Q-A #2: Why call Build Back Better an infrastructure bill?

Genevieve Signoret & Delia Paredes

(Hay una versión en español de este artículo aquí.)

First, let me introduce our new guest blogger and today’s coauthor, the economist Delia Paredes. We’re thrilled that Delia will be sharing her insights and knowledge here from time to time for the indefinite future.

Our question today came from a client:

Why do you sometimes speak of the possibility that an infrastructure bill will be passed in the United States in 2022, when the Infrastructure Investment and Jobs Act was passed last November 2021?

When we speak of the possible passage in 2022 of a second U.S. infrastructure, we’re referring to Build Back Better, also known as “the social spending bill”. So, to restate our client’s question, why call a social spending bill an infrastructure bill?

Whereas the Infrastructure Investment and Jobs Act approved in November 2021 authorized investment in “hard” (material) infrastructure in physical works such as roads, bridges, railways and internet access, the objective of Build Back Better is to fund investment in “soft” infrastructure ” (immaterial).

Wikipedia defines soft infrastructure as “all the services necessary to maintain the economic, health, cultural and social standards of the population of a country”. Because the Build Back Better bill would authorize investments in services such as universal preschool for three- and four-year-olds, low-income health care (Medicaid), and efforts to combat climate change, we see it as a second infrastructure bill, one focused on soft infrastructure.

Both types of infrastructure, soft and hard, boost productivity and thus the rate of potential growth of gross domestic product.