It is probable that President Joe Biden’s Build back Better Act will cost taxpayers more than twice what it says. And a lot of the hidden costs will add to the national debt.
These are the conclusions of two independent analysis released this week. Both rely upon a crucial assumption, which was not included in the Congressional Budget Office (CBO’s) analysis of this bill. It is that at most the next 10 years the various policies under the Build Back Better plan will still be in effect.
“The Build Back Better Act relies on a number of arbitrary sunsets and expirations to lower the official cost of the bill,” explains the Committee for a Responsible Federal Budget (CRFB), a nonprofit that advocates for balanced budgets. The group’s newly updated analysis of the Build Back Better plan finds that the package will cost an estimated $4.8 trillion over 10 years if all provisions are made permanent—double the price tag applied by the CBO last month.
As There are reasonsAs the CBO has pointed out repeatedly, many key components of the bill were designed to manipulate the CBO’s cost-of-litigation method by setting arbitrarily expiring dates. Despite the fact that lawmakers clearly intend these policies to remain permanent fixtures, The expanded child tax credit would be the most notable example, expiring after just one year. Others parts of the bill such as the universal preK funding and the new subsidies for child-care would also expire within six years. The Affordable Care Act will provide expanded subsidies that would continue until 2025.
The bill’s CBO estimate projects it to cost $1.8 trillion, and will add $367 billion over the next ten years.
The CRFB estimates that if all of the Build Back Better plans’ proposals were to be made permanent, then the price would rise to $4.8 trillion and the bill will add $2.8 trillion to our deficit.
According to the CRFB analysis, “To be safe, lawmakers might choose not extend some or all these provisions.” To pay for the bills and extensions, lawmakers would have to double the current offsets. Alternatives to this would include a significant increase in debt.
The projections of the CRFB closely mirror a November analysis of the bill by the Wharton Budget Model. This project, which crunches numbers at the University of Pennsylvania, did a comparable analysis. Wharton’s analysis showed that making temporary BBB provisions permanent would result in an increase of $4.6 trillion for the entire package.
The Wharton analysis also provides a useful illustration of why policy makers engage in this sort of budget gimmickry to pass big spending bills—and, to be sure, this is a game that both Republicans and Democrats are adept at playing.
As currently written—with all those early expiration dates and temporary provisions—the Wharton Budget Model projects that the BBB proposal would add about $274 billion to the deficit over the next decade. This would lead to a 0.2 percentage reduction in GDP.
These numbers change significantly when you see the entire scope of this spending package. All provisions of the BBB Plan would be made permanent if “federal debt increases by 24.4 per cent” and GDP falls by 2.9percent relative to current law. The decline in GDP is due to the fact that higher levels of debt will likely sap future economic growth, because the government will have to pay larger sums of money—extracted via taxes from productive parts of the economy—to service the debt.
In summary, Congress has the ability to cover up the cost of Build back Better plans over the long run, as well as the potential economic consequences of raising government spending trillions.
The Biden administration’s pitch to Americans—and to key holdouts in Congress like Sen. Joe Manchin (D–W.Va.)—has been that the BBB plan won’t add to the deficit and that it will boost the economy. No matter how much Congress attempts to conceal the real cost of this legislation, it’s clear they are both false.