230 Economists Warn Bill Will Boost Inflation!

Here is the letter from 230 economists that everyone's talking about: 

Dear Leader Schumer, Leader McConnell, Speaker Pelosi, and Leader McCarthy,

The U.S. economy is at a dangerous crossroads. Forty-year high inflation is causing immense strain for households and small businesses, and it is prompting steep interest rate hikes that, while necessary to counter fiscal policy excesses, increase the chance of a deepening recession.

As such, taming inflation must be the top short-term economic priority to avoid further economic decline and hardship. Unfortunately, the inaptly named “Inflation Reduction Act of 2022” would do nothing to the sort and instead would perpetuate the same fiscal policy errors that have helped precipitate the current troubling economic climate.

At a time when the economy already faces supply/demand imbalances, the residual effects of stimulus, labor shortages, and supply chain disruptions, this bill would compound rather than alleviate many of these problems.

In particular, its $433 billion in proposed government spending would create immediate inflation pressures by boosting demand, which the supply-side tax hikes would constrain supply by discouraging investment draining the private sector of much-need resources.

Of particular concern, the corporate minimum tax would fall heavily on capital-intensive manufacturing, thereby undercutting efforts to shore up the resilience of America’s supply chains.

In addition, the prescription drug provisions would impose price controls that threaten healthcare innovation, creating a human health toll that would add to the financial woes that Americans are already experiencing. Even the one superficially appealing aspect of the bill–deficit reduction–is likely to prove illusory due to implausible spending phaseouts.

In summary we agree with the urgent need to reduce inflation, but the “Inflation Reduction Act of 2022” is a misleading label applied to a bill that would likely achieve the exact opposite effect.

Sincerely, [200+ economists] A few of the notable signers include Nobel laureate Vernon Smith, former Chair of the Council of Economic Advisers Kevin Hassett, former Director of the Office of Management and Budget Jim Miller and Robert Heller, former president of the Federal Reserve Board 1986-1989.
In addition, professors from the University of Chicago, Princeton University, Duke University, the University of Virginia, Columbia University and the University of Notre Dame, among others, were listed on the letter dated Aug. 3.