated funding, much of the bill, or $351 billion, is deficit spending. Moreover, the study said that any benefits from the bill would not be realized until 2050.
“Unlike the infrastructure compromise outlined in June,” the report says, “we estimate that this bill would increase government debt by 2050. Even with current government borrowing rates being at historical low values, higher government debt mitigates the positive impact of public investment, as U.S. and international savings are diverted from private capital investment toward public debt.”
It is common for members to loosely promise that bills will “ultimately pay for themselves” but we are now in record and crippling levels of debt as well as rising inflation. It may ultimately not matter to the public to add another $351 billion to the pile but the Wharton analysis can add a degree of clarity on the choice.
The bill is an exercise of “dynamic scoring” which can be used as a sleight of hand used in Washington to claim economic effects that are difficult to show or disprove.
Notably, Transportation Secretary Pete Buttigieg is citing the support of Republican senators as proof of that the claim is correct: On “Fox News Sunday,” Buttigieg insisted “You don’t see the number of conservative Republicans supporting this bill that you do unless it’s fiscally responsible.”
That is a curious claim that seems to backhand his own party on economic responsibility.
None of this is likely to matter. The wonderful thing about dynamic scoring is that there really is no real numerical or quantifiable score. It is the “plausible deniability” defense of economics.
Federal debt
The Federal debt presently exceeds 28 and one half “trillion” so-called dollars. 28 and 1/2 trillion Federal Reserve Notes. 28 and 1/2 in trillion in bonds, U.S. Bonds, which are owned and owed to between 40 and 50 percent foreign “entities.”
Federal Deficit: 2020
The Federal government ran a deficit of $3.1 trillion in fiscal year 2020, more than triple the deficit for fiscal year 2019. This year’s deficit amounted to 15.2% of GDP, the greatest deficit as a share of the economy since 1945. FY2020 was the fifth year in a row that the deficit as a share of the economy grew.
Who is the Federal government?
I will not show the “debt” or “deficit” of the individual States of the Republic or Union.
What is Dynamic Scoring?
Dynamic scoring is a method of estimating the budgetary impact of a change in government policy, which accounts for the secondary economic effects of the policy on all sources of government revenue and expenses in addition to the direct effects of a policy on spending and revenue. In dynamic scoring, these secondary effects are estimated using some sort of macroeconomic or econometric model. Because these models can take many forms and include many different kinds of assumptions about the structure of the economy and people’s economic behavior, the results of dynamic scoring can be highly dependent on the specific model and assumptions used.
What is Static Scoring?
Dynamic scoring can be contrasted to static scoring, which estimates only the direct impact that a policy change will have on government revenues and expenditures without otherwise assuming any change in the economy as a result of the policy.
Simply, the professor, as is true of almost all Federal and State elected officials, politicians and bureaucrats, has never had “an honest job.”
What is an “honest job?” An “honest job,” or “real business” (which is also a job) is one in which you are either an ”employee” or an “employer.” The employer creates a revenue stream and meets a payroll from profit made from a commercial or financial transaction.
The professor, as is true of almost all Federal and State elected officials, politicians and bureaucrats have no so-called “skin in the game.”
In other words, they receive and give money they did not earn from a profit making enterprise.
Yes!, the professor and his ilk perform a function, and to a limited extent a somewhat necessary function.
The issue (no one has a problem anymore) arises presently and historically: I (the professor and his ilk) be gone! You (those receiving the fiat currency for no profitable labor) be gone! We (I, you and everybody) be gone!
Which is to say, “I, You, We, will not be responsible. It will be someone else’s “issue,” but not problem.
This was the zeitgeist or ethos of 2008, 2009 financially failure. Indeed, it is in very so-called “boom” and “bust” of all irresponsible monetary, fiscal behavior, which is history of our great country.
dennis hanna
I’m not sure but didn’t the US credit rating get lowered for the first time while Pres Obama was in office. Has it been restored?
