Thread by @econjared46

In recent conversations, I’ve been noodling on different ways to understand the costs and benefits of the $3.5 trillion reconciliation plan. In important ways, this topline number provides the least informative perspective.

First, that’s a gross number. It ignores the impact of “payfors” on the net cost. Over the next decade, that net cost is ZERO (ftr, the gross cost is ~1% of GDP). And those are highly progressive payfors that hit no one under $400K!

2nd, the investment component (as well as the tax cuts) spend out over time. Even if you ignore payfors (and pls don’t do that!), the gross $3.5t spends out over the next decade. EG: In year 1, ARP spent out 63%; in year 1 BBB+infrastructure spends out 6%!

This timing perspective matters! Again, the gross cost of BBB is ~1% of GDP per year over the next decade. The investment portion is ~4% of what the federal government will already spend each year over that period.

That’s one reason to discount inflationary concerns re BBB as @ernietedeschi and I argue here. But there are even better reasons for that, which is the next reason it’s so important to look under the hood here, at the value proposition!
whitehouse.gov/cea/blog/2021/…

Here’s how @brycecovert put that value proposition in the NYT: “The American people deserve a political debate that’s not almost entirely focused on the price tag. We should be arguing about where the money would go.”
nytimes.com/2021/09/16/opi…

When we invest in the getting goods to markets more efficiently, in good, green jobs, in cutting taxes and lowering costs for working families, through help with child & elder care, prescription drugs, hth ins premiums…

When we invest in the economy’s productive capacity through clean water, EVs, roads/bridges; when we help pave the way for caretakers to join the paid labor market, we boost the economy’s capacity, dampening future inflationary pressures…

…while creating good jobs and lasting opportunities for people for whom economic growth has for decades been a spectator sport!

And when we offset the costs of these investments by the wealthy paying their fair tax share…well, that’s a much more fulsome and analytically sound way to evaluate the costs--and benefits!--of these plans.

They say economists are people who know the cost of everything and the value of nothing. So, I’m playing against type here, but that’s the real story of what @POTUS is trying to do for America’s working families, now and in the future.
QED!