Dec 21, 2021 - Economy

The alternative to BBB: Supply-side progressivism

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Illustration: Eniola Odetunde/Axios

The Build Back Better bill might be dead, but it isn't buried. The progressive agenda remains, and substantial parts of it will reappear in Congress in the new year.

  • If those parts are focused in such a way as to minimize costs, they're likely to feature fewer subsidies and more of an emphasis on increasing the supply of crucial services.

Why it matters: From housing to child care to energy and education, the U.S. is beset by rising costs for the goods and services needed most — and part of the reason is there isn’t enough to go around. Economists and other experts worry that subsidizing those costs could make things worse.

Between the lines: Instead of reducing the rising costs of essential services like child care, the now-dead BBB bill would have mandated higher wages and greater credentials for workers, and then offset higher costs with hefty subsidies.

  • In a November column in the New York Times, Samuel Hammond, Daniel Takash and Steven Teles of the center-right Niskanen Center said that wouldn't "reduce rising prices so much as mask them."
  • "If we try to deal with the problem of expensive health care, child care, and higher education by throwing more money at it," the economist Noah Smith wrote earlier this year, "the result will be that although consumers will pay less, society as a whole will pay more."

The big picture: If the socialism of BBB was ultimately defeated, Plan B might be what's come to be called "supply-side progressivism."

The bottom line: Next year's GDP would have been higher with BBB. But cash injections rarely improve productivity.

Go deeper: The case for creating more of everything

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