Biden’s soft infrastructure agenda may not boost growth

As the Democrats who control Washington reshape a multi-trillion-dollar package that would expand the social safety net and boost green energy, a key question hanging over their efforts is what impact it will have on the economy. A recent White House memo favorably cites a letter from 17 Nobel Prize-winning economists suggesting that both bills qualify as infrastructure “by making critical investments in human capital, the care economy, research and development, public education, and more…his agenda invests in long-term economic capacity and will enhance the ability of more Americans to participate productively in the economy.” Other economists aren’t so sure. “Millions of American parents are feeling the squeeze, having a hard time doing their job, earning a paycheck, while taking care of their children or aging parents.” In a statement, Emilie Simons, a White House spokeswoman, said: “The Build Back Better reconciliation package is a historic, long-term investment in our nation’s economic future—an investment that research suggests will increase GDP, create a larger labor force, increase global competitiveness and improve living standards and greater equity in the decades to come.” While both sides of the debate can point to studies that favor their case, here is what academic and other research says about three prominent components. Free community college Mr. Biden’s proposal would waive tuition for two years of public community college, while also providing more cash to cover the living expenses that sometimes deter lower-income students from attending. But taking a longer view, a 2019 research paper written by three economists in academia and one at the Federal Reserve Bank of Chicago that used IRS tax data found “little evidence that increased women’s employment, wage earnings, or attachment to employers.” Compared with women giving birth in earlier years and in other states, the paper found new mothers using paid parental leave saw “reduced employment by 7 percent and lowered annual wages by 8 percent, six to 10 years after giving birth.” New mothers with access to the paid leave could expect to receive around $1,833 in wage replacement for one year, the study found, but approximately $25,681 lower earnings over the next decade, for a net 10-year loss of about $24,000.