The difference between Tom Brady and Joe Biden? With Tom Brady, you never had to worry about inflation.
Context
The current U.S. inflation rate is 7.04 percent, or the level at which prices of goods and services have increased over the preceding 12 months. That’s the highest rate since June 1982.
Multiple simultaneous factors are contributing to that statistic, including supply chain snags, a shortage of truck drivers, and wages increasing in 2021 at the highest rate since 1983. But critics of higher government spending say that another major factor is federal government spending.
In fiscal year 2021, federal spending soared to approximately $7.2 trillion, or about 16.7 percent of GDP. The latter number marked a new all-time record outside of wartime.
What the legislation does
The Inflation Prevention Act would disallow Congress from enacting legislation that would increase inflation until the annual inflation rate drops below 4.5 percent. That inflation determination would be according to the official financial estimate from the nonpartisan Congressional Budget Office (CBO).
That could potentially be very soon — the Federal Reserve currently predicts that inflation will fall to 2.6 percent by December 2022, while falling below that 4.5 percent threshold months prior.
The Senate version was introduced on January 12 as S. 3495, by Sen. Tim Scott (R-SC). The House version was introduced two weeks later on January 25 as H.R. 6485, by Rep. Mike Garcia (R-CA25).
What supporters say
Supporters argue that Congress’s spending was a major factor that got inflation into this mess, so it’s on Congress to help get out of it as well.
“All across America, hardworking Americans are concerned with the rising costs of basic goods because of reckless government spending,” Rep. Garcia said in a press release. The legislation would “help alleviate the inflation crisis for American families through practical barriers limiting out-of-control government spending. We must put an end to this now and get America back on track.”
“American families cannot continue to endure the burden of skyrocketing costs of everyday goods brought on by reckless spending in Washington,” Sen. Scott said in a separate press release. “A sound financial future requires wise financial action now.”
What opponents say
Opponents say that government spending levels contribute minimally to the current 40-year inflation high.
“I couldn’t disagree more with that assessment,” Rep. Alexandria Ocasio-Cortez (D-NY14) said in a Yahoo Finance interview, when asked whether inflation was primarily caused by government spending. “There’s a lot of evidence that particularly industries with high corporate concentrations, whether it’s almost oligopoly-level industries, a lot of these price increases are potentially due to just straight price gouging by corporations.”
“The real key is making sure that we’re diagnosing the causes correctly,” Rep. Ocasio-Cortez said. “Because the danger here is that if we say we’re helping working people too much and say that the cause of this is, oh, it’s because we provided too much assistance during the American Rescue Plan, stimulus checks were too generous, that is why we are dealing with the problems that we’re dealing with now, what that’s going to result in is a pullback in the assistance that some families need the most right now.”
Odds of passage
The House version has attracted 18 cosponsors, all Republicans. It awaits a potential vote in either the House Rules or House Budget Committee.
The Senate version has attracted 12 cosponsors, all Republicans. It awaits a potential vote in the Senate Rules and Administration Committee.
Odds of passage are low in the Democratic-controlled Congress.
