ICYMI: New Reports: Build Back Better Framework will Grow the Economy and Ease Inflationary Pressures

The Build Back Better Framework will create durable economic growth and ease bottlenecks and inflationary pressures by increasing the supply of goods that consumers want to buy, improving the resiliency of our supply chains, and reducing the costs of producing and getting goods to market. New analyses from the Economic Policy Institute (EPI) and Moody's Analytics underscore that point, In fact, the EPI analysis finds that, "the Build Back Better Act's macroeconomic boost looks more valuable by the day." Specifically, the new EPI analysis finds:

• The U.S. economy is not overheating due to "too much" fiscal relief and recovery provided earlier in 2021. Given the productive capacity that existed pre-COVID, the Economic Policy Institute projects that the U.S. economy should be easily capable of producing as much GDP as was produced from July through September without causing any inflationary pressures.
• The uptick in inflation seen in the spring and summer was not driven by an increase in demand. Instead, it was driven by a very sharp shift in spending patterns over the COVID-19 economic recovery. Specifically, over the recovery, U.S. households cut back spending on face-to-face services (like restaurants, hotels, gyms) and significantly increased spending on goods (like clothing, furniture, and autos). In addition to this sharp reallocation of spending, temporary supply-side bottlenecks in specific sectors – like autos – also contributed to pushing up inflation.
• Going forward, there is very little reason to worry about overheating putting further upward pressure on inflation. According to EPI, fiscal policy is set to become substantially less expansionary in coming quarters, putting a large drag on demand growth.

The Economic Policy Institute concludes that policymakers shouldn't overreact to the mid-year inflationary uptick that is already levelling off and should instead pass the bipartisan Infrastructure Investment and Jobs Act and Build Back Better Act. According to EPI, these bills would provide a host of benefits, including stabilizing the economy, boosting long-run growth, and providing an insurance policy against demand growing too slowly in coming years. President Biden's Build Back Better Framework will set the United States on course to meet its climate goals, create millions of good-paying jobs, enable more Americans to join and remain in the labor force, and grow our economy from the bottom up and the middle out. And, it is fully paid for and will reduce the deficit by making sure that large, profitable corporations can't zero out their tax bills, no longer rewarding corporations that shift jobs and profits overseas, asking more from millionaires and billionaires, and stopping rich Americans from cheating on their tax bills. Under this historic agreement, nobody earning less than $400,000 per year will pay a penny more in taxes.

The Moody's Analytics report finds that the Build Back Better Act will add 1.5 million jobs per year on average across the decade, while boosting GDP by nearly $3 trillion, easing inflationary pressures, and reducing the financial burden of inflation for working families by bringing down the cost of childcare, eldercare, education, healthcare and housing.

Read the full Economic Policy Institute analysis here and the full Moody's Analytics report here.