An easier, wiser way to pay for infrastructure
Congress is working to finalize a new infrastructure spending package. But why are they ignoring an easy way to pay for it?
Americans agree: Our infrastructure needs work. With widespread public approval, Republicans, Democrats and independents alike all support boosting federal investment in infrastructure.
So it’s a good thing that Senate Majority Leader Chuck Schumer is pushing for a vote this week on a tentative infrastructure deal struck by a bipartisan group of senators and President Joe Biden. This is a great opportunity for our leaders to buck partisan gridlock, get important work done and bring the American people back together. While there is room for improvements, by definition, a bipartisan compromise will always include some sacrifices.
But the vote might not happen as quickly as the majority leader wants because senators are still hashing out the details of the deal. The biggest sticking point is the question of how to pay for all the new spending.
The bipartisan deal includes a long list of potential funding sources. Some, including reinstating a Polluter Pays Tax for Superfund site clean-up, make a lot of sense. Others, such as relying on public-private partnerships and the “macroeconomic impact of infrastructure investment,” seem more like wishful thinking. One of the most promising “pay-fors” initially identified, increasing Internal Revenue Service (IRS) collections, was dropped from the deal over the weekend.
Why does this matter? Well, as the old saying goes, nothing is free. In their deal, President Biden and the senators propose half a trillion dollars in new spending. If we aim to boost infrastructure investment by more than half a trillion dollars, we have to find a way to pay for it. All along, this has been one of the biggest hurdles to a deal. Democrats and Republicans both drew lines in the sand at vastly different places, making a compromise appear difficult.
But here’s what’s puzzling: Amid all the debate about how to pay for the new investments, our leaders have mostly ignored the easiest, most straightforward solution — one that’s both wise and popular. If we cut wasteful and unnecessary government spending, we could easily pass a bill with almost no new spending.
There’s plenty to cut. An easy place to start is with one of President Biden’s original proposals: eliminating fossil fuel subsidies. Every year, the United States government gives the fossil fuel industry $20 billion in tax breaks, incentives and other subsidies. This massive giveaway goes to an industry that made $28 billion in profits in 2018 alone. Not only is this a colossal waste of taxpayer money, but it also fuels the climate crisis. If we end fossil fuel subsidies, we could move toward meeting our climate goals while freeing up $100 billion over five years for needed infrastructure spending.
That’s just the tip of the (melting) iceberg. Last week, U.S. PIRG, Environment America, R Street Institute, Taxpayers for Common Sense and Friends of the Earth unveiled a new “Green Scissors” database of nearly $300 billion of wasteful and environmentally harmful government spending planned for the next ten years. It’s time to shear that from the budget.
For example, fossil fuel companies that drill on public lands or in public waters normally pay royalties for oil and gas extraction. The Department of the Interior, however, often provides what is known as “royalty relief,” granting exemptions from payments. This has cost the federal government billions of dollars in royalty payments over the past three decades, while allowing companies to drill on public lands scot free. If this practice continues, it’s projected to cost taxpayers more than $2 billion over the next 10 years.
But wait, there’s more. Last fall, U.S. PIRG Education Fund and the National Taxpayers Union Foundation identified more than 50 cuts and reforms that would save taxpayers $790 billion over the next decade. Our organizations diverge on what constitutes a proper regulatory and tax system, but we are united in the belief that the federal government spends in ways that are neither fiscally sustainable nor in the interest of the American people. The wasteful spending we identified shows many areas of potential bipartisan agreement.
These proposed cuts touch nearly every portion of federal expenditures, including entitlements, defense spending, wasteful subsidies and a broad range of discretionary programs. They include large items, such as a $195 billion reform of the Department of Defense’s operations and maintenance budget, and relatively small ones; for example, $4 million in savings from limiting the pensions and perks provided to former presidents.
All together, these could pay for much of the half a trillion dollars in new spending over five years. When paired with some of the proposed pay-fors that aren’t new revenue, such as closing the IRS tax gap, they could pay for even more of it.
Especially when it frees up money for popular and necessary infrastructure investments, improving government efficiency and eliminating duplicative or wasteful spending is something Americans of all stripes can get behind. There is still time to act: Congress is still working through the details of the infrastructure framework agreed to by the bipartisan group of 21 senators and President Biden. As they do that, they should cut wasteful spending to pay for it.
Director, Environment Campaigns, PIRG
Matt oversees PIRG's toxics, transportation and zero waste campaigns and leads PIRG’s climate program to promote a cleaner, healthier future for all Americans. Matt lives in Amherst, Massachusetts, with his wife, two daughters and chihuahua.