Moody's Analytics on Build Back Better: "will strengthen long-term economic growth..."

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Jesse Lee

@JesseLee46
Moody's on Build Back Better: "strengthen long-term economic growth, the benefits of which would mostly accrue to lower- and middle/income Americans... Concerns that the plan will ignite undesirably high inflation and an overheating economy are overdone."

https://moodysanalytics.com/-/media/article/2021/macroeconomic-consequences-of-the-infrastructure-investment-and-jobs-act-and-build-back-better-framework.pdf…
7:50 AM · Nov 4, 2021

Macroeconomic Consequences of the Infrastructure Investment and Jobs Act & Build Back Better Framework

INTRODUCTION

Lawmakers in Washington DC continue to work feverishly on another massive fiscal plan, including a more than $1 trillion bipartisan infrastructure deal and a $1.75 trillion package
of social spending and tax breaks to lower- and middle-income households that the Biden administration and congressional Democrats hope to pass into law via the budget reconciliation process. While the legislation remains in flux, it is similar in spirit to the Build Back Better agenda President Biden proposed earlier this year. If this is close to what becomes law, it will strengthen long-term economic growth, the benefits of which would mostly accrue to lower- and middle- income Americans. The legislation is more-or-less paid for on a static basis and more than paid for on a dynamic basis through higher taxes on multinational corporations and the well-to-
do and a range of several other pay-fors. Concerns that the plan will ignite undesirably high inflation and an overheating economy are overdone, as the fiscal support it provides will ensure the economy only returns to full employment from the recession caused by the COVID-19 pandemic. Because the package includes a myriad of spending and tax initiatives, some of which are new and uncertain, implementing this legislation as intended and in a timely way will take deft governance. In this white paper, we assess the macroeconomic impact of both the bipartisan infrastructure deal legislation and the reconciliation package of social spending and tax changes.

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