President Joe Biden and Transportation Secretary Pete Buttigieg overstated the impact of the bipartisan, Senate-approved infrastructure bill on job creation, likely citing instead an economic forecast that includes the much larger and partisan “human infrastructure” bill.
An economic analysis by Moody’s Analytics found the bipartisan bill “supports only a modestly stronger economy.” The infrastructure bill alone would, at its peak in the middle of the decade, temporarily increase the number of jobs in the U.S. by 650,000, the analysis said. But it would take a few years for those jobs to emerge, and by 2031, after most of the infrastructure projects are finished, the bill would result in just 100,000 more jobs than if the bill did not pass, according to the analysis.
Biden and Buttigieg this week both included the employment gains from a much larger partisan reconciliation bill to overstate the projected jobs impact of the bipartisan infrastructure bill.
Two days before the $1 trillion infrastructure bill passed the Senate, Buttigieg on “Fox News Sunday” called the bill “historic legislation that’s going to get us better roads and bridges, better ports and airports, a better future for our economy and creating millions of jobs.”
“Forecasters on Wall Street project that over the next 10 years our economy will expand by trillions of dollars, and it will create an additional 2 million jobs a year beyond what was already projected — good-paying jobs all around the country,” Biden said.
We reached out to the White House press office for clarification about which Wall Street forecasters Biden was referring to, but we did not get a response. But Democrats have frequently cited the analysis from Mark Zandi, chief economist at Moody’s, and Bernard Yaros, assistant director at Moody’s.
The $1 trillion infrastructure bill, which includes about $550 billion in new federal spending, includes investments in construction of roads and bridges, expansion of clean energy sources, modernization of the electricity grid, expansion of broadband Internet access, replacement of lead water pipes, and improvements to public transit.
In its analysis, Moody’s notes that the initial Biden infrastructure plan was scaled back in order to win some Republican support.
As a result, the report states, “The bipartisan infrastructure deal is small and thus supports only a modestly stronger economy.”
Moody’s, July 21: The most immediate impact in early 2022 is to reduce growth, since the pay-fors take effect right away while the increased infrastructure spending does not get going in earnest because of lags in starting infrastructure projects until late in the year. The apex in the boost to growth from the deal is expected in 2023, when real GDP increases 2.9%, compared with 2.3% when assuming only the ARP [American Rescue Plan] is passed into law. The deal creates close to 650,000 jobs at its peak impact in the middle of the decade, reducing the unemployment rate a couple tenths of a percentage point.
We should note that other economists are not as optimistic about the economic impact of the infrastructure bill. The Penn Wharton Budget Model, for example, forecasts that the “proposal would have no significant effect on GDP by end of the budget window (2031) or in the long run (2050).”
As the infrastructure projects wind down by the end of the decade, Moody’s forecasts there will be about 100,000 more jobs in 2031 than if the infrastructure bill does not pass.
That’s a far cry from “an additional 2 million jobs a year beyond what was already projected,” as Biden put it, or “millions of jobs,” as Buttigieg said.
Moody’s does project those kinds of job gains if the much larger $3.5 trillion reconciliation bill also passes Congress. The so-called “human infrastructure” bill features a host of social investments, including funding for child and elder care, universal pre-K, free community college, and various climate change initiatives.
“The reconciliation package is large and thus meaningfully lifts economic growth and jobs and lowers unemployment,” the Moody’s analysis states.
According to Moody’s projections, if both the infrastructure and reconciliation package become law this year, the jobs gains would rise to nearly 1 million in 2023 and peak at about 2.6 million extra jobs in 2027. By the 10th year, 2031, the two plans would end up adding 2.2 million jobs. The reconciliation package alone accounts for 2.1 million of those.
The Senate passed a blueprint for the reconciliation plan on Aug. 11 strictly along partisan lines, 50-49. But its fate is far more tenuous than the infrastructure bill.
Shortly after the vote, Democratic Sen. Joe Manchin — whose vote will likely be necessary to pass the legislation — said he had “serious concerns about the grave consequences” of the bill.
“Early this morning, I voted ‘YES’ on a procedural vote to move forward on the budget reconciliation process because I believe it is important to discuss the fiscal policy future of this country,” Manchin stated. “However, I have serious concerns about the grave consequences facing West Virginians and every American family if Congress decides to spend another $3.5 trillion.”
An Aug. 2 White House fact sheet on the infrastructure bill also cites the forecast of “around 2 million jobs per year over the course of the decade” — if the infrastructure bill is passed together with “the President’s Build Back Better Agenda,” which is the reconciliation bill.
That’s a distinction Biden and Buttigieg glossed over when touting the impact of the bipartisan infrastructure bill. But it’s a big omission given that most of the 2 million jobs would be created by the reconciliation bill. (It’s also not the first time Biden and Buttigieg have exaggerated the impact of infrastructure legislation on jobs.)
Talking about just the infrastructure bill, Biden said that “over the next 10 years … it will create an additional 2 million jobs a year beyond what was already projected.” In fact, the infrastructure bill alone — according to Moody’s forecast — would create as many as 650,000 jobs in the middle of the decade. But by the end of 10 years, it is projected to result in 100,000 more jobs, not 2 million.
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