Biden’s infrastructure plan would cut U.S. debt and slightly increase economic growth - Wharton study

CNBC reports that according to a new study from the University of Pennsylvania’s Wharton School, a bipartisan infrastructure deal would not only add to economic growth, but also lower the national debt.

Researchers at the Wharton School said the additional $579 billion in new infrastructure spending would increase domestic output by 0.1% and decrease the U.S. debt by 0.9% by 2050.

“Over time, as the new spending declines, IRS enforcement continues, and revenue grows from higher output, the government debt declines relative to baseline by 0.4 percent and 0.9 percent in 2040 and 2050 respectively,” the Wharton team wrote.

Wharton senior economist Jon Huntley said improvements to public capital (roads, bridges and other physical infrastructure) makes private capital (trucks and trains hauling goods for companies) more productive over time.

Fewer potholes and rail service interruptions, when summed over years, increase U.S. economic activity and encourage further investment from the private sector.

The projected uptick to GDP and concurrent reduction to the national debt, though fairly modest, are likely welcomed news to the Democrats and Republicans that brokered the agreement with the White House.