By John Harwood
The White House on Monday sent Democrats on Capitol Hill a new memo, obtained by CNN, touting the benefits of each major component of the sprawling legislative proposal that the President hopes to pass with only votes from his party’s lawmakers. As some Democratic critics liken individual provisions to spendthrift giveaways, Biden’s aides hope to bolster their case that the plan offers a formula for long-term economic growth.
“A growing body of research shows that these investments will increase labor force participation, improve living standards, enhance US competitiveness, and boost economic growth in the decades to come,” the memo argues.
So far, the plan has become known less for its contents than its original $3.5 trillion price tag. With moderates balking at that amount, negotiators are weighing whether to shrink it to around $2 trillion by paring back all of its elements or by jettisoning some of them.
At a moment when slower-than-expected job growth and higher-than-expected inflation have clouded the economic outlook, the memo cites the Organization for Economic Co-Operation and Development’s assessment that the US is the only one of the largest developed economies to have returned to its pre-pandemic size. It also quotes an estimate by Moody’s Analytics that the original package would boost US economic output by $4.6 trillion over the next decade.
On individual components of the package, the memo asserts that:
- Plans to boost spending on child care and universal pre-school would “increase equitable economic growth” by improving children’s health, educational achievement and long-term earning potential. Those investments, it argues, would also make it easier for their parents to obtain job training and employment.
- The proposal to make two years of community college free would boost productivity and reduce unemployment among those whose high school degrees would otherwise consign them to low-wage work. Echoing the findings of some economic researchers, it notes that two years of higher education would prepare them for “middle-skills” jobs that provide a pathway to the middle-class.
- Spending to enhance the system of home care for the elderly would not only boost the wages of home care workers but would also allow more adult children of those elderly patients to remain in the work force. The US economy faces a long-term labor shortage.
- Extending the enhanced Child Tax Credit contained in the administration’s Covid relief bill earlier this year would extend dramatic reductions in child poverty. It cites a recent academic study that concluded child poverty costs the US economy 5.4% of overall output each year.
- Provisions to address climate change — which face stern resistance from Democratic Sen. Joe Manchin of West Virginia — would create up to 638,000 clean-energy related jobs in manufacturing, construction and services by 2030.
- Spending to enhance the supply of affordable housing would reduce inflationary pressures facing renters and home-buyers while supporting more than 115,000 new jobs per year over the next decade.
- Spending to expand Medicaid in the 12 states that have not done so under the Affordable Care Act “could produce as many as one million new jobs” as it improves the health and financial status of beneficiaries who gain coverage.
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