Monday, Dec. 13, 2021
Is the Build Back Better Act expected to increase inflation?
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.
This fact brief is responsive to conversations such as this one.
Sources
- Politico Secretary of the Treasury memo on fiscal responsibility and the Build Back Better Act
- Center on Budget and Policy Priorities Build Back Better would save about $2 trillion in second decade
- Economic Policy Institute Open letter from Nobel Laureates in support of economic recovery agenda
- Invest in America Action Economists: Build Back Better Act’s cost cutting measures will alleviate strain of inflation on families
- Committee for a Responsible Federal Budget What Will Build Back Better Mean for Inflation?
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Fact briefs are bite-sized, well-sourced explanations that offer clear "yes" or "no" answers to questions, confusions, and unsupported claims circulating online. They rely on publicly available data and documents, often from the original source. Fact briefs are written and published by Gigafact contributor publications.
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