The Democrat-supported “Inflation Reduction Act of 2022” could lead to a slight increase in inflation over the next two years if it’s passed and signed into law, according to a Penn Wharton study released Friday.
Penn Wharton analyzed the massive spending package that reached a shocking agreement between Sen. Joe Manchin (D-WV) and Senate Majority Leader Chuck Schumer (D-NY) on Wednesday. The study came to a dismal conclusion for Democrats, and even found that the bill could do the exact opposite of what its name suggests through 2024.
“The Act would very slightly increase inflation until 2024 and decrease inflation thereafter. These point estimates are statistically indistinguishable from zero, thereby indicating low confidence that the legislation will have any impact on inflation,” the Penn Wharton Budget Model found.
According to the study, inflation could rise by 0.05% over the next two years before a marginal drop of 0.25% “by the late 2020s,” rendering the spending package basically ineffective at accomplishing its purpose.
The Penn Wharton findings were released the same day that new data from the Bureau of Economic Analysis (BEA) showed that the personal consumption expenditures (PCE) index, a key measure of inflation, increased 6.8% in June. That’s the highest yearly increase since January 1982, marking troubling news for Americans as the economy officially entered a recession on Thursday.
The Democrat spending package that gained surprising support from Manchin earlier this week would be the largest legislative climate investment the U.S. has ever made at $369 billion. The bill would also raise taxes on billion-dollar businesses and extend Affordable Care Act subsidies.
In recent weeks, Manchin shot down Democrat attempts at pushing through President Joe Biden’s agenda, and reportedly told Democratic leaders he would “unequivocally” refuse to support legislation related to climate change and tax increases.
Manchin claims that reconciling with Democrats on this package will help the country fight inflation, but findings from the Penn Wharton Budget Model now bring that claim into question.
“We must be honest about the economic reality America now faces if we want to avoid fanning the flames of inflation,” Manchin said in a statement Wednesday. “At its core, the purpose of reconciliation is to get our economic and financial house in order. Contrary to foolish talk otherwise, America cannot spend its way out of debt or out of inflation.”
Leif Le Mahieu contributed to this report.
Source: Dailywire
