Build Back Better plan is about 'productivity growth' and 'improving labor supply': WH advisor

Heather Boushey, Member of the White House Council of Economic Advisers, joins Yahoo Finance’s Karina Mitchell to discuss the rise in retail sales, labor shortage, infrastructure, and the Build Back Better plan.

Video transcript

ALEXIS CHRISTOFOROUS: Joining us now is Heather Boushey, member of the White House Council of Economic Advisors. And Heather, thanks so much for joining us. Good to see you again. When you take a step back--

HEATHER BOUSHEY: My pleasure.

ALEXIS CHRISTOFOROUS: --does the president bear some responsibility for higher inflation? And as one of his advisors, what, if anything, can the White House do to combat these rising prices?

HEATHER BOUSHEY: Well, when the president came into office, his number one goal was to work to contain the pandemic, getting shots in arms, and then to make sure that families and businesses all across the country and communities were made whole, while we sort of weathered the storm of the pandemic, that we got through it. And so, the American Rescue Plan was designed to do just that, to support families and businesses throughout the crisis. And then, of course, we got hit by delta over the summer. So the pandemic has lasted longer than people had hoped for. But folks have been working really hard to contain it.

And I start there because the kind of inflation that we're seeing today is really grounded in the pandemic. It's grounded in the fact that not just in the United States, but around the world, supply chains have been seeing a lot of kinks in the chain because of the pandemic. So when a factory in another country has a COVID outbreak, if they're the only factory that makes that really important part, then that part can't get made and it can't get shipped, and other businesses can't do their business, and then people can't get the goods that they are trying to order on time.

So the president has really focused his economic policy on, first and foremost, containing the pandemic, and then making sure that we kept families and businesses whole. And now we are focused on making sure that we, in his words, we build back better, focusing on-- he spent a lot of time focusing on addressing the supply chain hiccups, doing the work to help open up the courts and get things moving again. And there's been a lot of progress there.

But at the same time, we've also seen this very significant increase in the number of jobs. So in terms of those goals, we have certainly exceeded them. Forecasters a year ago said that it would take another two years to get to an unemployment rate of 4.6%, and that is where we are today. So when you look at the big picture, there's a lot to really be-- that we've accomplished in the economy so far.

KARINA MITCHELL: And so I want to turn your attention, ma'am, to that Build Back Better plan. The CBO is expected to provide us results with their research to find out if this is fiscally solvent. But then there was, for example, a comment from Senator Portman just a short time ago. He is adamant, saying that this is the wrong time for this social spending because inflation is rampant. When the president proposed this bill, when he envisioned it, we were not staring down a 6% handle on inflation. What comments do you have to address that? And then, again, Senator Manchin, there are so many concerns with what is in the bill. He does not favor paid family leave being in it.

HEATHER BOUSHEY: Well, the pieces of legislation that the president has put out there, the bipartisan infrastructure bill, which has passed and it was signed into law on Monday, which Senator Portman and Senator Manchin both supported and voted for, you know, that is a significant investment in America's long-term growth. It's going to fix bridges and roads across the country, not just today, but for years to come. This is a long-term investment that's going to support communities. It's going to make sure that we get those leaded pipes out of our water systems.

And it's going to make those investments in the future so that America can be competitive, such as making sure that there are electric vehicle charging stations all across America. Now the legislation that we are still working on getting across the finish line that, as you noted, the Congressional Budget Office would be giving their assessment of the spending and revenues for that, that is the Build Back Better legislation. And that is about making sure that families have what they need to succeed in the economy. It is about making sure that families have access to affordable child care.

So that-- and that, again, is not a quick hit. It's not a one-time drop of money that's going to lead to inflation-- in fact, quite the opposite. And economists across the spectrum have been in agreement on this, that that legislation is going to improve our labor force participation over time. It's going to help families with care responsibilities, both with children and with elder care, be able to get into the labor market and stay in those jobs and be productive.

It's going to make sure that we're making the investments that the United States needs to make in order to be competitive over the course of this century. We all know that climate change is here. And a lot of other countries are focusing on the innovation and the production that they need to do to create those green technologies. The United States needs to catch up and make those investments as well.

