Look at Build Back Better's Benefits, Not Its Price Tag - Alan Blinder

[question everything]

It’s past time that Americans heard more about what’s inside President Biden’s Build Back Better plan than about the sticker price. For starters, the budget numbers cover 10 years, a decade in which the Congressional Budget Office projects $288 trillion worth of economic output. So a BBB plan of $1.75 trillion or so would amount to roughly 0.6% of gross domestic product—slightly more than the 0.5% Americans spent last year on tobacco.

For reasons both technical and economic, no one can make accurate budget projections 10 years ahead. Try forecasting what GDP, tax revenue and spending will be over a decade. But another huge source of forecasting error is political. Try forecasting the decisions of Congress over a decade. CBO doesn’t attempt to do that. Instead, it assumes that laws will remain unchanged for the entire decade. That will certainly be wrong. But the CBO isn’t about to second-guess Congress.

(snip)

The so-called $1.75 trillion plan that recently passed the House was scored by the CBO at $1.64 trillion. And it includes several provisions that will surely be cut in the Senate. The bill Mr. Biden eventually signs will be cheaper. But instead of focusing on numbers, Americans should be debating three big issues. Do the BBB proposals spend public funds wisely? Is the proposed new spending oriented toward creating a better future? And are we paying for it in reasonable ways?

The first question is far and away the most crucial. Conservatives will tell you that not all government spending proposals are well-designed and effective. True. But some are. The House bill includes several real winners. Do you oppose universal pre-K education? You shouldn’t; it works. Are you against more-affordable child care? Not many Americans are. Do you think we should ignore global climate change? If so, think again. The list goes on and on. In a bill this large and multifaceted, everyone can find something they don’t like. But by and large, the BBB plan is well-designed. Second, will all this new spending improve future economic and social conditions, or just finance a spending spree today? Overwhelmingly, it’s the former. About two-thirds of BBB spending can justifiably claim to be investments in the future. That’s pretty good for government work.

Third, should we pay for all this spending with higher taxes or rely on deficit financing? A basic principle of public finance calls for governments to finance recurring expenditures by recurring revenues, but to borrow for long-term investments. The Biden team, however, decided against using deficit financing this time, opting to pay for everything—mostly through higher taxes on corporations and the rich. The choice between taxing and borrowing matters for many reasons. One revolves around short-run macroeconomic impacts. With jobs plentiful and inflation high, it is certainly arguable that we don’t need more fiscal stimulus right now. Better to cover additional spending with additional taxes.

(snip)

So here’s my bottom line on BBB. Members of Congress should get over the big numbers; they mean nothing to most Americans. Focus instead on the merits of the case. Make sure the money is spent wisely. Target most of the funds toward the future. Finance the package sensibly. Then vote for it.

https://www.wsj.com/articles/look-at-build-back-betters-benefits-not-price-tag-federal-budget-bbb-reconciliation-debt-cbo-11638718325 (subscription)

Mr. Blinder, a professor of economics and public affairs at Princeton, served as vice chairman of the Federal Reserve, 1994-96.

[BeckyDem]

1. MSM did not cover the remedies to many of the countries problems.

It is shameful beyond words. It is their job to report the facts, not focus on the horse race of argument.