President Joe Biden and the Democrats were busy doing a victory lap for Friday’s passage in the House of the so-called “Inflation Reduction Act.”
The bill, mostly a tax hike and hundreds of billions in spending on “green” energy that also includes price controls for some prescription drugs, notably contains no provisions relating to monetary policy or interest rates. This had led skeptics to point out that the bill would likely do little or nothing to address inflation.
Even the mainstream media is getting in on the act:
Nevertheless, CBS News now reports after the bill’s passing that a group of economists say it will actually do very little to curb inflation.
That is the conclusion of the Penn Wharton Budget Model, a group of economists at the Ivy League school who predict the impacts of legislation.
While Americans are struggling with 40-year high inflation, Democrats in Congress came up with the brilliant plan of raising taxes and spending more money we don’t have.
Included in the bill, $288 billion would give Medicare the power to negotiate prescription drug prices, beefed up IRS enforcement that includes the hiring of 87,000 IRS agents will get a boost of $80 billion, $313 billion of new revenue will come from a 15% minimum corporate tax hike, $300 billion would go to deficit reduction, and $369 billion will cover “energy-focused climate programs” over the next ten years.
If you’re wondering what any of that has to do with inflation, so am I.
But while Democrats were busy funding all of their pet programs with taxpayer money, the statement on Friday from the Penn Wharton Budget Model was that the imprint of any effect on inflation “is statistically indistinguishable from zero.”
Along with the Penn Wharton Budget Model economists, the non-partisan Congressional Budget Office (CBO) has also concluded that the bill would have virtually no effect on inflation for at least the next two years.
The Inflation Reduction Act is producing a game of dueling economists. The White House has touted a letter signed by 120 economists, including some Nobel Prize winners and former Treasury secretaries, who say that the bill will create “downward pressure on inflation by reducing the government’s budget deficit by an estimated $300 billion over the next decade.”
Prior to passage of the bill, another letter signed by over 230 economists sent to both the House and the Senate argued that the bill does anything but reduce inflation.
This group stated that the bill “would create immediate inflationary pressures by boosting demand, while the supply-side tax hikes would constrain supply by discouraging investment and draining the private sector of much-needed resources.” The also say the corporate tax hike will further impair any supply chain issues.
The CBO also says it’s malarkey that taxes won’t go up for people making under $400,000.
So much for the “Inflation Reduction Act.”
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