Newsflash—increasing government spending during already inflationary times will inevitably increase inflation. Therefore it was a shock when Democrat West Virginia Senator Joe Manchin, who had been talking tough on economic matters in recent years, agreed with Senate Majority Leader Chuck Schumer on a tax-hiking, union-loving “Inflation Reduction Act” which will do nothing of the sort.
Living in California, I’m used to bills being named one thing while actually effectuating something else entirely. The Golden State’s ridiculously-titled “Safe Neighborhoods and Schools Act” of 2014 recategorized many felonies into misdemeanors and let thousands of criminals loose, making our neighborhoods much more dangerous. Misleading titles are not written by accident and are conjured to get voters to enact things they don’t actually want.
While Democrats celebrate and start to call this the savior of Biden’s presidency, cold-eyed economists have weighed in with a dose of reality: this “Inflation Reduction Act” bill will almost certainly increase inflation despite its name.
To wit, 230 economists have sent a letter to House and Senate leadership arguing that the Manchin-Schumer bill has a “misleading label,” and that the economy is at a “dangerous crossroads.” They write:
…the “inaptly named ‘Inflation Reduction Act of 2022’ would do nothing of the sort and instead would perpetuate the same fiscal policy errors that have helped precipitate the current troubling economic climate.”
Who would have thought?
The greatest contributor to inflation is government spending, why won’t Dems stop lying about their bill? It shouldn’t take 230 economists to verify this fact. https://t.co/BOZ88xCfu4
— Gianno Caldwell (@GiannoCaldwell) August 5, 2022
My daughter is majoring in economics. When she shows me some of her textbooks with complicated charts and insane calculations, I admit I’m out of my league. But I don’t think I need to be an econ major to know that more government spending and increased taxes are not a great idea right now while we’re in a recession and inflation is at an all-time high. The economists continue:
The economic experts point to the $433 billion in proposed government spending, which they argue “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 letter, dated August 3, was signed by Nobel laureate Vernon Smith, former Chair of the Council of Economic Advisers Kevin Hassett, former Director of the Office of Management and Budget Jim Miller, Robert Heller, former president of the Federal Reserve Board, in addition to professors from the University of Chicago, Princeton University, Duke University, the University of Virginia, Columbia University and the University of Notre Dame. That’s some serious firepower.
But the reality isn’t enough to persuade Chuck Schumer, who tried to sell this on the Senate floor Thursday:
The Inflation Reduction Act will lower inflation, lower the costs of prescription drugs, close loopholes long exploited by big business who pay no or little taxes.
Ok, Chuck, we’re supposed to believe that you know better. (He has his own letter from 130 economists who claim that the act “meets the needs of working families now and what our economy needs now for stronger, sustained economic growth in the years ahead.”) Senate Minority Leader Mitch McConnell was not so enthusiastic, saying in a statement:
Democrats are catastrophically out of touch with what American families actually care about. Their approval ratings show it. And their reckless taxing and spending spree proves it, as well.
Unfortunately, it looks like Arizona Democrat Senator Krysten Sinema is now on board, meaning that the vote will largely be decided along party lines and ultimately be decided by noted economist Vice President Kamala Harris and her tie-breaking vote in the Senate.
I admit to feeling foolish for hoping that Manchin and Sinema would be the bulwarks of our defense against Leftist lunacy, as they had both helped block the insane $3 trillion Build Back Better Act and staunchly opposed abolishing the filibuster.
It would appear they’ve finally caved though, presumably to get back in the good graces of Chuck Schumer, Nancy Pelosi, and their ilk, and we will all be paying the price as your grocery and gas bills keep rising.
There are many angles to this story. See all our coverage of the “Inflation Reduction Act” here.