Jonathan: As a deficit hawk you complain that the bipartisan trillion dollar infrastructure package would result in “crippling levels of debt”. The Penn Wharton projection of $351 billion is not the only one. The CBO projects $ $256 billion. Whichever number you choose we are still talking about serious money. But let’s put these numbers in perspective. In the early negotiations the Republican Senators refused to consider adding money so the IRS could go after tax cheats. The Republicans in the Senate wanted to add another $50 billion to the defense budget. The Pentagon budget last year was $778 billion–the single largest category of discretionary spending and more than what is spent by the next 10 countries–including China .We are now out of Iraq and Afghanistan. Do we still need hundreds of military bases around the world and billions to maintain our nuclear arsenal? But you don’t address the US bloated military budget in your warnings about the deficits caused by the proposed infrastructure package. During his 4 years Trump kept increasing the Pentagon budget. Never heard you complain about that spending.
One of the reasons the infrastructure package is so big is that the problem is huge and has been ignored for years by both the Dems and the GOP. Trump talked about infrastructure but he did nothing. Instead, one of his first acts was to push through massive tax cuts for corporations and himself. That resulted in red ink for decades to come. In 2020 alone those tax cuts added $220 billion to the deficit. Had the GOP refused those tax cuts the money could have been used largely make up the deficit that is projected by the infrastructure package. Don’t recall you complaining about the tax cuts in 2017.
Like you, Trump opposes the bipartisan Senate package. He calls it a “disgrace”. But the public overwhelmingly favors spending on our crumbling infrastructure. From personal experience I can attest to the work that needs attention. About 3 years ago the water main broke in the street in front of our house. There was water everywhere. It took a week for the water department to fix the break–digging a huge hole in our front yard to get to the underground break. I talked to the workers. One told me: “This main is only 50 years old. We have water mains in older parts of the city that are over 100 years old. We spend most of our time running around putting our fingers in the dike!”. This story can be repeated all over the country. The problem is huge and requires a lot of money to fix.
So as climate change increases (last year was the hottest on record) we need to spend trillions more to address that problem. Some climate scientists say we have almost reached the tipping point so the quicker we start transitioning away from fossils fuels the better equipped we will be to leave a sustainable country and planet for your children and my granddaughters. Don’t you think that investment in the future is worthwhile? I guess not because you have your head stuck in the quicksand of “crippling levels of debt”.
Cost of peace is continuous preparation for war. Time proven historical fact. Weak are attacked but not usually the strong. We do not as a nation have recent history of attacking the weak except for Kennedy and when we are first attacked as per 911. Major problem is that we do not respond to attacks with full force of our military. It is the responsibility of states to maintain their roads and bridges not the federal government in most cases. Global warming is not impacted by single nation. Better option for single nation is to prepare for impact rather than try to prevent. Without India, China and Africa participation attempt to prevent climate change is futile and they are unlikely to fully participate because of the impact on their economy and culture.
You give yourself away with “climate change” not global warming anymore?
I am making a good MONEY (500$ to 700$ / hr )online on my Ipad .Last month my pay check of nearly 30 k$.This online work is like draw straight-arrow and earn money. Do not go to office.PRw I do not claim to be others,I just work. You will call yourself after doing this JOB,It’s a REAL job.Will be very lucky to refer to this WEBSITE.
I hope,you can find something………..► http://money32.ezyro.com/
Math deficiency seems to be a criteria for political candidates. I watched a gubernatorial debate in the late 1990s. The challenger talked about all his amazing programs that would be implemented if he were elected. The incumbent governor had a checkbook in his coat pocket. When it was his turn to answer, he held up the check book, turned to the challenger and said, “You know, that’s a great idea. But wait,here is the checkbook for the state. Tell me where the money will come from and I will personally make it happen.
He repeated this gesture throughout the debate but the challenger could not answer.
Now, if their plan truly is American Marxism, which many in office and much of the corporate elites have already adopted, then it would make sense for them to spend blindly until they crash the economy. They will next propose confiscation of personal property, corporate property because it is their only lever when they have spent this nation into oblivion.
Look through these lenses and now look at the bigger picture. We are headed for the cliff at full speed. Just placate the masses and feed them lies intricately woven into a narrative. Give them lots of free stuff. But wait, it gets even better! American Marxism allows the elite to continue making millions while they look down their smug noses at we, the mere masses, their lowly subjects.
The core of America is that an individual should NEVER tip their hat to those in power. It is they who should tip their hat to the individual citizen. Rarely does anything go well when money and power is centralized.
