Cutting the Reconciliation Bill to $1.5 Trillion Would Support Nearly 2 Million Fewer Jobs per Year

https://portside.org/2021-10-13/cutting-reconciliation-bill-15-trillion-would-support-nearly-2-million-fewer-jobs-year
Portside Date:
Author: Adam S. Hersh
Date of source:
Economic Policy Institute

Congress may have bought itself another month to negotiate over the Biden-Harris administration’s Build Back Better (BBB) agenda, but one thing is clear: Further reducing the scale and scope of the budget reconciliation package unequivocally means the legislation will support far fewer jobs and deliver fewer benefits to lift up working families and boost the economy as a whole.

How much will such compromise cost the U.S. economy? We crunched the numbers to find out what compromising on the BBB plan will mean for every state and congressional district in the United States. If the budget reconciliation package is cut from $3.5 trillion to $1.5 trillion—as Senator Joe Manchin (D-WV) has called for—nearly 2 million fewer jobs per year would be supported.

In a previous analysis, we showed that the BBB agenda—combining the Bipartisan Infrastructure Framework and the proposed $3.5 trillion budget reconciliation package—would support more than 4 million jobs annually. It would also make critical investments that would deliver relief to financially strained households, raise productivity, and dampen inflation pressures to enhance America’s long-term economic growth prospects. David Brooks, the center-right New York Times columnist, recently captured the significance of these initiatives when he wrote that these are “economic packages that serve moral and cultural purposes. They should be measured by their cultural impact, not merely by some wonky analysis. In real, tangible ways, they would redistribute dignity back downward.”

Senators Manchin and Kyrsten Sinema (D-AZ) are intent on scaling back Build Back Better’s purpose. While Sen. Sinema has not publicly staked a position outlining her objections, Sen. Manchin has telegraphed a top-line spending figure of $1.5 trillion as the maximum he would support.

The $2 trillion gap left by Manchin’s proposal cuts far deeper than any of the policy specifics he proposes eliminating. Even if he succeeded in eliminating all climate-related funding in the BBB agenda budget resolution, for example, Manchin’s plan would still fall nearly $1.8 trillion short. Thus, for the purpose of our analysis, it makes most sense to assume that hewing to Sen. Manchin’s demands would mean a proportional cut across all of the BBB agenda’s individual initiatives (more on the methodologies used here and here).

Besides delivering fewer tangible benefits to typical families, scaling back Build Back Better also severely compromises the package’s value as macroeconomic insurance against recovery waning in the coming years.

Absent the Build Back Better package, there is no guarantee of robust growth once the provisions of the American Rescue Plan—enacted in March of this year—begin fading out in earnest in mid-2022. The U.S. economy is not out of the woods yet. In past instances, policymakers have too often erred on the side of withdrawing fiscal support too early, resulting in protracted recoveries and prolonged spells of elevated unemployment, which ultimately undercut America’s future economic potential. The BBB package would counter a potential slump and effectively support millions of jobs, especially if a host of plausible scenarios occur, including:

Scaling back the plan now, as Sens. Manchin and Sinema would like, will support millions fewer than the original package. In total, Sen. Manchin’s proposal would support nearly 1.9 million fewer jobs per year than the Build Back Better agenda. Full results for each state and congressional district can be downloaded here and in the figures and table below.

TABLE 1

Jobs impact of Democratic budget reconciliation plans by state, jobs supported per year

  Build Back Better Plan Manchin Budget Reconciliation Proposal Reduction in jobs supported Reduction in jobs supported as share of state employment
All states 3,246,675 1,391,432 -1,855,243  
Alabama 44,976 19,275 -25,701 -1.24%
Alaska 8,548 3,663 -4,885 -1.39%
Arizona 62,236 26,673 -35,564 -1.17%
Arkansas 28,746 12,320 -16,426 -1.27%
California 370,742 158,889 -211,853 -1.16%
Colorado 56,903 24,387 -32,516 -1.15%
Connecticut 38,885 16,665 -22,220 -1.23%
Delaware 9,647 4,134 -5,513 -1.22%
District of Columbia 8,825 3,782 -5,043 -1.37%
Florida 185,859 79,654 -106,205 -1.15%
Georgia 97,452 41,765 -55,687 -1.18%
Hawaii 14,283 6,121 -8,161 -1.20%
Idaho 16,466 7,057 -9,409 -1.22%
Illinois 132,647 56,849 -75,798 -1.22%
Indiana 68,482 29,350 -39,133 -1.24%
Iowa 35,465 15,199 -20,266 -1.26%
Kansas 30,464 13,056 -17,408 -1.22%
Kentucky 43,092 18,468 -24,624 -1.26%
Louisiana 42,474 18,203 -24,271 -1.19%
Maine 14,500 6,214 -8,286 -1.25%
Maryland 71,815 30,778 -41,037 -1.34%
Massachusetts 77,440 33,188 -44,251 -1.24%
Michigan 100,904 43,244 -57,659 -1.25%
Minnesota 65,278 27,976 -37,302 -1.27%
Mississippi 27,529 11,798 -15,731 -1.28%
Missouri 63,046 27,020 -36,026 -1.25%
Montana 10,960 4,697 -6,263 -1.23%
Nebraska 21,229 9,098 -12,131 -1.22%
Nevada 24,892 10,668 -14,224 -1.04%
New Hampshire 15,802 6,772 -9,030 -1.25%
New Jersey 89,528 38,369 -51,159 -1.17%
New Mexico 19,343 8,290 -11,053 -1.25%
New York 204,022 87,438 -116,584 -1.23%
North Carolina 100,323 42,996 -57,327 -1.23%
North Dakota 9,062 3,884 -5,178 -1.29%
Ohio 125,737 53,887 -71,850 -1.29%
Oklahoma 38,860 16,654 -22,206 -1.26%
Oregon 42,876 18,376 -24,501 -1.27%
Pennsylvania 137,632 58,985 -78,647 -1.28%
Rhode Island 11,573 4,960 -6,613 -1.25%
South Carolina 48,136 20,630 -27,507 -1.23%
South Dakota 9,961 4,269 -5,692 -1.29%
Tennessee 66,869 28,658 -38,211 -1.25%
Texas 260,838 111,788 -149,050 -1.15%
Utah 28,985 12,422 -16,563 -1.14%
Vermont 7,299 3,128 -4,171 -1.27%
Virginia 91,427 39,183 -52,244 -1.27%
Washington 72,508 31,075 -41,433 -1.18%
West Virginia 17,290 7,410 -9,880 -1.33%
Wisconsin 68,900 29,529 -39,372 -1.33%
Wyoming 5,919 2,537 -3,382 -1.16%

Source: Authors’ analysis of U.S. Census Bureau 2019a and 2020a, and Bureau of Labor Statistics Employment Projections program 2019a and 2019b. For a more detailed explanation of data sources and computations, see Hersh (2021) and Scott and Mokhiber (2020).

Adam Hersh joined EPI in 2021, bringing a wide range of research interests from the interrelationship between growth and inequality, to global economic governance, Chinese industrial policy and reform, and climate change.


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