The Congressional Budget Office (CBO) has released an estimate of what it would cost to make most temporary provisions in the House-passed Build Back Better Act permanent, projecting it would add trillions to the deficit and sparking a fresh wave of Republican criticism of the Democrats’ social and climate spending bill.
Responding to a Republican request for a budgetary impact score for a modified version of the House-passed Build Back Better Act that does not include sunsets, the CBO’s Dec. 10 projection estimates that it would add $3.0 trillion to the deficit over a decade.
A separate CBO projection of the cost of the Build Back Better Act as written, which includes phase-outs of key provisions proposed by Democrats, estimates that it would add $365 billion to the deficit through 2031.
“Nobody believes these programs are going to end. Democrats want them to go on,” Sen. Lindsey Graham (R-S.C.) told reporters on Friday after the CBO released the cost estimate of the modified bill. “I am begging some reasonable Democrats out there to stop this train.”
Republicans, who universally oppose the bill and have denounced Democrat promises to sunset key provisions as maneuvers to lowball the bill’s cost, argue that it will add to inflationary pressures already gripping the U.S. economy. Consumer prices in November rose at their fastest over-the-year pace in 39 years.
Sen. Rick Scott (R-Fla.) told CNBC’s “Squawk Box” on Dec. 13 that “unbelievable” levels of inflation and debt are now his chief concern, with the Florida Republican’s remarks coming in response to a question about the CBO score.
“My biggest concern is this unbelievable inflation and this unbelievable debt. There is a day of reckoning for all of this debt,” Scott said.
Democrats have pushed back against Republican criticism of the bill. House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.) issued a statement on Dec. 10 calling the new CBO score “fake” and “based on mistruths,” arguing that the analysis was misguided as it assumed the spending provisions would be made permanent, while “Democrats have committed that any extensions of the Build Back Better Act in the future will be fully offset, therefore ensuring BBBA will not increase the deficit.”
As written, the Build Back Better Act calls for the child tax cut to expire after one year, with free preschool and child-care subsidies expiring after six years.
Both parties are vying for support from two Democrat senators, Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.), who have not committed to backing the Build Back Better Act. Their votes are key for the Democrats to pass the bill in the evenly-split Senate.
Manchin, in particular, has been vocal in expressing concern about the bill’s spending and possible inflationary impact.
“Inflation is real, it’s not transitory. It’s alarming. It’s going up, not down. And I think that should be something we’re concerned about,” Manchin told reporters on Friday.
Surging inflation, which hit 6.8 percent in the year through November, has become a key economic concern among U.S. consumers, more so than unemployment.
“When directly asked whether inflation or unemployment was the more serious problem facing the nation, 76 percent selected inflation while just 21 percent selected unemployment,” Richard Curtin, director of the University of Michigan’s closely watched Consumer Sentiment Index, said on Friday in a statement accompanying the latest reading for early December.
The most recent University of Michigan consumer sentiment survey saw confidence pick up slightly in early December from the prior month’s decade-low, but the uptick was driven entirely by households with incomes in the lowest third, with the other tiers recording losses.
Curtin said that expectations for incomes to rise in the year ahead was what drove the rise in sentiment among the bottom third of earners.
“This suggests an emerging wage-price spiral that could propel inflation higher in the years ahead,” Curtin said, with his remarks recalling a period in the 1970s when future inflation expectations became de-anchored, sending wages higher and fueling an upward inflationary spiral.