Leer en Español
SENATOR JOE MANCHIN was the key player in getting the controversial Biden-endorsed “Inflation Reduction Act” through Congress. It had been all but ruled out by the West Virginia senator when, almost overnight, he reached an agreement with Sen. Chuck Schumer (D-NY) to pass it in the upper chamber. Days after its enactment, contradictions soon followed.
The Democrat was asked by Fox News’s Hillary Vaughn about the name of the bill, which is considered Orwellian by critics.
Specifically, she asked him if it was “misleading” to call the bill the ‘Inflation Reduction Act’ since, according to studies, the prices of products will not go down with this new law.
Manchin responded, “Why would it?”.
“Well, immediately it’s not. We’ve never [said] anything would happen immediately, like turn the switch on and off,” Manchin explained, admitting that the law’s effect on inflation will not be greater in the short term.
The consultation came in the wake of several studies that have been done on the law, such as the one conducted by the Wharton School of the University of Pennsylvania, which already knew what Manchin “revealed”. Their analysis concluded that it would have an impact on price levels “statistically indistinguishable from zero.”
The (almost zero) impact of the Inflation Reduction Act on inflation
“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,” they explained from the institution.
“We project no impact on GDP by 2031 and an increase in GDP of 0.2 percent by 2050. These estimates include the impact of debt and carbon reduction as well as capital and labor supply distortions from rising tax rates,” they added according to the study.
The Wharton School was not alone in pointing out the effects of the law. The Tax Foundation also followed suit, asserting that “By reducing long-run economic growth, the bill worsens inflation by constraining the productive capacity of the economy.”
“To the extent the revenue raisers are seen as long-lasting sources of revenue, the bill reduces inflation, but projected revenues are not certain and may be less than we are forecasting. By increasing spending, the bill worsens inflation, especially in the first four years, as revenue raisers take time to ramp up and the deficit increases. We find that budget deficits would increase from 2023 to 2026, potentially worsening inflation,” they added.
Joaquín Núñez es licenciado en comunicación periodística por la Universidad Católica Argentina. Se especializa en el escenario internacional y en la política nacional norteamericana. Confeso hincha de Racing Club de Avellaneda. Contacto: [email protected] // Joaquín Núñez has a degree in journalistic communication from the Universidad Católica Argentina. He specializes in the international scene and national American politics. Confessed fan of Racing Club of Avellaneda. Contact: [email protected]