Yes, the Build Back Better Act is fully paid for
3 min readEPI director of research Josh Bivens took to Twitter to refute critics’ most recent claim that the Build Back Better Act (BBBA) is only “fully paid for” due to accounting gimmicks. The claim, Bivens stresses, is “bad economics,” adding that BBBA is indeed fully paid for. Read the full Twitter thread explaining why below.
Children whose parents couldn’t find decent work? Underserving of a modest unconditional tax credit. Millionaire heirs? Deserving of maintenance of a zero tax rate on inherited capital gains. 2
— Josh Bivens (@joshbivens_DC) November 2, 2021
The essence of the new complaint is that the revenue increases in the BBBA are permanent, but a number of the spending provisions and tax credits sunset before the end of the 10-year budget window. Hence, the bill is not really “paid-for” and will increase budget deficits. 4
— Josh Bivens (@joshbivens_DC) November 2, 2021
The BBBA negotiations landed in a spot where it is funded with revenue instead of debt – and that’s great! The tax provisions are genuinely valuable in and of themselves, and, they will not neutralize any of the macroeconomic benefits of the spending. 6
— Josh Bivens (@joshbivens_DC) November 2, 2021
The inevitable comparisons credulous commenters will make are to the tax cuts passed under George W Bush and Donald Trump. All of these tax cuts contained at least some provisions which sunsetted over the 10-year budget window, aiming to make their deficit impact look smaller. 8
— Josh Bivens (@joshbivens_DC) November 2, 2021
It seems odd to need to say more about this, but the BBBA critics make a further claim that sunsetted provisions in fiscal bills never really get sunsetted. Future Congresses, in this claim, will be unwilling to reduce BBBA spending. Hence, shell game. 10
— Josh Bivens (@joshbivens_DC) November 2, 2021
On the logic – if future Congresses think the spending provisions of the BBBA are so popular with the public that they can’t be sunsetted, won’t they also think these provisions are popular enough to ask the public to support them with some revenue increases? 12
— Josh Bivens (@joshbivens_DC) November 2, 2021
On the empirical claim that provisions are never sunsetted – a non-trivial portion of the Bush tax cuts were indeed allowed to sunset – roughly 20{1cd7dfeabecd92a256507009bf608c3bde4df96f09e82f3bc2c9d67cc3d41389}. Importantly, these were a much larger share of the cuts these delivered to high-income households. 14
— Josh Bivens (@joshbivens_DC) November 2, 2021
And yes, I would’ve rolled back more – but the simple fact is that tax cuts on the rich went up non-trivially under the Obama administration. It was a fight, but, provisions not-loved by the majority can be rolled back or allowed to sunset. 16
— Josh Bivens (@joshbivens_DC) November 2, 2021
The real fear here is obviously not about the size of deficits. If it was, today’s critics would simply support any number of sensible and progressive measures to raise more revenue.18
— Josh Bivens (@joshbivens_DC) November 2, 2021
The fear instead seems to be that the BBBA might really deliver enough to alert U.S. families about what is possible for a decent government to do, and remind them that ours has done so little for them for so long. 19
— Josh Bivens (@joshbivens_DC) November 2, 2021
