Lie of the Year
The Wharton BBB Budget Model shows the true cost of Biden’s Build Back Better plan which Biden actually said costs nothing.
Wharton Spending Analysis
In the illustrative permanent spending scenario, the total cost over 10 years is instead $4.26 trillion. Transfers and tax expenditures make up 66 percent of new spending under the permanent spending scenario.
The largest proportion of this spending is on the CTC [Child Tax Credit] extension, which totals $1.8 trillion in new spending over the budget window. The Premium Tax Credit expansion is the next largest expenditure in Transfers and Tax Expenditures, requiring $385 billion of new spending over the budget window.
Extending the EITC results in $125 billion of new spending. Labor Productivity boosting spending is the second largest new spending category in the permanent spending scenario, receiving 19 percent of new spending over 10 years.
The dollar amount of the spending is twice the cost under the White House’s proposed framework because the White House proposed three small spending years, followed by three years of preschool and then an end to preschool and childcare programs; in this scenario, we extend preschool and childcare programs. Other federal spending and public infrastructure investment remain unchanged in dollar terms and now make up 12 and 3 percent of new spending, respectively.
Revenue Projections
Build Back Better Economic Impacts
In the illustrative scenario, government debt increases by 19.9 percent and 25.2 percent in 2040 and 2050, respectively. This new debt crowds out private investment, decreasing the capital stock by 7.6 percent in 2050. More scarce capital decreases the productivity of workers, lowering wages by 1.5 percent in 2050. In turn, lower wages and the transfer provisions in the proposal decrease hours worked by 1.3 percent in 2050. Overall, the fall in both labor and capital decreases GDP by 2.8 percent in 2050.
Manchin’s Fears
The Wharton Model specifically outlines the scenario Manchin fears. That is, once started, government programs never end.
The Progressissives understand this as well, thus their efforts to play games with durations rather than fully fund programs for 10 years.
Manchin Calls Timeout to Study Build Back Better, May Vote Against
On November 1, I noted Manchin Calls Timeout to Study Build Back Better, May Vote Against
- “As more of the real details outlined in the basic framework are released, what I see are shell games and budget gimmicks that make the real cost of this so-called $1.75 trillion dollar bill estimated to be twice as high if the programs are extended or made permanent,” said Manchin
- “Simply put, I will not support a bill that is this consequential without thoroughly understanding the impact that it will have on our national debt, our economy and most importantly all of our American people,” he said.
- “To be clear, I will not support the reconciliation legislation without knowing how the bill would impact our debt and our economy and our country. We won’t know that until we work through the text.”
Pelosi’s Curious Response
The response from House Speaker Nancy Pelosi was more than a bit curious: She added items to the proposal instead of taking any away.
What’s Going On?
I discussed what I thought might be happening in Pelosi Pushes for a Vote That’s Doomed in the Senate, What’s Going On?
Regardless of what game Pelosi is playing, Manchin needs to not only push for more time but also read and understand the true costs of Build Back Better as noted by Wharton.
Dear Senator
@Sen_JoeManchin
Dear Senator, you are correct to have concerns over the budget.Wharton analyzed it and concluded the true cost is $4.26 trillion!
Please do not be railroaded before studying the bill and Wharton analysis. https://t.co/TyYmAJRkte
— Mike “Mish” Shedlock (@MishGEA) November 5, 2021
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