As Congress wrangles over the details of a massive spending bill that's central to President Joe Biden's "Build Back Better" plan, a new analysis shows the proposal will leave America poorer in the long run.

Biden's plan to hike federal spending by about $3.5 trillion over the next 10 years—paid for with a combination of huge tax increases and up to $1.75 trillion in new borrowing—will decrease future economic growth and reduce private wealth, according to a new analysis from the Penn Wharton Budget Model (PWBM), a macroeconomic forecasting project based at the University of Pennsylvania.

The report projects that the reconciliation package would cause GDP would fall by about 4 percent by 2050 relative to where it would be if the proposal did not pass. That decline is driven by an estimated 6.1 percent reduction in private capital, which the group defines as "computers, equipment, factories, buildings, and other productive assets that are used to produce goods and services" and an 8.9 percent increase in government debt.

Higher levels of spending and higher amounts of government debt "crowds out investment in productive private capital. Less private capital leads to lower wages as workers become less well-equipped to do their jobs effectively," the PWBM analysis warns.