The CBO analysis that anticipates a $200 billion deficit impact over 10 years assumes the new and changed programs expire on schedule. E.g., CTC ends after 2022 and SALT cap reinstated in 2025. Alternatively, if BBB policies are made permanent, the CBO estimates a $3 trillion deficit. [1] Such a larger increase in deficit spending would entail a large stimulating effect on the economy.

I think it's well accepted that we put in these expirations with the expectations that the programs would be extended, but we needed to minimize the deficit spending to get this through recon. I haven't seen any proposals from Dem leadership for how we hope to handle that in the future, assuming we even have sufficient Ds in Congress. Hence, I think it reasonable to assume that at least some of these programs will be extended and at least partially paid for through additional deficit spending.

Still agree that the overall impact of BBB on inflation will be minor. Yet, if we truly were concerned about inflation and wanted to use fiscal tools to combat inflation we'd be increasing taxes. Possibly even front loading a tax revenue surplus with later deficit spending in the 10 year plan. That of course would be political suicide.

[1] "Budgetary Effects of Making Specified Policies in the Build Back Better Act Permanent", https://www.cbo.gov/publication/57673

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Great article. I've read in the past that the higher rate of unionization in the 1970s could have been a factor, too - that it was the mechanism by which higher expectations (held by unions) got into wages. But maybe this research wasn't accurate.

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I was getting a little concerned that you were being too blasé about this, but I think your last point -- that the Fed is taking this seriously, and the _fact_ that they're taking it seriously is helping to keep markets from panicking -- is exactly right. Matt Yglesias came out the other day with a take that I think kind of approaches the same conclusion from the opposite side. Like, he's concerned about inflation, but between the Fed making careful moves toward tightening, and investments in fixing the supply problems, this is still a situation where we _could_ solve the immediate problem and launch into a Roaring Twenties.

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