Dems’ “Inflation Reduction Act” Won’t Reduce Inflation

CBO Confirms: “Proposal’s Effect on Inflation Is Negligible at Best”

Ranking Member’s News Release | U.S. Senate Committee on the Budget

Senate Budget Committee Ranking Member Lindsey Graham (R-South Carolina) today released this statement after the Congressional Budget Office (CBO) confirmed the Manchin-Schumer “Inflation Reduction Act” would do nothing to address inflation. Last week, Graham asked CBO about the current fragile state of our nation’s economy and the potential impact of this latest Reckless Tax and Spend bill.

“When it comes to the Manchin-Schumer so-called ‘inflation reduction’ proposal, another shoe has just dropped. According to CBO analysis, the proposal’s effect on inflation is negligible at best. The estimate ranges from reducing inflation by 0.1 percent to increasing it by 0.1 percent in the near term. The idea that this tax and spend proposal is going to blunt inflation is yet again rejected, this time by CBO. Democratic statements about the proposal are quite frankly wrong and misleading.

“Further, CBO indicates that the Obamacare subsidies can go to a family of four earning $304,000 a year. This is, by any reasonable definition, people who are doing well and not in need of subsidies from the government.  Also, CBO confirmed my suspicion that the way the 15 percent corporate minimum tax is constructed would hurt economic growth.

“So what have we learned today from CBO? The bill does not lower inflation, it hurts economic growth and the Obamacare subsidies are absurd.

“Hopefully reason will prevail on the other side; although I doubt it.”

CBO found:

  • The so-called “Inflation Reduction Act” will not reduce inflation. In fact, the bill could slightly increase inflation in 2023.Further, extending Obamacare subsidies for the wealthy is an inflationary policy and would reduce incentives to work.
  • The U.S. economy shows signs of slowing and we could be in a recession right now.
  • The 15% corporate minimum tax reduces incentives for businesses to invest in things like new factories and equipment.

Also yesterday, CBO released an estimate of the Manchin-Schumer deal. Their analysis showed the Manchin-Schumer deal would front-load spending and increase deficits for years – which would do nothing for the current inflation crisis.

Read CBO’s response to Graham HERE.

Read Graham’s original letter to CBO HERE.

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