Macroeconomic Consequences of the Infrastructure and Budget Reconciliation Plans
Moody’s Analytics, 21 JULY, 2021
Prepared by Mark Zandi, Chief Economist
Bernard Yaros Jr., Assistant Director
INTRODUCTION
Federal lawmakers are feverishly working on another massive fiscal plan, including a nearly $600 billion bipartisan infrastructure deal and a $3.5 trillion package of spending and tax breaks to support a range of social investments that the Biden administration and congressional Democrats hope to pass into law via the budget reconciliation process. While this work is
very much in progress, it is similar in spirit and size to the Build Back Better agenda President Biden proposed earlier this year. If this is close to where the legislation ultimately lands, it
will strengthen long-term economic growth, the benefits of which would mostly accrue to lower- and middle-income Americans. The legislation is more-or-less paid for on a dynamic basis through higher taxes on multinational corporations and the well-to-do and a range of other pay-fors. Worries that the plan will ignite undesirably high inflation and an overheating economy are overdone. The fiscal support it provides is only sufficient to push the economy back to full employment from the recession caused by the COVID-19 pandemic. Because the package includes a myriad of spending and tax initiatives, some of which are new and uncertain, implementing this legislation as intended and in a timely way will take deft governance. In this white paper, we assess the macroeconomic impact of both the bipartisan infrastructure deal and the reconciliation package.
Full report:
https://www.moodysanalytics.com/-/media/article/2021/macroeconomic-consequences-infrastructure.pdf
Thing’d directly boost GDP over 1% per annum…that’s about $200 billion per annum — plus the multipliers from increased productivity, reduced carbon emissions, etc etc etc.
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