Build Back Better is in limbo — without its social programs, the economy will be, too
It’s tempting to look at the economy with cynicism right now. Inflation is at a four-decade high, and the war in Ukraine is driving additional price spikes. Although the labor market has made positive steps toward recovery, the gains remain divided along racial and gender lines. And though the Infrastructure Investment and Jobs Act was a long-overdue down-payment for roads, bridges and other similar projects, Congress hasn’t given the economy much to work with since it was passed in November.
Indeed, the Build Back Better Act’s sinking was a disappointing missed opportunity to help position our economy for success after the pandemic recession. Deficit and inflation concerns have long gotten a seat at the table of economic policy debates, but there is plenty of evidence showing those objections were misplaced arguments against this legislation. So as Congress looks to forge a path forward with a narrower scope, where should its focus lie to secure a stronger, more stable and more equitable economy for future generations?
If we look to the evidence, the answer lies in social infrastructure — the care work, education and health care we all deeply rely on. And we don’t even have to look back far to see just how powerful these investments can be. Take, for example, the renewal of the automatic Child Tax Credit and its monthly disbursement in 2021. By providing families with monthly income support to supplement their own earnings and help offset rising prices, policymakers lifted an estimated 3.7 million children out of poverty while reducing racial disparities in household income. Poverty rates fell drastically for Black and Latino children. This is a blueprint for success and neglecting to use it to shape other policies is a costly mistake, both for families and the economy as a whole.
Consider the benefits of investing in childcare alone. The National Women’s Law Center estimated that increased employment from universal childcare access could boost a mother’s lifetime earnings by about $94,000, savings by $20,000 and Social Security benefits by $10,000. It would also help address racial and gender inequities in wealth. For Black mothers, two-thirds of whom are equal, primary or sole earners in their households, universal childcare would offer a $100,000 increase in lifetime net income. So it’s not surprising that recent research found universal pre-k would bring $21.6 billion to GDP in the first two years and $304.7 billion in annual budgetary, earnings, health and crime benefits by 2050.
And the benefits of investing in social infrastructure extend much further. Two years of free community college would lighten the crippling burden of student debt, better prepare young adults to enter the workforce and ultimately boost financial security. Some estimates find attendees’ earnings power could increase by as much as $7,000 annually. In a similar vein, expanding Obamacare in the 12 states that refused federal funding for Medicaid could reduce families’ medical debt by $6.8 billion.
Of course, these investments must be accompanied by additional policy reforms to ensure long-term solvency, fight inflation and holistically address inequality. Raising taxes through the Global Minimum Tax and the Billionaires Tax is a logical place to start, given our gaping and growing wealth divide. Investing in high-road supply chains at home would deliver long-term productivity gains and future protection from global disruptions. And enacting antitrust reforms would bring both immediate and enduring cost reductions.
But ultimately, to strengthen our economy for the long haul, we must ensure the least compensated workers, Black women, reach parity with their peers. Reducing and eliminating what I’ve coined the “double gap” — the wage penalties Black women face due to gender and racial discrimination in the American labor market — should be the polestar in future economic policymaking.
A strong social infrastructure system enables workers to care for themselves and their loved ones while remaining productive members of the labor force — and the dividends in fostering and sustaining more broad-based economic growth is clearly vast. Yes, the Build Back Better Act would have been a great first step, but we still have an opportunity to act. This time, we need to take it because the cost of inaction to our economy, and to our children, is simply too great.
Michelle Holder is the president and CEO of the Washington Center for Equitable Growth, a nonprofit research and grantmaking organization dedicated to advancing evidence-backed ideas and policies that promote strong, stable and broad-based economic growth.
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