by Mitch Kokai
Senior Political Analyst, John Locke Foundation
If Democratic lawmakers had to comply with federal truth-in-advertising laws, they’d all be up on charges for the blatantly false name given to the “Inflation Reduction Act.”
President Joe Biden claimed last week that “this bill will, in fact, reduce inflationary pressure on the economy.” In fact, it won’t. It was never meant to.
The University of Pennsylvania’s Wharton School examined the bill. Here’s what it concluded.
“The impact on inflation is statistically indistinguishable from zero.”
Worse, “the Act would very slightly increase inflation until 2024 and decrease inflation thereafter.”
In other words, it would add inflationary pressure today, when inflation is already running red hot, draining worker wages, and causing pain and suffering across the land.
Who cares what it does years from now, when, unless Biden really screws things up, inflation should be back to normal anyway?
You don’t have to look very hard to see why the bill’s inflation-fighting claims are pure bunk.
Deficits: On paper, the bill would reduce the federal deficit by more than $300 billion over the next decade. That’s supposed to be inflation fighting.
But while $300 billion in deficit reduction might sound like a big number, it amounts to less than 2% of the $15.7 trillion in projected deficits over those years. Which means it’s more like a rounding error than actual deficit reduction.
Worse, the bill front-loads $485 billion in new spending and subsidies, while the tax hikes and other deficit-cutting measures take time to kick in. As a result, it would increase deficits in the near term, and start cutting them only in 2027, according to the National Taxpayers Union Foundation.
As anyone who has followed how Congress makes spending and tax decisions knows, it’s only the near-term that counts, because nothing is ever set in stone.