Infrastructure or Democratic Wish List? What to Know About Those $1.1 Trillion and $3.5 Trillion Spending Bills

Congress is forging ahead with a $1.1 trillion infrastructure bill. The measure has received bipartisan support, but many conservatives warn that now is not the time to put America in even more debt. 

The government has increased America’s national debt by $5.2 trillion just since the start of 2020, but “adding to that with two more multitrillion-dollar spending packages over and above what they’ve already spent, that threatens to return us to the kind of inflation that we haven’t seen in decades,” says David Ditch, a policy analyst in The Heritage Foundation’s Center for the Federal Budget. 

In addition to the $1.1 trillion infrastructure bill, Democrats are also striving to pass a $3.5 trillion reconciliation package, which includes funding for universal day care, tuition-free community college, and climate change initiatives, among many other things.

“It’s important to understand the $3.5 trillion package … would be the largest piece of legislation in the history of the world,” Ditch says. 

Ditch joins “The Daily Signal Podcast” to explain what’s in each bill and the effect such aggressive spending will have on the American people. 

We also cover these stories: 

• Senate Democrats announce a $3.5 trillion budget they hope to pass through reconciliation, an obscure maneuver that would allow them to get it through the Senate with just 51 votes, sidestepping Republican opposition.
• One of the women who say New York Gov. Andrew Cuomo sexually assaulted them comes forward to tell her story to the public in detail.
• The United Nations’ Intergovernmental Panel on Climate Change releases a new report full of dire predictions.

Listen to the podcast below or read the lightly edited transcript.

Virginia Allen: Congress is in the middle of debates over two large spending packages. Here with me to break down what you need to know about these massive spending bills is David Ditch, a policy analyst in The Heritage Foundation’s Center for the Federal Budget.

David, thanks so much for being here.

David Ditch: Happy to be here.

Allen: … I do want to let all of our listeners know that we are recording this interview on Monday afternoon. So by the time that you’re hearing this conversation, it’s possible that the Senate will have already voted early Tuesday morning to pass the $1.1 trillion infrastructure bill. But with that said, let’s go ahead now and jump into the details of this trillion-dollar infrastructure bill.

So David, the $1.1 trillion bill includes $550 billion for additional infrastructure building, like improving roads and bridges, public transportation, clean water, high-speed internet, and so on. So how much in this bill, how much money is allotted for things that are other than what we think of as infrastructure?

Ditch: It’s really hard to say. It’s important to provide the context here. Back in the spring, the Biden administration released a $2 trillion spending plan that they referred to as infrastructure. Most of that was not infrastructure, I think, by any reasonable stretch of the imagination. A lot of it was social spending. Some of it was economic micromanagement, had nothing to do with physical assets.

This bill is actually strongly focused on physical assets. That doesn’t make it a good thing, however.

Allen: And why not?

Ditch: For one thing, they get the priorities completely wrong. For example, there’s a reason why infrastructure, broadly speaking, polls very well. It tends to pass by big majorities in Congress. And that’s because, historically, the federal infrastructure spending focuses on the highway system, which a huge number of Americans use for personal use. It’s the nation’s essentially circulatory system for moving people and goods from border to border and coast to coast. It’s tremendously valuable.

This bill would spend as much of the new money on things like Amtrak and public transportation as it does on the highway system, even though Amtrak and public transportation combine for 5% or less of transportation use, depending on what metrics you’re looking at. In terms of mileage, it’s less than 1%.

Allen: So then, why this massive push to spend all of this money on infrastructure right now, especially infrastructure that, like you point out, isn’t even in that high demand among the American people?

Ditch: It seems to be political. And unfortunately, there seems to be a sense that, well, Republicans prioritize highway spending and Democrats prioritize transit spending. And rather than try to actually weigh what the value of different spending is, they’re just going to throw one pot of money at the “Republican infrastructure” that people actually use and the same pot of money at the “Democrat infrastructure” that very few people use, which is a really great way to light taxpayer money on fire.

Allen: So then, how much in this bill is actually necessary? I mean, how much should we be giving the government right now to spend on infrastructure?

Ditch: The fact is, I don’t think the federal government should be increasing its infrastructure spending. If anything, I think the federal government should be taking a step back.

For one thing, the pandemic is absolutely a sea change moment in terms of how people travel. We don’t know, five or 10 years down the line, whether people are going to be driving as much. It looks like they’ll be driving a comparable amount, but there might be changes in different parts of the country. We don’t know how often people are going to be flying. We don’t know how often people are going to be using public transportation. And spending a bunch of money building new infrastructure that might end up just being wasted is a bad idea.

