The INVEST in America bill, HR 3684, also known as the infrastructure bill, passed the House on July 1st, and the Senate on August 10th. You can view the Senate voting roster here. We raise this, despite heavy political haggling about funding levels and deficits, federal infrastructure spending is a pale shadow of past practice. We also point out that an environment of evenly divided hyper-partisanship, a single senator or two can gain outsized visibility as they are able to hold hostage any progress on voting.
There has been a tussle in the House as well; whether to vote on infrastructure separately, combined with the upcoming budget resolutions or voting budget resolution first. The House passed a reconciliation bill on August 24, 2021 setting out budgetary levels for federal FY 2023 and giving instructions to the legislators for markup. House Speaker Pelosi set September 27 for a vote on the infrastructure bill, HR 3684.
The National Association of State Budget Officers, NASBO, succinctly explains September funding deadlines and expirations here. Briefly, reconciliation language is to be drafted by September 15; infrastructure, as mentioned above, is to be voted September 27; action on the debt ceiling may be needed as well. Expirations include the end of expanded unemployment insurance on September 6; federal highway program reauthorization ends September 30; the National Flood Insurance Program, NFIP, Temporary Assistance for Needy Families, TANF and the increased benefit for Supplemental Nutrition Assistance Program, SNAP, each end September 30.
Given continuous postponement of infrastructure funding, it is worth noting the history of government involvement. In their latest “TLR on the economy” newsletter, Philippa Dunne and Doug Henwood comment: “depreciation still has the upper hand for both the private and public sectors. Federal civilian net investment has been hugging zero for two decades.”
They continue: “Net private fixed investment, excluding housing, rose from 1.9% of GDP in 2020 to 2.1% in 2021 H1, an extremely low level by historical standards, matching or barely exceeding recession years in the past.” Private fixed investment is “equal to the average for the 1940’s, a period that included World War II, when civilian spending was squeezed.”
Federal non-defense net spending (net of depreciation) was 0.1% of GDP in H1 2021, matching the average since 2000. “State and local net investment was a bit better at 0.6% of GDP” Dunne and Henwood note, but only about one-third the average from the 1950’s and 1960’s. Federal net investment is a quarter of its average during those decades. In this context, proposed funding levels for infrastructure do not seem excessive at all, and we note that substantial post-war infrastructure investment took place alongside healthy economic growth of the nation. In the 20 years from 1961-1980, GDP grew on average 3.67% while average growth in the 20 years from 2001-2020 was only 1.72% according to World Bank national accounts data based on a constant 2010 US dollar.
