During the July 15th press briefing, Biden’s press secretary, Karine Jean-Pierre, made a crazy point about the Democrat reconciliation bill, a bill that would include huge amounts of spending that Senator Manchin is opposed to on the grounds that it will increase inflation, arguing that the government spending more money will somehow reduce inflation.
That comment came when a reporter asked about the two spending bills currently in the legislature, saying:
Karine, on that, you have two big legislative proposals that you tout as, you know, helping with inflation — obviously, reconciliation and then the China bill, the USICA bill. Both are obviously intertwined, and both seem to just be going nowhere right now.
With, you know, reconciliation — if Manchin gets what he wants — being slimmed down so much, and you guys touting the national security reasons for why to pass USICA, is it worth sacrificing that if you could have it done faster?
So Manchin wants to spend less money, which would seem to be a good way to start reducing inflation, as it would mean spending fewer freshly printed dollars and flooding the system with even more money.
But Jean-Pierre pushed back against Manchin’s stance, arguing that spending the full amount that Democrats want in the reconciliation bill would somehow help decrease inflation. In her words:
No, I’m glad you asked that question. We think it’s a false choice to have to pick one or the other. Right? You look at reconciliation: Experts have said that it will — it will help fight inflation, not just for the moment but for the long haul. And that matters.
Essentially, the Democrat point is that the reconciliation bill, which would boost taxes on some high earners, is anti-inflationary because it would use those tax dollars to somehow reduce costs. Senate Finance Committee Chairman Ron Wyden, for instance, said:
“What we’re doing is cutting costs for consumers. That has a real anti-inflationary impact, cutting medical costs, cutting energy costs, paying down debt. That is the anti-inflationary ‘cutting costs for consumers point’ of our bill.”
Similarly, Liz Warren said “When problems are paid for, that doesn’t mean more dollars have been pumped into the economy. And when rich people have to pay taxes to help fund programs that help people go to work, that puts more workers into the economy, more productivity, and that drives prices down, not up.”
If the outcome Democrats claim will happen–policies paid for by increased taxes lowering costs–then perhaps the argument they’re making would be accurate. Manchin and Republicans, however, are unconvinced, seeing the bill as just more government spending that would not reduce prices.
Even RINO Senator Romney, for example, is against the reconciliation bill on the ground that it will end up spending more money, which will boost inflation, and make things harder for small businesses, which would also boost prices and thus inflation. In his words:
“Anytime you’re spending more money, you’re creating more demand and that causes prices to go up. So, if they come up with a bill that spends more money, it’s going to be inflationary. If they’re going to raise taxes on small business, they’re going to make it harder for small business to provide the products that people want, and therefore that causes prices to go up.”
Manchin, for his part, has remained an opponent of the reconciliation bill, saying “Everyone should be extremely cautious, because you cannot do a thing right now that’s going to add or be inflammatory to inflation.”