Washington, D.C. – A new analysis from the Center for American Progress outlines how President Joe Biden’s signature legislative priorities—the already passed American Rescue Plan and Infrastructure Investment and Jobs Act as well as the proposed Build Back Better Act—will help curb America’s decades long affordability crisis without adding to inflation, leading to much-needed stronger inflation-adjusted income growth now and for years to come.
Long before the COVID-19 economic crisis, costs of basic items such as housing, child care, and prescription drugs were outstripping wage growth for many Americans. The crisis could have greatly exacerbated these issues, leading to a widespread economic and humanitarian crisis, but fortunately, the American Rescue Plan has already delivered three strikes against financial insecurity. It boosted incomes in the very short term, accelerated job creation in short order, and helped families build a modest financial cushion amid the ongoing recovery and pandemic, with especially strong income gains for lower-income families.
The bipartisan Infrastructure Investment and Jobs Act, which was signed into law yesterday, and the Build Back Better Act, which is currently under consideration, will lay the foundation for stronger income growth above and beyond the rate of inflation in a number of critical ways.
Importantly, these two major pieces of legislation will:
- Reduce long-term inflationary pressures: Investments in new roads, bridges, and internet access for all will reduce long-term inflationary pressures, easing future supply-chain bottlenecks and making it easier to get products and services to people. The Build Back Better Act, meanwhile, will expand child care capacity and add to other care infrastructure in home- and community-based settings. More people, especially women, who still bear the brunt of caring for family members, will be able to join and stay in the labor force, ensuring that households get services, from health care to education, and goods, from meat to cars, when they need them. In addition, the expansion of both physical capacity and the number of people who will bring their skills, talents, and hard work to the labor market will measurably reduce inflationary pressures over the coming years. The Build Back Better Act is fully paid for over the longer term, and the Infrastructure Investment and Jobs Act adds modestly to the long-term deficit. This fiscally responsible approach will further reduce inflationary pressures.
- Lower costs on essentials such as prescription drugs, energy, child care, and housing: Both pieces of legislation will boost people’s incomes, as the American Rescue Plan recently did. They will put people back to work much faster than otherwise would have been the case. The additional infrastructure spending, which is largely paid for by repurposing existing pandemic relief funds, among other items, will mean more hiring, especially in construction and manufacturing. Likewise, the additional funds and higher wages for child care and home- and community-based services will lead to more hiring in these critical sectors—and will help improve jobs in female-dominated industries. At the same time, lower- and middle-income families with children will continue to receive extra child tax credit payments. The combination of more and better jobs at higher wages and additional tax credits will help ensure that families are able to make their paychecks go further.
- Put more people back to work in good-paying jobs: Many costs facing families will decline as a result of the newly passed and proposed laws, coupled with better implementation of existing laws. The Build Back Better Act’s proposed investments in clean electricity and energy efficiency will make energy costs more affordable, saving the average household approximately $500 a year in reduced energy costs. The Build Back Better Act also includes investments aimed at lowering drug prices and capping the amount seniors and diabetics have to pay out of pocket for their prescriptions. Investments in the care infrastructure will lower care costs thanks to more competition and greater availability of services. Likewise, infrastructure investments will lower the costs of transportation for people relying on public transit in their daily lives. And more spending on affordable housing, in combination with stricter anti-discrimination housing legislation, will make it easier for families to afford a roof over their heads. These public investments will occur against the backdrop of stricter antitrust rules that will boost competition and lower prices for many things that people want to buy, from apples to cars to health care.
“The American Rescue Plan, the Infrastructure Investment and Jobs Act, and the proposed Build Back Better Act are designed to create jobs, boost wages, and make life more affordable for families,” said Andres Vinelli, vice president for Economic Policy at the Center for American Progress. “If fully enacted, Biden’s economic agenda will help ensure greater financial security for American families long after the pandemic has subsided and will ease long-term inflationary pressures.
Read the column: “President Biden’s Economic Agenda Will Help Make Life More Affordable Without Adding To Inflation” by Rose Khattar, Andres Vinelli, and Christian Weller
For more information or to speak with an expert, contact Julia Cusick at [email protected].