What we are experiencing is tyranny of a menacing minority who cleverly dictate the agenda. The most outspoken Marxists group begins their statement about the uprising in Cuba, “We condemn the United States..” You know who they really are and what their end game really is. They don’t even hide their contempt for Americans. This is very Dangerous!
Unless it stops, this will not end well.
What’s to be worry about the United States only has about $29 Trillion current debt with a projected GDP $22.72 Trillion. This is dangerous economics especially if the House Democrats in DC achieve their desired goal of another $5 Trillion funding package. Currently Keynes economics is in full force with no end in sight. Will his monetary policy as adopted by the left politicians work out in the long term amassing larger and larger debt or come to ruination of the United States. Were Adam Smith and Friedman more correct in their idea of monetarism? It could be defined as the struggle between SOCIALISM vs. CAPITALISM or in modern American parlance Left vs. Right.
Our public officials in both the executive and legislative branches and from the local to the Federal levels need to be subject to Sar-Box-like requirements that have teeth including jail and substantial fines for the kinds of fiscal legerdemain that our elected officials indulge in. The Federal GAAPs also need a complete overhaul so that we the taxpayers will have access to fiscal information that is understandable and transparent, not today’s morass.
“It is common for members to loosely promise that bills will “ultimately pay for themselves” but we are now in record and crippling levels of debt as well as rising inflation. It may ultimately not matter to the public to add another $351 billion to the pile but the Wharton analysis can add a degree of clarity on the choice.”
Thank you for the clarity, Professor Turley. I have no doubt your fears are well founded.
Keynes sold the West on deficit spending in times of trouble. The biggest mistake Keynes made (but not the only one) is assuming that once the taboo of deficit spending outside of war was lifted, politicians would used deficit spending as Keynes himself might use deficit spending.
He was an important economist, but like all leftists, he made ridiculous assumptions about the political class.
Krugman is worse. Krugman is the most dangerous idiot in the Western World. Quantitative Easing as a remedy for instability in money velocity is already transmogrifying into debauching the currency to swindle bond holders. Good luck with that.
It’s surprising that JT did not mention the official CBO score that also says the bill is not paid for.
Buttigieg insisted “You don’t see the number of conservative Republicans supporting this bill that you do unless it’s fiscally responsible.”
I read that, did a quick spit take, and read it again. Then I got to Prof. Turley’s comment:
That is a curious claim that seems to backhand his own party on economic responsibility.
…. and cracked up.
Wharton:. Keep on farting. Or Farton.
Liberty2nd
You probably think PE means a class you failed in High School. I’m sure you could tell us what Theta, Vega, Delta, and Gamma mean to such a mental giant you are, in “finances terms”.
” . . . covered by existing of dedicated funding . . .”
What does the even mean? That the funds are already there, in government coffers? Somebody had/has to pay for that “existing funding” — via taxes from those who work, or via inflation of the money earned by those who work.
Reminds me of the old joke that Democrats like to tax and spend, but Republicans like to borrow and spend. I think that goes back to the 1980s.
In theory, dynamic scoring could be worthwhile, except (a) we do not understand the world and the economy well enough to dynamically model it even 2 months out, let alone decades (sort of like climate, but I digress), and (b) the modeling would have to be done in a stochastic fashion with multiple scenarios tested, and (c) it would have to be done with scrupulous honestly. None of which apply.
Corollary to the statement, “The bill will ultimately pay for itself.”
“In the long run, we are all dead.”
Statistics say “whatever we want them to say by how we run the numbers!” So, just suck it up people. 2050 (30 yrs), my grandchildren may have children then unless they decide like so many couples are saying now that there is nothing for them. If they do not have children, how will it ever be paid. Besides which, it will be growing and growing over the next 30 yrs anyway.
Open borders will provide the kids when our failure to reproduce creates vacancies? Sad that the zero population proponents are the same people pushing the open border strategy. Maybe those who push plans to increase inflation will destroy our economy to the point that people will not want to come here. Seems the communist countries and the new Democratic socialists are in a competition to see who can create worst economies.
Wharton’s!
Always fartons.
What kind! of people go to Wharton?
Fat Kids, skinny kids. Kids who climb on rocks.
