Top financial analysts dispel GOP claim that Biden agenda will fuel inflation
Republicans have been baselessly claiming the Build Back Better jobs proposal will worsen inflation.
For weeks, Republican lawmakers have asserted — with no evidence — that President Joe Biden’s investment plans will make inflation worse. On Tuesday, two major financial analysis services predicted they will not.
In an interview with Reuters, Moody’s Investor Service vice president William Foster predicted that Biden’s just-signed $550 billion Infrastructure Investment and Jobs Act and the proposed $1.75 trillion Build Back Better climate and caregiving infrastructure proposal “should not have any real material impact on inflation.”
Finch Ratings senior director Charles Seville told the wire service that the two measures “will neither boost nor quell inflation much in the short-run” but could actually increase the labor supply and productivity in the longer term.
The White House and congressional Democrats have dismissed GOP assertions that their proposed investments will fuel higher prices and have noted that provisions in the bills to improve infrastructure and child care will actually help curb inflation over the next decade.
They have cited a group of Nobel Prize-winning economists who say Build Back Better is part of the solution, not the problem. “Because this agenda invests in long-term economic capacity and will enhance the ability of more Americans to participate productively in the economy, it will ease longer-term inflationary pressures,” Columbia University professor Joseph Stiglitz told the Washington Post on Nov. 4.
On Tuesday, Moody’s Analytics chief economist Mark Zandi echoed those predictions, telling Reuters the two measures “do not add to inflation pressures, as the policies help to lift long-term economic growth via stronger productivity and labor force growth, and thus take the edge off of inflation.”
“Nobody is buying Joe Biden’s claim that his massive government spending bill is going to reduce inflation,” tweeted Rep. Mo Brooks of Alabama on Tuesday. “It’s Biden and Pelosi’s endless spending that is causing inflation! Just shows how Socialist Democrats lie to the American people.”
“Democrats have spent TRILLIONS in 2021 and they want to spend TRILLIONS more,” complained California Rep. Tom McClintock. “Inflation is only going to get WORSE and it’s hard-working Americans who will pay the price for their failed policies.”
“Don’t be fooled – this socialist spending scam will exacerbate the inflation crisis,” warned Texas Rep. Beth Van Duyne.
Sen. Rob Portman (R-OH), who backed the bipartisan Infrastructure Investment and Jobs Act, even claimed that the bill he voted for “adds to the supply side of the economy, and will be counter-inflationary,” but that the Build Back Better proposal “will increase inflation through massive stimulus spending and hurt the economy through massive tax increases.”
While Republicans have been blaming Biden’s spending plans for the rising cost of goods — even blaming the not-yet-passed proposals for the problem — many experts say current inflation is actually being caused by other factors. These include the increased demand for goods as the economy reopened after COVID-19 pandemic shutdowns and troubles with global supply chains.
Still, some Republicans are signaling they plan to continue to demagogue their opponents over the issue.
“You can see what’s going to happen next. We’re going to continue to have inflation, and then interest rates will go up,” Florida Sen. Rick Scott, who heads the National Republican Senatorial Committee, told the Wall Street Journal on Sunday. “This is a gold mine for us.”
The House is expected to vote on the Build Back Better proposal before Thanksgiving.
Published with permission of The American Independent Foundation.
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