President Biden and Democrats in Congress have been heralding the recent agreement leadership secured with Senator Joe Manchin (D-WV) to allow some parts of the bloated Build Back Better budget reconciliation package that Manchin's prior reservations stalled. Calling the legislation the "Inflation Reduction Act of 2022," Democrats hope Americans will take the bill at face value and credit the president's party for taking action amid the current recession and ongoing inflation crisis.
But, according to researchers at the University of Pennsylvania's Wharton Budget Model, the Inflation Reduction Act is not actually going to do anything to change inflation in the long term, and will actually add to inflation until 2024.
All the climate and healthcare spending in the bill — along with the tax increases — will, according to Wharton's experts, "produce a very small increase in inflation for the first few years, up to 0.05 percent points in 2024." It's worth noting that Wharton used Personal Consumer Expenditures read of inflation, which on Friday hit its highest annual rate in more than 40 years of 6.8 percent. So, the 0.05 percent estimate is not substantial when compared to the Biden administration's economic policies that have driven inflation to levels not seen since the early 1980s — but it's also the opposite of a reduction, as the legislation's name asserts the bill would do.
In the longer term, "by the late 2020s," according to the Penn Wharton Budget Model economists, the bill will bring a 0.25 percent decrease to PCE inflation, which is again insignificant in light of the highest-in-a-generation inflation that Biden's money spending and printing policies have brought.
As a final nail in the coffin of the promise made by Democrats and the name of their Inflation Reduction Act, Wharton clarifies that "[t]hese point estimates, however, are not statistically different than zero, thereby indicating a very low level of confidence that the legislation will have any impact on inflation."
#NEW: The UPenn @Wharton budget model estimates the so-called "Inflation Reduction Act" would NOT reduce inflation.
— Financial Services GOP (@FinancialCmte) July 29, 2022
In fact, Senator Manchin's favorite economists estimate it would actually increase inflation through 2023.https://t.co/yqW8nrDFg3
Yup, the legislation that Democrats and Biden have been heralding this supposed silver bullet for inflation that Biden has denied he caused is unlikely to have "any impact on inflation." "Reducing inflation and lowering the cost of living in this country are my top priorities," Biden claimed. "The Inflation Reduction Act is what the American people have been waiting for." But it's not.
Inflation continues to be a problem and there is a solution that Democrats are ignoring. Instead, they're using one of the most painful of Biden's crises as a trojan horse to force pieces of Build Back Better through Congress without having any intention of actually helping Americans who are struggling to make ends meet in the Biden recession.
Joe Biden and Senate Democrats, including Joe Manchin, apparently think changing the name of Build Back Better to Inflation Reduction Act means Americans won't notice their sly trick. But Senate Majority Leader Chuck Schumer has already turned to bragging about the bill that won't actually do anything to ease inflation, and will add to that burden that's already at a 40-year high for the next two years. "The Inflation Reduction Act of 2022 will close tax loopholes long exploited by the wealthiest individuals and largest corporations," Schumer tweeted on Thursday. That doesn't sound like anything to do with inflation. "The Inflation Reduction Act of 2022 will be the largest package on climate change ever passed by Congress. Period," Schumer also tweeted — again not having anything to do with inflation.
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