Friday’s House vote approved a multitrillion-dollar, radical tax-and-spend package. All but one Democrat voted for it, and all Republicans opposed.
Though the bill has been given the innocuous-sounding name “Build Back Better,” it would cause tremendous long-term damageOur way of living.
It would also be a serious threat for our economic recovery as it would lead to a worsening of price inflation.
Since the outbreak of the coronavirus epidemic, the federal government has spent over $5 trillion to finance the deficit. A lot of this spending was wasted or used for political connections to benefit special interests.
All that deficit spending has been a factor in America’s most significant bout of inflationIn decades, families have been feeling the negative effects.
Rather than heeding the warning of the raging inflationary fire and backing away from the reckless spending plan, the administration has rolled out a series of flawed talking points in an effort to prop up Biden’s dismal approval ratings.
It’s important to understand exactly why these points are so off-base.
CLAIM: “We must pass the Build Back Better Act to lower costs for working families … .”
RESPONSE: When most people think about “lower costs,” they imagine the price of something going down. When the Biden administration says “lower costs,” it means the federal government subsidizing a few politically favored causes.
In the real world, more federal intervention could backfire in many ways.
- Long-term federal subsidies for parts of the economy such as college tuition or health careIn the past, price increases have outpaced economic growth or wages for decades. That’s because when Uncle Sam picks up some or all of the tab, it distorts the consumer/provider relationship in ways that artificially increase demand and make it easier for providers to raise prices.
- Federal subsidies are often tied to red tape that raises the price of goods and services. This huge spending package is a perfect example. New child care subsidies come along with mandates that would increase the cost of childcare. through the roof.
- Welfare expansions that do not meet work requirements would not only affect poor households, but it would also increase dependency on government. Inflationary pressure would rise if there were fewer workers and businesses that produced more.
Federal meddling in prices would increase, not decrease, is the bottom line.
CLAIM: “[I]t’s not going to cost anything for the American taxpayer.”
RESPONSE:This whopper has been offered by the Biden administration since months.
The bill would impose heavy taxes on investors and businesses, and hire an army IRS agents to shake down America.
In addition, the idea that trillions of dollars in spending and tax credits have “zero cost” is patently absurd. We all know that every penny spent by the federal government must come from somewhere.
If it’s taxed, money is taken out of the economy. If it’s borrowed, money comes from future taxpayers, many of whom aren’t even old enough to vote yet. Private investment is also affected by borrowing.
If it’s just printed, that dilutes the value of the money in our paychecks and bank accounts.
The fact that the administration keeps using such an obviously false talking point suggests that it can’t come up with proper defenses for its radical agenda.
CLAIM: “[T]His bill is paid in full. It’s not going to add to inflationary pressures—quite the opposite.”
RESPONSE:Here, a Biden spokesperson admits that deficit spending is inflationary. He also claims that the bill’s tax hikes are enough to pay for the spending and tax credits, and thus claims that the bill wouldn’t make inflation worse.
Three major problems are found in what he said.
First, the nonpartisan Congressional Budget Office said that the bill is not fully paid for. It would add hundreds of millions of dollars to the national deficit, including interest costs.
Second, the bill has major gimmicks like having major programs expire arbitrarily in the first few year. As such, the bill’s true price is more than doubleWhat Democrats claim.
Third, because the spending is front-loaded while the taxes are spread across 10 years, it’s guaranteed to create fresh deficit spending the moment it’s signed into law. This would lead to more price inflation at a time when most families cannot afford it.
Concerns about what the social spending bill would do to inflation aren’t limited to conservatives. Steven RattnerThis week, The New York Times published a piece by a top Obama economic advisor arguing that Democrats should be more concerned about inflation.
CLAIM: “ … Build Back Better will ease inflationary pressures and lower costs for working families.”
RESPONSE:This claim, along with a related claim that Nobel Prize-winning economists believe the bill would lower inflation, stems from an open letterPublished September by the left-leaning Economic Policy Institute.
Specifically, the letter claims that an earlier version of the legislation would “ease longer-term inflationary pressures.”
Setting aside the merits of the claim, these economists aren’t saying that the bill would address the inflation that Americans are actually dealing with right now.
As such, the administration’s repeated (and often obscured) references to the letter in the context of inflation are an attempt to confuse the public about what the letter actually says.
Legislators need to have enough economic knowledge and common sense to see past these opaque talk points.
The “Build Back Better” tax-and-spend package is the last thing the economy needs right now.
It’s not too late for the Senate to do the right thing and stop the bill in its tracks.
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