Yesterday, during a business roundtable at the White House, President Biden doubled down on Democrats’ claims that the so-called “Inflation Reduction Act” will lower inflation. An analysis released yesterday by the Congressional Budget Office in fact found that the Democrats’ budget reconciliation bill will have no impact on reducing inflation – a similar conclusion to that reached by researchers with the Penn Wharton Budget Model.
And there’s a reason why:
- $22 billion is added to the debt in the first five years. How does that help today’s inflation crisis?
- 122 percent of the bill’s supposed deficit reduction comes after 2026 – attempting to make up for the deficit increase in the first five years.
- 78 percent of the deficit reduction does not show up until the last two years.
All of this of course assumes the bill’s savings will actually occur at some point – and in many ways, that is in dispute. The Democrats’ Inflation Act relies on budget scoring gimmicks and false sunsets to hide the true cost of its inflationary spending – which will total over $700 billion and add over $100 billion in new debt.
With inflation raging at a forty-year high, now is not a good time to be adding more fuel to the fire. Unfortunately, that’s exactly what Democrats are proposing to do in their latest budget reconciliation bill that spends today with the hope of saving some later.
Key Background: Democrats’ Inflation Act
The American Economy is in Recession under Joe Biden
- When Biden took office, CBO projected real GDP would grow 2.9 percent in the first quarter of this year. Real GDP fell by 1.6 percent.
- When Biden took office, CBO projected real GDP would grow 2.2 percent in the second quarter of this year. Real GDP fell by 0.9 percent.
- Over the last 75 years, every single time the economy has experienced consecutive quarters of negative growth, America has been in a recession.
- During the 2007-2009 recession, 9 million Americans lost their jobs and 10 million people fell into poverty, including 3 million children.
- The Federal Reserve just raised interest rates by 75 basis points – the fourth such rate increase since March – to combat the President’s inflation crisis. In total, the federal funds rate has risen by 2.25 percent, the fastest cumulative rate hike in 40 years.
- The interest rate on a 30-year fixed mortgage has doubled since Biden took office.