And a part of the Build Back Better legislation is really about making those investments in our future, in America's competitiveness, to making sure that from innovation to commercialization, we are focused on adapting to these new green technologies. So the big pieces of Build Back Better are about long-term investments, they're about productivity growth, and it's about improving labor supply, none of which will add to price increases. In fact, just the opposite. This is what's going to keep our economy strong and prices contained for years to come.

ALEXIS CHRISTOFOROUS: Heather, as an economist and as one of the president's advisors, are you advising him on his nomination for the next head of the Federal Reserve? And also, I'm wondering what the one thing is you'd like to see the next Fed Chair do, whether that is Mr. Powell or Ms. Brainard or whomever, to manage inflation and the economic recovery.

HEATHER BOUSHEY: Well, working here at the White House, we do not comment on Federal Reserve policy. So I will leave that at that. But I will say that one of the most important questions and one that the president has elevated through an executive order he put out earlier this year is to make sure that as we're thinking about our financial system and as we're thinking about the economy writ large, that we are attending to the role that climate change will play in creating instability.

So climate change is going to bring physical damages to places that are hit by droughts or hurricanes. We're already seeing the United States have costs due to climate change, about $100 billion a year. And at the same time, there are these transition costs, transitioning to green technologies. There are costs of changing the kinds of assets that people have or the way that they produce things. And so I think that as we're thinking about management of the economy, as we're thinking about the financial system, really making sure that we are taking into account these physical and transition costs of climate change, that's an urgent and number one priority.

KARINA MITCHELL: And, ma'am, I want to ask you, Americans are so concerned, right, coming into the winter-- colder weather, higher fuel costs. They're paying more for their gasoline. A new report saying Thanksgiving dinner will cost them 14% more this year. They're very worried. And Republicans argue that too much money has been pumped into the system, right, through the American Rescue Plan. But one of the ways the Biden administration can help is that there was a provision in that American Rescue Plan, $1.9 trillion. It was in the coronavirus relief package that can actually help with fuel costs for low-income families. Isn't that right?

HEATHER BOUSHEY: Certainly. There's a lot we can do to help low-income families with fuel costs. And let's also remember that because of the American Rescue Plan, that's supported family incomes. And one of the really important outcomes we've seen is lower poverty, lower child poverty. And let's not forget that this time last year, the news was filled with stories of mile-long lines at food banks, people going hungry all across America, because we had such high unemployment and because the pandemic was not contained and because we had not provided sufficient support to American families.

So this Thanksgiving, we are looking at an economy where, certainly, prices have risen, and we hope that that is starting to get under control as the pandemic is getting contained. But we have less poverty. We have far fewer people going hungry. And people have the resources that they need, in many cases, to be able to afford that Thanksgiving dinner. And retail sales have been rising sharply. And so, I want us to really focus on that larger picture. Again, this time last year, we were creating jobs to the tune of 60,000 a month. Right now, over the past few months, we've created jobs, more than 600,000 jobs-- actually, that's for the whole year. So we're in a very different economy than we were last year.

ALEXIS CHRISTOFOROUS: And I know that you back President Biden's request for the FTC to take a harder look at gas and oil companies to see if they're colluding in some way to make gas prices higher. Some are saying that that argument from President Biden is a little bit thin. Investigating sounds like a good idea, but it seems like this is based on just a couple of months' worth of data. And a lot of this could actually be due to higher transportation costs and sort of inflation at work. What are some of the main reasons why President Biden feels that collusion is taking place at the gas pump?

HEATHER BOUSHEY: Well, here's the thing. It's hard to tell when prices rise, exactly why a firm might be increasing them. And there is evidence that we've started to see that perhaps some of these rises in prices is about decisions that firms are making to charge higher prices. It may not be grounded in rising costs for them. And that's where the FTC, the Federal Trade Commission, can really play a role. What's really important is that we have an open and competitive economy, where prices are competitive, and so where businesses can't overcharge. They can't get away with overcharging because either they're not a monopoly, or they're not being made to act in a competitive way.

And so that's what the FTC is going to look into. And nothing could be more important. As we sit here and talk about higher prices, you know, it's really important to understand and for the FTC and doing their job, which they are doing each and every day, to make sure that there isn't higher prices for the wrong reasons. And so I was very glad to see the president taking that step at this important time for the American families.

ALEXIS CHRISTOFOROUS: Heather Boushey, member of the White House Council of Economic Advisors, thanks so much for your time today. We appreciate it.