Both Biden and Republicans are saying their $1 trillion infrastructure plan is paid for – an expert says it’s more like ‘pixie dust’

Joe Biden with bipartisan group of senators.
President Joe Biden with the bipartisan group of senators that agreed a $1 trillion infrastructure plan. Kevin Dietsch/Getty Images
  • A bipartisan group wants stimulus funds, among other things, to fund $1 trillion in infrastructure spending.
  • Tax Policy Center’s Howard Gleckman said those plans are “pixie dust” and aren’t realistic.
  • He said the plan can’t be funded without tax increases, but Biden and the GOP differed on that.
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President Joe Biden reached an agreement last week with a group of bipartisan senators on a $1 trillion infrastructure plan, and they claimed it was paid for. But details of the funding proposals are murky – so much so that experts are calling it completely unrealistic.

Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, released a report on Monday analyzing the bipartisan group’s plans to pay for its infrastructure plan. Gleckman, who regularly writes about fiscal policy for the center’s TaxVox blog, wrote that the group’s plan to fund the package amounts to “pixie dust.”

“Let’s face it: If Congress wants to pay for a $1 trillion spending plan without raising the deficit, the only real ways to finance it are by raising taxes, cutting other spending, or both,” Gleckman wrote. “This agreement does very little of either. And while the White House fact sheet describing the agreement includes no revenue estimates with its brief descriptions of the pay-fors, they are certain to generate far less than the plan costs. “

Along with repurposing stimulus money and selling oil from the Strategic Petroleum Reserve, the other funding ideas from the bipartisan group include extending the mandatory sequester, which would cut payments to Medicare providers if Congress doesn’t meet certain budget targets, and using funds from the 5G spectrum sale in February, which the senators are counting as new spending.

Gleckman, who is affiliated with the left-leaning Urban Institute, told The Washington Post that the group thinking these funding methods would pay for a $1 trillion infrastructure plan is a “daydream.”

“There’s not a chance they’re going to get it off a list like this,” Gleckman told the Post. “It’s full of stuff that isn’t a tax increase and isn’t a spending cut and is just wishful and fanciful.”

Biden initially proposed a corporate tax hike to fund infrastructure, but Republicans have strictly opposed that plan, while Biden rejected GOP proposals to hike the gax tax because that would violate his promise to not raise taxes on families making under $400,000. Those were the only realistic ways to fund infrastructure, Gleckman said.

Reducing the tax gap through stricter Internal Revenue Service enforcement was included in the bipartisan deal, though, which Sen. Mark Warner (D-Va.), part of the bipartisan group, told reporters that “there’s lot of evidence that if you invest more in the IRS, it’s going to pay a huge dividend.”

Insider previously reported that lawmakers on both sides of the aisle agree IRS enforcement should remain. But even so, revenue generated from stricter enforcement would not come close to closing the tax gap – between what’s owed and what the IRS collects – of as much as $1 trillion per year. Even with Biden’s initial proposal of $80 billion more in IRS funding, hundreds of billions of taxes would still go uncollected each year.