Dumb schmucks younger punks…
Even farts with chicken pox…
Choose Wharton. Loose goose Wharton!
The school God likes…
To bite!
“They lie to us.”
They being politicians.
The 17 Republicans who signed on got rolled.
If they can’t structure a good bill, then pass and vote against the bad bill.
Monument claims
Politicians lie to us
except Trump, of course.
Jeff
I made a categorical statement – no exceptions.
Is it hard living with Trump in your head?
Monument,
You are the first Trumpist on this blog who has acknowledged that Trump is capable of lying. I’m very proud of you. I misjudged you. My bad.
Trump is a great salesman so he’s bombastic. But he’s often proved right. Remember he wanted shine a light inside a lung to kill the virus? So does the doctors at Cedars-Sinai Medical Center who have found a wave length of UV light that kills viruses and bacteria but does not harm human tissue. Using a catheter they insert the light into a lung.
But stupid people mocked him and laughed. Were you one of them?
I didn’t know that Dr. Trump taught the doctors at Cedars-Sinai Medical Center that he discovered a wave length of UV light that kills viruses and bacteria but does not harm human tissue.
Fascinating. Trump is not only smarter than all his generals, he is smarter than all his medical professionals.
Who knew?
Fascinating. Trump is not only smarter than all his generals, he is smarter than all his medical professionals.
Another leftist that wakes up in the morning with exactly zero history to consider. Each dawning moment allows the leftist to ignore anything that happened previous.
Go back and read about the the Light Bringer, Obama. He said he needed no advisors, he knew everything, understood everything. An attitude supported by the reality that Obama had accomplished exactly Zero, in his life. Even his elections were handed to him by unexplained events.
VS President Trump who has Produced at the top of his field.
President Trumps greatest accomplishment, according to his detractors is Never making any money, is enterprise was an elaborate facade hiding utter failure while at the exact same time, cheating government out of massive amounts of income tax, on that failure.
You are a dead-ender. I got it. I don’t want to convince you to change your mind. You stay just where you are on the side of Trumpism, Newsmax, Fox, Q-Anon and Infowars. We don’t want anything to do with you. You are too far gone.
Jeff, you lie. I am at a loss exactly what message you are trying to convey. President Trump was taken literally, not seriously. Obama was treated seriously, not literally. The issue is not if you can find the lie in every literal statement, but whether you can lie with immunity. Like leftists.
You are a 100% wrong. Trump was taking seriously but NOT literally because even Trumpists knew the man was a chronic and habitual liar. I’m not going to argue with you about Trump. Suffice it to say, you are a Trumpist and your reputation will rise or fall with him. Good luck defending his lies. You are going to need it.
To monumentcolorado, 8 Aug 2021, 12:31 –
I believe the motivation of the 17 supporting Republicans is more insidious.
Embedded into the 2,700-page bill are several gov’t control-freak wet dream items:
1. questioning the CDC’s official claims of scientific fact will become a hate crime under the law;
2. “gender identity” will become protected by federal law, so that biological men who claim to be women will be officially allowed to participate as women in women’s sports, use women’s toilets, showers etc.;
3. the gov’t will be permitted to track citizens’ driving, enabling per-mile taxation (in addition to the gasoline tax);
Additionally, new vehicles will be required to implement monitoring technology (such as eye scanners, breathalyzers, etc.), so that the driver can be prevented from driving while drunk [but like cellphones, which can be locationally tracked by triangulation via the cellphone towers, tracking of individual car will also be enabled in real time].
What this has to do with “infrastructure” is difficult to say, except for beefing up the government’s infrastructure to spy on its own citizens. I cannot even imagine how enshrining CDC views as legally sacrosanct orthodoxy and protecting the rights of individual claims of gender identity while ignoring the impinged upon rights of actual women provide any benefit regarding infrastructure.
So I suggest that perhaps the Republican congressmen supporting this disaster of a bill are either totally oblivious to such sections of the huge bill (in which case they are merely incompetent and irresponsible), or are perhaps more motivated by psychopathic control hunger, a “pandemic” seen in politicians around the world these days, and certainly not limited to U.S. Democrats.
Assume you are referring in part to the “national motor vehicle per-mile user fee pilot”. Big Brother is somewhere smiling