White House hopeful of deal with Congress on climate, social spending

Official says the administration is optimistic about President Joe Biden's signature 'Build Back Better' proposal given the degree of alignment seen on issues

Reaching agreement with the U.S. Congress on new climate and social spending proposals will be a challenge, but the Biden administration remains upbeat it can be done, Brian Deese, the president's top economic adviser, said on Wednesday.

Deese, director of the National Economic Council, said he was optimistic about President Joe Biden's signature "Build Back Better" proposal given the degree of alignment seen on issues ranging from clean energy to lowering prescription drug costs and lowering child care costs.

If the proposals were fully paid for, as intended by the Biden administration, the spending package would not have a net impact on aggregate demand or inflation, he told a virtual event hosted by the Council on Foreign Relations.

"Part of why we remain optimistic about this is the degree of alignment on the economics and the practicalities of the major components for this," he said, adding, "Put aside what we call it, and just think about the actual economic impact." Biden last year won congressional passage of COVID-19 relief legislation and a massive infrastructure bill with the backing of fellow Democrat Joe Manchin, but the West Virginia senator remains a significant roadblock toward winning Senate passage of some version of Biden's $1.7 trillion Build Back Better bill, passed by the House of Representatives in November.

Deese said a meeting of chief executives from the utility industry at the White House on Wednesday were very supportive of long-term, technology-neutral tax credits or other incentives to produce zero carbon energy.

There was also broad agreement on provisions aimed at allowing negotiation of lower prescription drug prices, while lowering health care premiums. Measures to reduce the cost of child care and investing in preschool would also help bring people back into the workforce, he said.

Enacting such measures "would provide people practical relief today that they would feel in their pocketbooks" without adding to inflationary pressure, he said.

On the issue of inflation, Deese said the current spike in inflation was due to pandemic effects and was mainly due to the shift in demand from services to goods and the impact that had on supply chains.

But supply chain issues were easing, labor force participation was rising, and the Federal Reserve had tools in place to address inflation, he said.

Overall, he said he expected factors that had driven prices higher to "moderate across the course of time."

(Reporting by Andrea Shalal. Editing by Chris Reese and Aurora Ellis)