Is the Build Back Better Act expected to increase inflation?

Monday, December 13, 2021
By Jacob Alabab-Moser

Most economists in government and academia agree that the Biden administration's Build Back Better legislation will not contribute to inflation.

A memo by Treasury Secretary Janet Yellen reassured lawmakers that the legislation would not add to short- or long-term inflation given that it is projected to have a small short-term net deficit impact and, as highlighted by the Congressional Budget Office, reduce the deficit in later years.

Two groups of top economists released statements of support for the legislation as well as Biden's larger infrastructure and social spending agenda. The groups highlighted how the legislation will counter both short-term price increases during the pandemic and long-term inflationary pressures by investing in economic capacity and productivity over several years.

The Committee for a Responsible Federal Budget called the expected impact "ambiguous," recommending fully paying for the costs to reduce inflationary risk.

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