Over 230 economists warn Manchin’s spending bill will perpetuate inflation
A letter sent to House and Senate leaders by 230 economists says the Infrastructure Reduction Act is expected to contribute to soaring inflation and weigh on the US economy, contrary to claims by President Biden and the Democrats.
Economists wrote in the letter first obtained by Fox News Digital that the US economy is at a “dangerous crossroads” and that the “misnamed ‘Inflation Reduction Act of 2022’ would do no such thing and perpetuate at instead the same fiscal policy mistakes that helped precipitate the current troubling economic climate.”
Sen. Joe Manchin, DW.Va., announced last week that he had reached an agreement with Senate Majority Leader Chuck Schumer, DN.Y., on the $739 billion reconciliation package after more than a year of negotiations between Democrats.
Economic experts point to the $433 billion in proposed government spending, which they say “would create immediate inflationary pressures by stimulating demand, while supply-side tax hikes would limit supply by discouraging investment and draining the private sector of much-needed resources.”
They also write that a “particular concern” is the corporate minimum tax which they say will undermine efforts to get supply chains working again.
In addition, the bill’s prescription drug provisions “would impose price controls that threaten innovation in health care, creating a toll on human health that would add to the financial hardship that Americans already know”.
Notable signatories include Nobel Laureate Vernon Smith, former Chairman of the Council of Economic Advisers Kevin Hassett, former Director of the Office of Management and Budget Jim Miller and Robert Heller, former Chairman of the Federal Reserve Board 1986 -1989.
Additionally, professors from the University of Chicago, Princeton University, Duke University, University of Virginia, Columbia University, and the University of Notre Dame, among others, appeared on the letter dated August 3.
Experts conclude that while they agree with an “urgent” need to fight inflation, Manchin’s bill is a “misleading label” applied to legislation that would achieve the “opposite effect”.
The letter was sent to Schumer, Senate Minority Leader Mitch McConnell, R-Ky., House Speaker Nancy Pelosi, D-Calif., and House Minority Leader Kevin McCarthy, R- Calif.
WHITE HOUSE SLAMS REPUBLICANS FOR TRYING TO ‘OBSTRUCT’ PASSAGE OF $739B ‘ANTI-INFLATION PLAN’
Schumer touted the Inflation Reduction Act as an immediate solution to inflation, which hit a new 40-year high last month.
“The Inflation Reduction Act will reduce inflation, reduce prescription drug costs, close loopholes long exploited by big corporations that pay little or no tax,” Schumer said Thursday in the Senate.
Additionally, Biden urged Congress to pass the bill during a virtual roundtable on Thursday. “My message to Congress is this: Listen to the American people,” he said.
“This is the strongest bill you can pass to reduce inflation, continue to reduce the deficit, lower health care costs, fight a climate crisis, and promote America’s energy security and reduce the burdens on working-class and middle-class families,” Biden continued. .
However, Republicans are less enthusiastic about the spending and the more than $700 billion tax package.
McCarthy told Fox News on Wednesday that “the Democrats have no intention of solving all the problems they have created” and that Manchin’s bill is not the solution.
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In the Senate, McConnell said this week that most of his colleagues were “somewhat shocked” by Manchin’s reversal of previous positions. He went on to tell Fox News that the bill raised taxes and “to call it an inflation-cutting bill is kind of laughable.”
“Democrats are catastrophically out of touch with what American families really care about. Their approval ratings show it. And their fiscal and spending spree proves it, too,” McConnell said in a statement this week.
The Senate is due to meet on Saturday to vote on a procedural motion to move the bill forward. It remains unclear whether Sen. Kyrsten Sinema, D-Arizona, will support the legislation, and her vote is needed for the bill to eventually pass under reconciliation rules that would allow a majority to pass.
Democrats previously touted a letter from 126 economists backing Manchin’s bill.