How can Build Back Better soothe Americans’ inflation woes?
For proponents of President Biden’s Build Back Better plan, a challenging obstacle recently has emerged. That obstacle is not Sen. Mitch McConnell (R-KY), although McConnell certainly is challenging. It’s not even Sen. Joe Manchin (D-WV), although Manchin definitely represents an obstacle.
No; the most recent and perhaps the greatest impediment to Build Back Better’s passage in the Senate is the fear of inflation – and fears stoked by opponents that more government investment will simply make things worse.
On Tuesday, expert economists came together to participate in a webinar sponsored by the Coalition on Human Needs and entitled, “Inflation Truths: Why Build Back Better Will Help, Not Hurt.”
The webinar featured Jared Bernstein, a member of the White House Council of Economic Advisers; Josh Bivens, Director of Research at the Economic Policy Institute; and Rakeen Mabud, Managing Director of Policy and Research and Chief Economist at the Groundwork Collaborative.
The three experts all agreed that President Biden’s American Rescue Plan, passed by Congress in March, did not contribute significantly to the current rate of inflation, and Build Back Better would gradually ease inflation’s sting, not make it worse. But they also spoke of the need to address inflation’s immediate harmful impact on struggling families, and for effective messaging that explains inflation’s root causes, and discusses how Build Back Better and the new infrastructure legislation offer solutions.
“Some point the finger at government spending, such as the American Rescue Plan, and claim that President Biden’s Build Back Better agenda will contribute to further price increases,” said Ellen Teller, Director of Government Affairs at the Food Research & Action Center, who moderated the event. “But Build Back Better is a once-in-a-generation chance to help lift people out of poverty and put them on a path to prosperity.”
Bernstein attributed the current inflation rate to a number of interrelated factors: an imbalance of goods vs. services; supply chain snarls; labor shortages due to a lack of child and home care as well as COVID-19 fears; healthy household balance sheets, which allow families to spend more on durable goods; and the concentrated power of companies to set prices, which allows them to pass prices on to consumers.
But Bernstein also endeavored to put today’s economic conditions into perspective. He said if you look at the Consumer Price Index over the past 50 years, there have been times when sustained inflation was much worse – during much of the 1970s and early 1980s, for example.
And he pointed out that incomes at all levels are on the rise – lower-income families included. He said the latter is due to government investment since the pandemic began in stimulus checks, enhanced UI benefits, more nutrition assistance, and the expanded Child Tax Credit.
Josh Bivens, EPI’s Director of Research, also noted that the U.S. economy has performed extraordinarily well lately, adding 5.8 million jobs since December 2020 — five times the rate of job growth compared to the aftermath of the 2008 Great Recession. One could, he said, “spin the dial” and take steps to slow inflation, but one result of that would be to slow job growth tremendously. “We still have 5 million jobs to get back,” he said. “COVID-19 was a terrible shock. And if we decide today to spin the dial hard to get lower inflation, it means it will take much longer to get the 5 million remaining jobs back, and that would be a big cost that people should think about.”
Bivens was asked how he would “message” Build Back Better and bipartisan infrastructure legislation as an effective means of fighting inflation. His response:
“It means that more trucks can go through roads without being damaged and we have rail capacity to move goods better and investment in human infrastructure. More people who might want to join the paid labor market and are constrained because they have to care for a child or older relative – they will have the resources that let them have that care done…(so) they can also join the paid labor market, so you have an increased labor supply, allowing more goods to be produced. It is basically going to accommodate a higher level of demand at any point in time without leading to inflationary episodes like we are seeing now.”
Rakeen Mabud of the Groundwork Collaborative discussed effective ways to frame the issues of inflation and the Build Back Better agenda.
Her first suggestion was to empathize with the concerns of Americans, nine out of ten of whom are now concerned about inflation, according to recent polling. “As a result, inflation is becoming an effective boogeyman to oppose and whittle down the smart investment that we’ve needed for decades,” she said. “We’ve seen inflation used to discredit a broader economic agenda from the American Rescue Plan to the [student] loan cancellation to the bipartisan infrastructure framework that we know will help grow the economy and will result in prosperity.”
She added that it is important that advocates communicate to the public who is behind inflation – and often, she said, the “who” is the face of a corporation. For example: the cost of diapers has gone up 15 percent in the U.S. since 2020. But just two corporations – Kimberly Clark and Proctor & Gamble control 70 percent of the nation’s diaper market.
“We are seeing how concentrated corporate power is affecting real people,” she said. “The question is, how do we respond to all this? First, it’s critical that we take the air out of the claims that large-scale public investments should be postponed or whittled down. They are rooted in years of exploited supply chains, and actors who are using this current moment to line their shareholders’ investments. Pulling back is the last thing that we need. Making these smart, long-overdue investments will help create a resilient supply chain and a strong workforce needed to withstand economic shock while lowering health and child care (costs), which are a huge chunk of household budgets, and Build Back Better and associated policies do all of that.”
Mabud said recent polling and focus groups conducted by her organization find that messaging centered around corporate greed works.
“Three in five Americans and seven out of ten persuadable Americans, those who disapprove of President Biden’s handling of the economy, and are supportive of the Build Back Better (plan), like the messages that corporate greed is taking advantage of consumers…One voter in Virginia said that ‘these corporations, all they want to do is profit and they don’t care about us, or paying us what we’re worth or jacking up the rent or the energy.’”
In closing, Mabud repeatedly endorsed using a “We are the economy” frame when messaging around inflation and Build Back Better. “When we do well, the economy does well,” she said.
The one-hour webinar was recorded and closed-captioned.; you can watch it here. And you can view slides from the webinar here.