ECONOMISTS: INFLATION WOULD BE EASED BY BUILD BACK BETTER ACT
WASHINGTON, DC — Yesterday, Treasury Secretary Janet Yellen noted that the Build Back Better Act “is anti-inflationary,” since it “boosts the economy’s ability to provide goods and services” and “eases expenses for families.”
Secretary Yellen’s comments are in line with those of leading economists, who agree that the Build Back Better Act would help ease inflationary pressures by making critical investments in America’s future and lowering key expenses for middle-class families, which would counteract inflation.
Here’s What Economists & Experts Are Saying About How the Build Back Better Act Will Ease Inflation:
Inflation is Being Driven By a Return to Normal Demand and Constrained Supply Chains, Not Government Spending
Josh Bivens, Research Director at Economic Policy Institute: “All in all, the inflation spike we’ve seen in 2021 was not driven by macro overheating. This spike was largely driven by Covid-related factors: reallocation of spending away from face-to-face services and port shutdowns and other supply-chain snarls.”
Jesse Rothstein, Professor at UC Berkeley: “After we shut down the economy in March 2020, we knew that we’d have some inflation as things restarted — that supply chains would create trouble as we tried to restart them again. It’s hard to imagine a scenario in which our economy was in better shape coming out of the pandemic.”
Lauren Melodia, Deputy Director of Macroeconomic Analysis at Roosevelt Institute: “Inflation during the pandemic, including today, is not due to an overheating economy. What we see today are price increases still related to pandemic disruptions and long-term under-investment in our economy as well as rises in volatile sectors like energy, which always ebb and flow.
CNN Fact Check: “To blame rising gas and food prices exclusively on government spending is false. Supply chains are in disarray, not just in the US. The global production of oil and many other goods decreased last year when demand cratered as a result of the pandemic. But while demand has since increased, production remains below pre-pandemic levels, leading to higher prices.”
The Build Back Better Act Could Reduce Inflationary Pressures, But Will Not Exacerbate Them
Joseph Stiglitz, Nobel Laureate Economist: “Because this agenda invests in long-term economic capacity and will enhance the ability of more Americans to participate productively in the economy, it will ease longer-term inflationary pressures. This simply means what it says: it will have positive ‘supply side effects’ which reduce inflationary pressures.”
Jason Furman, Professor at Harvard’s Kennedy School of Government: “Your regular reminder: The reconciliation bill would have essentially no discernible effect on the medium- or long-term path of inflation. That legislation should be evaluated on other criteria like what it does for opportunity, climate change & long-term growth.”
The Build Back Better Act Will Lower Key Costs for American Families, Counteracting Inflation
Janet Yellen, U.S. Treasury Secretary: “[The Build Back Better Act] is easing expenses for families, taking some of their most important and worrisome expenses, like child care, like health care, and providing resources — often in the form of tax credits — so that families can bear those burdens. And in that sense too, it’s relieving the stresses from inflation that we’re seeing as our economy is opening back up.”
Larry Levitt, EVP for Health Policy at KFF: “There is a provision in the Build Back Better Act directly targeted at inflation: Capping price increases for drugs at inflation in both Medicare and private insurance plans.”
The Build Back Better Act is a Long-Term Investment Plan That Will Boost Economy
Michael Hillard, Professor of Economics, University of Southern Maine: “BBB is an investment program. By helping families and addressing market failure in health care and child care, it will raise our workers’ productivity, relieving future price pressures while making life better for families and for our children’s future. It’s a win-win for all Americans.”
Claudia Sahm, Jain Family Institute: “The Build Back Better legislation in Congress now is about getting to a better place than before Covid. It’s about fixing the problems we brought into this crisis, such as children living in deep poverty, unaffordable housing, caretakers not earning a living wage, and the worsening effects of climate change. Let the Fed fight inflation. Let people get vaccinated. Congress must invest in our future.”
Rakeen Mabud, Managing Director of Policy and Research & Chief Economist, Groundwork Collaborative: “It is imperative that we address the real culprits behind recent price hikes: the powerful corporations lining their pockets at the expense of workers, families and consumers, and the chronic underinvestment in our supply chains and economy writ large. Smart, large-scale investments like Build Back Better, coupled with pro-competition safeguards, will shift power to workers, reduce costs and prices in the long run, and ultimately, create an economy that works for all of us.”
About Invest in America
Invest In America is a national rapid response operation advocating for robust public investment to rescue the economy from the COVID crisis and create prosperity for the future, and to fight back against fear-mongers who use deficit concerns as a scapegoat to starve American communities and businesses of resources.
The operation consists of two components: Invest in America, the charitable and public education arm, which is a fiscally sponsored project of Economic Security Project funded by the William and Flora Hewlett Foundation and Economic Security Project co-chair Chris Hughes; and Invest in America Action, the advocacy and social welfare arm, which is a fiscally sponsored project of Economic Security Project Action funded by Chris Hughes and the Omidyar Network.