Senate Democrats’ latest party-line attempt to push their social agenda through Congress lifts Orwellian naming conventions to new heights. The Inflation Reduction Act of 2022? They might as well add “World Peace” and “Global Democracy,” since the bill has roughly the same odds of achieving those ends.
There’s a net $300 billion in the bill dedicated to reducing the deficit through higher taxes. In normal times, when inflation runs around 2%, a tax increase of about 1.2% of gross domestic product would exert some downward pressure on inflation. But because the deficit reduction is concentrated at the end of a 10-year period, only about a tenth of this reduction, 0.12% of GDP, would materialize in the next year.