I think first, we need to figure out what the needs are going to be. But another problem is that when the federal government is involved, projects take longer to complete. Projects become way more expensive to complete.

And in a lot of cases, not only is it bad for the federal government to be doing this work, but the federal government also prevents the private sector and state governments from doing the work and financing the work themselves. And it all leads to this centralization of power and control and money in Washington, D.C.

That is really unhealthy, both from a policy standpoint, because there’s lots of inefficiency, but also from a governance standpoint, because when everything’s controlled in Washington, it’s more removed from the people on the ground, from the voters. There’s less transparency, there’s less accountability. It’s just a bad deal all around.

Allen: How much do we usually spend a year on infrastructure? And then, with this $1.1 trillion bill, what’s the rollout of that as far as is that over a one-year period, a five-year period, how long until that money is distributed out?

Ditch: The core spending the government does is, and again, it depends on your definition, it’s in the neighborhood of $60 billion a year. And this is one of the other things that’s remarkable, this isn’t $1 trillion spread over 10 years. The vast majority of this money will get spent within five years. It’s nearly doubling the amount of infrastructure spending when there simply is no case for saying that we need to double infrastructure spending. Our economy hasn’t doubled, our population hasn’t doubled and isn’t going to double. It’s spending that is driven primarily by lobbying groups that stand to benefit from the spending.

Allen: So there’s obviously major impacts to that and we’re going to touch on that in just a moment. But first, I want to talk a little bit, David, about the possibility of this bill passing in the House. And in order to do that, we have to first talk about the $3.5 trillion reconciliation spending package. House Democrats are saying both the infrastructure bill and then this $3.5 trillion package must pass. What is in this other $3.5 trillion package?

Ditch: This $3.5 trillion package is sometimes referenced as reconciliation, which means that it’s going to go through a special set of budgetary rules that will allow it to pass with a slim majority vote in both chambers, which means that in theory, they could pass it through the Senate without a single Republican signing on. And that means in turn that the bill could be much further left than it would be if it needed to get bipartisan buy-in.

And because of that, they’re looking to shoehorn every progressive cause that they can think of into this bill. So they’re talking about big increases in social spending, massively expanding the welfare of state. They are looking at rolling out all kinds of environmentalist programs, huge amounts of spending that they would try to use to prop up favorable industries and favorable businesses, and try to implement rules that are going to punish businesses and industries that they don’t like. And then, they also have $100 billion set aside for a program that would try to promote mass amnesty for illegal immigrants.

Now, fortunately, that last thing might not be able to fit through the budget rules, but we can’t guarantee that it gets struck down. It very well might go through.

Allen: Well, I know House Speaker Nancy Pelosi, she said that she’s not going to take up the $1.1 trillion bill unless the Senate also passes that $3.5 trillion reconciliation package. So what do you think the chances are that the larger appropriations bill will pass the Senate? And do you think House Democrats are going to budge? And if it doesn’t pass, that they would go ahead and pass the $1.1 trillion bill?

Ditch: There are a lot of complications. For example … the full Democratic Caucus in the Senate is supporting the infrastructure bill, [but] there are a lot of very prominent members in the House caucus who are upset with the infrastructure bill that the Senate has put together. They might vote against it. And given how narrow the House majority is, that would increase the amount of Republican votes that they would need. And they can’t guarantee that they can get that.

So that’s No. 1, they might not even pass the infrastructure bill in the House.

No. 2, there’s already pushback among some moderate members in both the House and the Senate on the Democratic side against such an enormous tax and spend bill.

It’s important to understand the $3.5 trillion package, which is going to include spending and taxes, would be the largest piece of legislation in the history of the world. And that’s a tough pill to swallow. For instance, [Democratic Sen. Kyrsten] Sinema of Arizona has already come out saying that she is not comfortable with that kind of growth of the federal government.

Allen: That’s hard to swallow—the largest spending bill in the history of the world.

Ditch: Yeah. And it would be one thing if this was being done at a time where there were big majorities, it was clear that this is what the American public wanted, but instead, the American public has chosen over the last several cycles to have very narrow majority, essentially divided control of power. There’s no mandate for this kind of radical agenda.

Allen: Wow. So, the Congressional Budget Office says for just the $1.1 trillion infrastructure bill, they say, just that bill alone, that’s going to add significant debt to our national debt. And on the left we have those saying, “Well, actually, the bill will create opportunities for economic growth. It’ll sort of balance out or cancel out that debt.” So who’s right here? What are the long-term impacts of just the lesser bill?

