Economists have linked federal government spending to the ongoing record inflation just as the U.S. Senate recently approved the $430 billion Inflation Reduction Act of 2022.
The bill was spearheaded by U.S. Sen. Joe Manchin (D-WV) and U.S. Sen. Chuck Schumer (D-NY) and calls for new spending on energy, electric vehicle credits and health insurance. The bill passed 51-50, along party lines, and raises the minimum taxes for large companies and enforces existing tax laws, according to the United States Senate.
“The so-called Inflation Reduction Act that we are debating this evening, and I say so-called by the way, because according to the CBO and other economic organizations that have studied this bill, it will, in fact, have a minimal impact on inflation,” Bernie Sanders, who voted for his party’s bill, said on the Senate floor Saturday.
Economists have said that the rising inflation in the country is at least partially due to the recent federal government spending, according to SmartAsset.
U.S. Sen. Catherine Cortez Masto (D-NV) and U.S. Sen. Jacky Rosen (D-NV) backed the bill, according to the United States Senate.
“This is a major victory for hardworking Nevadans that will bring down prescription drug and health care costs, fight inflation, cut the deficit and create clean-energy jobs in Nevada while helping to fight drought and the climate crisis,” Masto said on her website.
Masto added that the bill closes tax loopholes that the “ultra-wealthy” exploited and ensures that corporations will pay more taxes.
Their Republican counterparts, however, are not buying the idea that the act will have the impact that the Democrats are saying it will.
U.S. Sen. Lindsey Graham (R-SC) said the bill is not going to bring down inflation and will actually worsen the recession, adding that the Democrats’ attempts to paint the bill as deficit-reducing is a “gimmick.”
“It says it would reduce the deficit by $100 billion — we’re going to spend almost a trillion dollars,” Graham told Fox News.
If there is cause for concern, it could be that inflation is a byproduct tied to the federal government’s COVID-19 pandemic relief measures, according to Paige Terryberry, senior analyst for fiscal policy at the John Locke Foundation.
“We are experiencing high, simulated demand propped up by trillions of newly created dollars. Supply is struggling to keep up,” she said.
