Key Points
- Inflation is currently at a 40-year high; the highest since the Carter administration.
- Despite this, President Biden is insisting that more federal spending will solve the problem.
- The Congressional Budget Office says that spending may be more damaging than the initially thought.
America is currently experiencing the highest inflation rate of the last 40 years. President Biden and his administration think the solution to bringing prices down is for the federal government to spend a lot more money. Here’s Biden in a statement released by the White House:
“We are making progress on pandemic related challenges to our supply chain which make it more expensive to get goods on shelves, and I expect more progress on that in the weeks ahead,” Biden writes. “The challenge of prices underscores the importance that Congress move without delay to pass my Build Back Better plan, which lowers how much families pay for health care, prescription drugs, child care, and more.”
But ‘Build Back’ may not be the answer. In fact, it could make America’s money problems worse.
Last month, the CBO released it’s initial review of Biden’s $1.85 trillion-dollar spending bill. “The CBO estimates that enacting this legislation would result in a net increase in the deficit totaling $367 billion over the 2022-2031 period, not counting any additional revenue that may be generated by additional funding for tax enforcement,” CBO Director Phillip Swagel said.
But now, it’s looking like it could be a lot worse if certain temporary spending items are made permanent (not uncommon in big social spending bills like ‘Build Back’). At the request of Senator Lindsey Graham (R-SC), the top Republican on the Budget Committee, the CBO has run the numbers on this exact ‘what if?’ scenario.
According to the Washington Examiner, “the House version of the Democratic climate and social spending bill would increase federal deficits by $3 trillion over the next decade if temporary provisions are made permanent…the report from the budget office released Friday is a blow to President Joe Biden’s efforts to push the bill through Congress, as it will add to fears that the spending measure would push the government further into debt and stoke inflation.”
Sen. Graham likely requested the report to give key-vote Sen. Joe Manchin (D-WV) something to think about; Manchin has been increasingly concerned about the cost of ‘Build Back’ and the length of some of the policy initiatives.
“One goes for three years, one goes for one year … one might go for the full 10 years, do they not intend for those programs to last the full 10 years?” Manchin says. “Well if you don’t intend for that to happen, what’s the real cost? Because we’re either going to debt-finance it if we’re not going to pay for it or come back and change the tax code again.”
The real cost could be high, Joe. Real high. And concerns that your fellow Democrats are using “shell games” and “budget gimmicks” to artificially lower the cost of the bill are well-founded.
“This is a recipe for economic crisis,” Manchin says.
He’s not wrong.
