It’s not unusual for economists to come to different conclusions, which can be influenced by partisan views on what data to evaluate and how much weight to give it. The letter writers include former Democratic administration officials and experts from left-leaning think tanks who argue that because the legislation would lower the deficit, it would put “downward pressure on inflation.” They urged Congress to pass the bill because of its “crucial investments in energy, health care and in shoring up the nation’s tax system.” Other economists, including 126 economists who sent a letter to congressional leadership Tuesday, are more bullish on the bill’s prospects to lower prices, though they did not qualify the extent.
One independent analysis from the Penn Wharton Budget Model found that it might cause a slight uptick in inflation over the next few years but then reduce it later. Some experts, including two economists influential among Democratic leaders, argue that the legislation would likely have a small effect on tamping down inflation or none at all. Joe Manchin, who repeatedly refused to support the Democrats’ previous spending proposals because of inflation concerns.īut economists disagree over whether the climate, health care and tax package would, in fact, live up to its name, particularly in the short term. The latest Senate budget reconciliation deal is titled the Inflation Reduction Act, a nod to West Virginia Sen.