This week, President Obama rolled out a plan to invest $50 billion in infrastructure as a way of boosting job creation, which will be (at least partially) paid for by cutting subsidies to oil and gas companies. Republicans immediately criticized the proposal, with even Sen. Jim Inhofe (R-OK), who typically jumps at the chance to approve infrastructure spending, saying he wouldn’t vote for it.
But many Republicans, at the same time that they are claiming that a $50 billion investment in America’s infrastructure is a budget-buster, are pushing to extend the Bush tax cuts for the wealthiest two percent of Americans. At $830 billion, the price tag for extending that sliver of the Bush cuts is more than 16 times the cost of Obama’s infrastructure proposal:
Rep. Candice Miller (R-MI): Miller “said the Obama administration’s proposal amounts to a second, costly stimulus plan…Instead, she said, the president should quickly support an extension of the George W. Bush tax cuts for all income groups.”
House Minority Leader John Boehner (R-OH): We don’t need more government ’stimulus’ spending. We need to end Washington Democrats’ out-of-control spending spree, [and] stop their tax hikes.
GOP Senate nominee Pat Toomey (PA): “Pat opposes more deficit spending and will fight for fiscal responsibility and reducing the deficit in the Senate,” said Toomey spokesperson Nachama Soloveichik.
Sen. Mitch McConnell (R-KY): After the administration pledged that a trillion dollars in borrowed stimulus money would create 4 million jobs and keep the unemployment rate under 8 percent, their latest plan for another stimulus should be met with justifiable skepticism…The administration wants to do it again — this time with higher taxes for even more new spending.
These Republicans all support extending the Bush tax cuts for the wealthiest two percent of Americans as a means of boosting the economy. But according to the Congressional Budget Office, investing in infrastructure provides far more bang for the buck than extending the Bush tax cuts.
In fact, extending the Bush tax cuts provides just 10 to 40 cents in economic activity for every dollar spent, compared with up to $1.20 for a dollar spent on infrastructure. As CBO said, “a permanent extension [of the Bush tax cuts] would entail large revenue losses after the recovery is over, so its effects on output and employment in the next few years per dollar of total budgetary cost would be much lower.”
Now, we shouldn’t pretend that Obama’s infrastructure plan is a silver bullet for job creation. Not only is it too small, infrastructure projects take some time to get up and running, so even if the measure does pass, the effects won’t be noticeable for quite a while. But if $50 billion (that will be at least partially paid for) is too expensive, then extending the Bush tax cuts for the wealthy is definitely unaffordable as well.