The latest sticking point over President Biden’s ambitious Build Back Better agenda? You guessed it: inflation. Asked this week about his reservations toward the legislation, Sen. Joe Manchin III (D-W.Va.) told reporters that inflation is "alarming. It’s going up, not down. And I think that should be something we’re concerned about.”
But inflation concerns are not a good reason to block this particular bill. They’re also not a compelling reason to support this legislation, despite what the White House and its allies often argue. Realistically, the bill is likely to have little effect on price growth either way.
It would do a lot of other really important things, though. And those things are what Democrats should emphasize when selling the bill — to Manchin and to the broader public.
To be fair, it’s reasonable to think that some elements of the legislation could contribute to inflationary pressures. The expanded child tax credit is designed to increase low- and middle-income families’ spending power. Overall consumer spending is already quite strong, and supply chains remain tangled. So this additional boost in demand could put some upward pressure on prices.
But other components of the bill would have the opposite effect.
For instance, the tax increases on corporations and wealthier Americans would effectively withdraw money from the economy, and therefore could be disinflationary.
Measures expanding the supply of housing would have similar effects. If more homes are available, after all, pressures on housing prices should abate.
Programs that expand access to preschool, child care and elder care could also help moderate inflation in the long run. These programs stand to make the working-age population more productive by enabling more Americans who might otherwise be busy with caregiving duties to participate in the paid labor force if they choose.
Big picture: Each of these programs’ effects on prices is somewhat indirect and likely to be modest. And the net effect of all of them put together could be a wash.
Inflation hawks point out that some of the larger Build Back Better programs that are likely to push prices up kick in before those anticipated to push prices down. That’s probably true. Even so, the magnitude of those front-loaded, fiscally expansionary policies is still small relative to the size of the overall economy.
Especially when you account for all the economic forces and policies that actually drive inflation, such as interest rates and the pandemic.
So it makes more sense to judge the bill on its more direct effects. Many of those are huge, and hugely positive — facts that have largely been lost in months of muddled messaging from Democrats and media coverage focused on the bill’s procedural progress rather than its contents.
That expanded child tax credit, for example, will keep millions of kids out of poverty. It already has, because a temporary version of the program was implemented earlier this year. (The last monthly installment of that temporary program went out to recipients this week.) Parents have been using their payments for school supplies, food, rent, child care and other necessities, according to census data.
This support reduces hunger and other deprivation today, and it helps children grow up to be healthier, more productive, higher-earning adults tomorrow. Simply put: This is not the program to cheap-out on, though it is reportedly in Manchin’s crosshairs.
The bill also includes huge investments in clean energy and other climate initiatives. They’re not perfect — there are cheaper, more effective tools to curb climate change — but they are nonetheless an improvement over the status quo. We’ve got only one planet, and this bill appears to be the most politically palatable option for keeping it habitable.
Other provisions, too, are unsung heroes of this legislation and would help struggling families nationwide.
Low-income Americans in the 12 states that refused to expand Medicaid would finally get access to subsidized health insurance, for instance. Americans already eligible for marketplace plans would also get more generous subsidies and so would pay less for their coverage in the years ahead relative to current law.
Roughly 7 million uninsured Americans are likely to gain health coverage as a result. This is the kind of thing Democrats — Manchin included! — should be shouting from the rooftops.
There’s a variety of other good stuff (and, to be fair, some not-so-good stuff). On the whole, this bill would transform the lives of millions of Americans by giving them greater financial, health and environmental security, and offering their children a shot at a better future.
If opponents dislike these objectives, they should critique them on their merits. Inversely, the bill’s advocates should promote the legislation on its merits, too.
Instead both sides seem trapped by their talking points over inflation — a politically and economically important issue, for sure, but one mostly unrelated to the matter at hand.