‘Crazy’ or ‘much ado about nothing’? How Joe Biden’s Build Back Better plan could affect inflation
By Paul Davidson
The White House says its sprawling Build Back Better legislation will create a new foundation for American households, a kind of social infrastructure for low- and middle-class families.
Many Republicans and some moderate Democrats say it will toss more gasoline on the flames of soaring inflation.
President Joe Biden said this week that he expects the $1.75 trillion bill to pass Congress by Thanksgiving, but analysts say concerns about its effect on inflation could delay approval and shrink its size.
The Congressional Budget Office has estimated the legislation would add $160 billion to the national debt over the next decade. But the White House said the bill would reduce the deficit by $100 billion over 10 years as a result of tax increases on the wealthy and corporations and IRS crackdowns on tax cheats . . .
Wayne Winegarden, senior fellow for the Pacific Research Institute, a free-market think tank, says the bill would also stoke inflation by adding to the nation’s money supply. The Fed has been buying hundreds of billions of dollars in Treasury bonds, effectively printing money. That keeps interest rates and government borrowing costs low.
But Winegarden says it leaves banks with lots of extra cash that they’re more likely to lend out, fueling more economic activity. He also takes issue with the legislation broadly, saying it provides people incentives not to work in some cases.