The past couple days, congressional Democrats have been celebrating the passage of the “Inflation Reduction Act” which is basically just a watered-down version of Biden’s failed Build Back Better Bill.
This new bill, while it thankfully isn’t the original $3.5 trillion of spending in the original Build Back Better plan, it still includes well over $700 billion in government expenditure.
Clearly there is no one within the Biden administration that understands basic economics, as Ben Carson hilariously pointed out, because anyone who has would understand that government spending creates inflation.
Having $700 billion dollars of spending and “inflation reduction” in the same sentence is paradoxical to an economist.
Nobel Prize winning economist, Milton Friedman, correctly pointed out in a famous speech, “inflation is made in Washington because on Washington can create money…consumers don’t produce, producers don’t produce it……what produces it is too much government spending and too much government creation of money and nothing else.”
Likewise, over 230 economists have written letters to Senator Schumer, advising him that the “Inflation Reduction Act” would only worsen inflation and do nothing to improve it.
Schumer arrogantly responded, “They’re wrong..I don’t know who that list was…it’s as plain as the nose on your face,” offering no evidence whatsoever. That’s hypocritical coming from someone telling you to “trust the experts” for over two years.
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If that wasn’t enough to convince you this bill is doomed to fail, both the Wharton School of the University of Pennsylvania and the Congressional Budget Office have also concluded the “Inflation Reduction Act” will not bring down inflation, but it would increase it.
The concept of this spending alone is ridiculous given the state of inflation in America, however, it is equally frustrating to examine where the money in this bill is being spent.
According to Breitbart, “There is roughly $385 billion in spending on energy and climate change, according to the nonpartisan Committee for a Responsible Budget. There is $100 billion of new spending for health care in the form of expanded Obamacare subsidies and expanded prescription drug and vaccine coverage.”
That’s right, according to Democrats spending hundreds of billions of dollars on climate change and Obamacare are going to bring down the inflation eating away your wallet. Not the underlying problems of monetary theory, government spending, or energy policy discussed here.
Furthermore, the bill proposes an increase in the corporate tax rate when we have had two quarters of negative economic growth, likely meaning we are in a recession.
This increase in taxes will only disincentivize business investment which will further slow economic growth and make the recession worse.
The strategy democrats are taking to mitigate inflation make absolutely no sense as economists, politicians, and everyday Americans are calling them out on it.
Consumer sentiment about the economy and inflation are rock bottom and falsely titling the bill “inflation reduction” while pursuing a political spending agenda will exacerbate this.
When the economic downturn and rising prices continue worsen in the coming months, you know who to blame when midterm elections come this fall.
– Macro Conservative