Four economics professors sign statement against Build Back Better agenda

Chairman of Economics, Business, and Accounting Charles Steele | Collegian Archives

Four Hillsdale College economics professors signed a statement denouncing the Biden Administration’s Build Back Better agenda featured in the Wall Street Journal on March 1.

Hillsdale College Chairman of Economics, Business, and Accounting Charles Steele, Professor of Economics Ivan Pongracic, Associate Professor of Economics Michael Clark, and Director of Economics Gary Wolfram signed the statement from the America First Policy Institute alongside more than 370 other economists.

“In short, it is socially and fiscally irresponsible and potentially destructive,” Steele said.

AFPI said in a news release that it wanted to refute a letter from the Biden Administration on behalf of the plan signed by more than 50 economists.

“The White House recently touted a letter signed by 56 economists who favor the policies in the President’s Build Back Better agenda,” the joint statement signed by the economists said. “They claim that this latest multi-trillion dollar government spending increase would ‘alleviate some of the strain caused by inflation.’ We fundamentally disagree. In fact, the policies in the Build Back Better agenda would increase inflation, increase the federal debt, reduce the number of people working, badly misallocate capital, and hobble economic growth.”

The $1.7 trillion bill would appropriate funding for clean energy, universal prekindergarten, subsidized child care, housing, and elder care, and expand the Affordable Care Act. Funding for the plan would come from changes to the corporate tax code, including a new corporate minimum tax, and tax-increases on high-income individuals, the Wall Street Journal reported. The bill passed in the U.S. House of Representatives in November. The Senate continues to deliberate on the agenda.

AFPI is a research institute promoting the free market, limited government, and strong national defense policy. AFPI asked a number of economists to speak out against Biden’s proposal. James Sherk, one of the AFPI directors, is a 2003 Hillsdale economics graduate.

Wolfram said he opposes the plan because it expands the scope of the federal government, leading to greater inflation because the Federal Reserve will monetize the deficits the plan would cause. President Joe Biden’s plan shows his distrust in the free-market because it distributes resources to a central planner, he said.

“As Ludwig von Mises pointed out in 1927 in his book, ‘Liberalism,’ when the government intervenes in the economy it causes unintended consequences, which leads to more government intervention, more unintended consequences — the economy moving towards central planning,” Wolfram said. “This will result in less economic growth and a lower standard of living for the masses.”

Clark said he agreed Biden’s plan will lead to inflation.

“If we wanted to correct the macroeconomy, this particular plan does not even fit the current economic circumstances as the increase in government spending would likely lead to an increase in inflation,” Clark said. “The Build Back Better plan is a politically correct sounding approach to justify more government management of the economy — something those in power appreciate as they believe they can serve the public.”

Clark said the Build Back Better plan is a “Trojan Horse” for the Biden Administration’s extreme agenda.

“The Build Back Better program has a specific bent towards solving inequality and promoting climate justice,” he said. “Plans like this often create unintended consequences that do more harm than good, oftentimes even when we only consider their own stated goals.”

Build Back Better would increase the national debt and take resources from the private sector, Steele said.

“It would fund bad projects that hurt American society and the American economy over the longer run,” he said. “For example, it would fund universal preschool for all 3 and 4 year olds — that is, it would put American preschoolers into programs run by the government and teachers unions, the very people who are currently ruining education by turning it into brainwashing and propaganda with garbage like Critical Race Theory.”

Steele said the plan would pour funds into “green” energy projects, which he called technologically and economically unsound.

Wolfram called the plan “legalized plunder” by taking from some and giving to others. 

“The Biden administration believes those who control the federal government should determine where resources should be allocated, not the market economy driven by individual preferences — hence the title ‘Build Back Better,’” Wolfram said.

Wolfram said his alternative to the Build Back Better agenda is to reopen the economy, reduce the taxation of production of goods and services, and reduce the federal government intervention in the private sector production of goods and services, namely in the energy sector.

Steele said the Biden administration should stop increasing government spending. 

“Most of the current activities the federal government is engaged in are not Constitutional and the federal government is not good at them,” he said. “I would cut the administrative state and shrink the federal budget.”

Wolfram cited Nobel Prize winning economist Milton Friedman, who said “There is no such thing as a Free Lunch.”

Biden clearly believes the average American thinks he can provide a free lunch for everyone,” Wolfram said.