The White House is defending the Inflation Reduction Act against a report from the nonpartisan Congressional Budget Office that suggests the legislation will not meaningfully lower inflation in the coming years.
“Could you address the new CBO analysis about the Inflation Reduction Act that says it would have almost no impact or negligible impact on inflation in 2022 and 2023,” White House press secretary Karine Jean-Pierre was asked during a Friday briefing.
Jean-Pierre responded, “You know, leading economists have said that this Inflation Reduction Act that’s been analyzed by them, that’s been looked at by these economists, will indeed reduce inflation.”
Jean-Pierre was then asked if her answer means she is “dismissing” the CBO report and whether it is fair to call the legislation the “Inflation Reduction Act” when the CBO is saying inflation will not be meaningfully reduced.
“Well, if you think about the Inflation Reduction Act, it will have an effect also on drug costs,” she explained. “Lowering prices on pharmaceutical costs, which is going to make a difference in a big way to seniors to families.”
Jean-Pierre went on to say that the legislation will lower energy costs, the cost of utility bills and Medicare, while also putting $300 billion toward lowering the deficit.
“That is going to make a difference,” Jean-Pierre said. “That is going to fight inflation, and so it should be called the Inflation Reduction Act, because that’s exactly what it’s going to do.”
Jean-Pierre was reacting to a report this week from the CBO that said the bill would have a “negligible” effect on inflation.
“In calendar year 2022, enacting the bill would have a negligible effect on inflation, in CBO’s assessment,” the office said. In calendar year 2023, inflation would probably be between 0.1 percentage point lower and 0.1 percentage point higher under the bill than it would be under current law, CBO estimates.
Jean-Pierre’s defense of the legislation comes the same day Senate Majority Leader Chuck Schumer, D-N.Y., said that a group of 230 economists who are warning that the legislation will increase inflation are “wrong.”
“They’re wrong..I don’t know who that list was… it’s as plain as the nose on your face,” Schumer told reporters.
The economists wrote in the letter that the U.S. economy is at a “dangerous crossroads” and the “inaptly named ‘Inflation Reduction Act of 2022’ would do nothing of the sort and instead would perpetuate the same fiscal policy errors that have helped precipitate the current troubling economic climate.”
U.S. job growth unexpectedly accelerated in July, defying fears of a slowdown in hiring even as the labor market confronts the twin threats of inflation and rising interest rates.