Ditch: Members of Congress in both parties, unfortunately, have a habit of saying that legislation they like, that’s going to increase the debt, will pay for itself. The problem is that the legislation needs to generate a 500% return on investment to get there, because typically, the federal government is taxing 20% or less of the economic output. And there is no way that you’re getting a 500% return on investment for what’s in the infrastructure bill—again, spending on things like Amtrak and transit that people just don’t use.

They want to spend money on broadband internet. Again, that’s something that on the surface might sound like a great thing, but they’re going to spend all this money on broadband internet to give access to a relatively small part of the population. But they also are implementing all kinds of social justice rhetoric within the broadband section that’s going to turn this more into the public housing version of the internet, rather than expanding the high-quality internet that people are thinking of.

Allen: So in other words, we’re seeing behind a lot of these things is really quite a bit of a leftist agenda.

Ditch: Absolutely. For an infrastructure bill that should be focused on sort of the nuts and the bolts—what’s practical? How are we going to get these things built? This infrastructure bill, they include the word “equity” more than 50 times. Equity being one of the leading left-wing concepts. It’s something that would not have been mentioned in previous bills. They’ve inserted it here because they want to transform places like the Department of Transportation into a vehicle for social change.

Allen: Very, very telling. And it sounds like they’re not hiding that agenda at all, including language like that so often in the bill.

Ditch: And another thing that just absolutely blows my mind is that they have a provision that they believe the federal government should be subsidizing internet access for “incarcerated individuals,” which we might think of as prisoners.

Allen: So really just building it on. Well, I want to chat just a little bit more about the impacts to our economy here. Since the start of 2020, we’ve increased our national debt by $5.2 trillion. And with this infrastructure bill and the reconciliation package, it doesn’t appear like the government has any plans at all on slowing down on that spending. So what does that mean for the single mom of two kids in Kansas, or the small business owner in Texas, maybe a new college grad, or the retired engineer in Florida? How does this much government spending affect everyday Americans?

Ditch: Well, for one thing, every dollar that’s spent is going to be taxed, whether it’s today or tomorrow. There is no such thing as a free lunch. And the left knows it, which is why they are expecting to have at least $1.5 trillion worth of tax increases, if not more, in the reconciliation package. And they’re going to try to focus those taxes on job creators. So they’re looking at taxes on personal investment. They’re looking at taxes on businesses.

What the economy needs right now—because we still haven’t gotten back to where we were before the pandemic, we still got work to do to get the economy back in shape—we need private sector investment, we need businesses to start, we need businesses to invest and grow, and tax increases on that investment is going to kneecap the economic recovery. So that’s first and foremost.

The other concern I have is they are blowing an incredible amount of money through the economy with all of this new spending. And that is a driving force behind the inflation that we’re seeing.

Some amount of federal spending, even a small increase, for example, it’s something that I would oppose as a fiscal conservative, but it wouldn’t necessarily be dangerous. But what the federal government has done by injecting trillions of dollars in the different COVID bills, in the stimulus bill over the course of the last year, and then adding to that with two more multitrillion-dollar spending packages over and above what they’ve already spent, that threatens to return us to the kind of inflation that we haven’t seen in decades.

Allen: So what are the solutions?

Ditch: One solution would be for members of Congress to hit the brakes a bit. They don’t have to pass the Senate’s infrastructure bill. They don’t have to spend $3.5 trillion in the reconciliation package. In addition to that, it is vital for Congress to take responsibility for programs like Social Security and Medicare that are on the fast track to bankruptcy. And if those programs really do hit the wall, that’s going to have big ramifications, both for retired Americans and for working Americans.

Allen: David, any last thoughts before we let you go? We really appreciate your expertise on this.

Ditch: The last time that we saw Congress really wake up and take responsibility for how they use taxpayer dollars was a result of the tea party movement. And that wasn’t driven by leads, it was driven by voters, it was driven by citizen activists who made their voice heard. And it’s important that that happen again, because I really think that’s the only way we can get Congress to do its job properly.

Allen: David Ditch, a policy analyst in The Heritage Foundation’s Center for the Federal Budget, sir, we thank you so much for your time. And for our audience, if you want to read more about this topic, we encourage you. You can search for David’s name, David Ditch, on The Daily Signal. You’ll see his latest pieces on this topic. But we really so appreciate your time and you coming on to break this down for us, David.

Ditch: Thank you very much.

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