Today, the Congressional Budget Office (CBO) confirmed that the Democrats’ latest reconciliation bill will have no impact on reducing inflation – a similar conclusion to that reached by researchers with the Penn Wharton Budget Model – in response to a request by Senate Budget Committee Ranking Member Senator Lindsey Graham (R-SC). CBO also reports that the largest driver of inflationary pressure, extended Obamacare subsidies, will simultaneously benefit wealthy Americans and disincentivize individuals from working.
CBO confirmed that American households earning over $300,000 will qualify for taxpayer funded subsidies to purchase Obamacare insurance coverage. Its analysis of the $313 billion tax increase on American businesses found that this so-called “book tax” will discourage investment in America’s economy. A previous analysis by the Joint Committee on Taxation concluded that 49 percent of the “book tax” will fall on U.S. manufacturers and $17 billion worth of tax increases will hit taxpayers making less than $200,000 per year.
“Today’s CBO analysis disproves Washington Democrats’ notion that they can spend their way out of inflation or tax their way out of recession. In addition to its $728 billion in inflationary spending, $114 billion in new debt, and $614 billion in tax increases and budget gimmicks, the latest reconciliation bill is also another Democrat giveaway to the wealthy and a drain on America’s economy,” said House Budget Committee Republican Leader Jason Smith (MO-08). “Washington Democrats should explain to American families why they will see their taxes go up by billions of dollars, continue to see an inflation crisis rob them of their paychecks, and see more debt added to their children’s future in order to give wealthy Americans a handout to buy into Obamacare. Or why they would attack American manufacturing and the health of America’s economy – particularly at a time when a recession is already underway created by the same type of reckless spending policies Democrats already enacted.”
Key Points from CBO Response
- American households earning over $300,000 qualify for taxpayer-funded Obamacare subsidies under the Democrats’ reconciliation bill.
- The Obamacare subsidies expansion disincentivizes work, reduces output, and increases inflation.
- The Democrats’ “book tax” increase will reduce investment in America’s economy.
- The so-called “Inflation Reduction Act” will have no impact on reducing inflation.
Key Points: Democrats’ Inflation Act