From Portside <[email protected]>
Subject Cutting the Reconciliation Bill to $1.5 Trillion Would Support Nearly 2 Million Fewer Jobs per Year
Date October 14, 2021 3:40 AM
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[ Besides delivering fewer tangible benefits to typical families,
scaling back Build Back Better also severely compromises the
package’s value as macroeconomic insurance.] [[link removed]]


CUTTING THE RECONCILIATION BILL TO $1.5 TRILLION WOULD SUPPORT NEARLY
2 MILLION FEWER JOBS PER YEAR  
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Adam S. Hersh
October 7, 2021
Economic Policy Institute
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_ Besides delivering fewer tangible benefits to typical families,
scaling back Build Back Better also severely compromises the
package’s value as macroeconomic insurance. _

Sen. Joe Manchin has said he will not support a Build Back Better
reconciliation bill greater than $1.5 Trillion., Stefani Reynolds/The
New York Times via AP, Pool

 

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
[[link removed]] 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
[[link removed]].
David Brooks, the center-right _New York Times_ columnist, recently
captured the significance of these initiatives when he wrote 
[[link removed]]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
[[link removed]] 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
[[link removed]] and here
[[link removed]]).

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
[[link removed]] 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:

* if private spending fails to sustain growth after the American
Rescue Plan fades;
* if the pandemic evolves and continues weighing on economic
activity;
* or if other unforeseen shocks to the economy emerge and threaten a
robust recovery.

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
[[link removed]] and in
the figures and table below.

* Every state and Washington, D.C. would see fewer jobs supported
under Sen. Manchin’s proposal than the BBB agenda. The largest
states would experience the largest absolute losses in jobs potential.
California would see 211,853 fewer jobs per year, while Texas, New
York, and Florida would see 149,050, 116,584, and 106,205 fewer jobs
per year, respectively.
* West Virginia would see 9,880 fewer jobs annually under
Manchin’s plan, equivalent to 1.33% of the state’s overall
employment. West Virginia would be no better off in terms of jobs in
fossil fuel industries, but would see 900 fewer manufacturing jobs,
400 fewer construction jobs, and 3,800 fewer health care and social
assistance jobs.
* Arizona would see 35,564 fewer jobs per year, equal to 1.17% of
state employment, including 2,500 fewer manufacturing jobs, 1,600
fewer construction jobs, and 11,400 fewer health care and social
assistance jobs.
* Alaska would be most impacted by fewer jobs under Manchin’s
proposal relative to the size of its economy, losing out on jobs
equivalent to 1.39% of its total employment, but all states and DC
would forego more than 1% of total employment.
* All congressional districts will see fewer jobs supported under
Manchin’s proposal than under the BBB plan, ranging from 0.9 to 1.5%
fewer jobs supported as a share of overall district-level employment.
* Districts represented by so-called moderate House Democrats
[[link removed]] would
take material hits to jobs under Manchin’s plan relative to the BBB
reconciliation plan. Rep. Josh Gottheimer’s (D-NJ 5th) would see
support for 7,700 fewer jobs per year in his district under
Manchin’s proposal and Rep. Stephanie Murphy (D-FL 7th) would see
7,600 fewer jobs. Altogether, the bloc of 10 moderate Democratic
members
[[link removed]] would
see 70,700 fewer jobs supported across their districts relative to the
BBB plan.

* Manchin and Sinema have become linchpins in this legislative
negotiation to a large extent because of an ideological hollowing out
of the “center” of Republican party officials. Supposedly moderate
Senate Republicans would not even entertain engagement over the
broader Biden-Harris economic agenda, but their constituencies, too,
would be worse off under Sen. Manchin’s proposal to cut the BBB
agenda.

* Maine would see 8,300 fewer jobs supported per year, or 1.3% of
state employment.
* Utah would see 16,600 fewer jobs per year.
* Ohio would miss out on economic support for an additional 71,900
jobs annually.

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)
[[link removed]] and Scott
and Mokhiber (2020)
[[link removed]].

_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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