The Inflation Reduction Act Will Reduce Inflation

August 1, 2022

Washington, D.C.  The Inflation Reduction Act will lower costs, make historic investments in the fight against climate change, ensure big corporations and the wealthiest few individuals pay their fair share in taxes, reduce the deficit, and reduce inflation. Find below quotes from experts who agree the Inflation Reduction Act will reduce inflation:

Maya MacGuineas, President of the Committee for a Responsible Federal Budget: “To fight inflation, we want policies that will increase supply or reduce demand. And this does both. Almost every one of these policies, in and of itself, will fight inflation. And on net, the entire package most certainly will.” [New York Times, 7/28/22]

Maya MacGuineas, President of the Committee for a Responsible Federal Budget: “The best thing Congress and the President can do to help avoid a recession is to help the Fed fight inflation. Lawmakers should be focused on legislation like the Inflation Reduction Act that could make the Fed’s job easier. Improved tax collection, drug savings, and deficit reduction would put downward pressure on inflation and help ensure fiscal policy and monetary policy are rowing in the same direction.” … “With inflation and the national debt both far too high, it’s long past time that policymakers stop adding to the debt and shift focus to deficit reduction. The Inflation Reduction Act is exactly the kind of package lawmakers should put in place to help the economy in a number of ways.” [Committee for a Responsible Federal Budget, 7/29/22]

Mark Zandi, Chief Economist of Moody’s Analytics: As named, the Inflation Reduction Act will lean against inflation over the next decade. It also adds a bit to growth. And it is more than paid for with tax hikes on large corporations and the well-to-do. While modest legislation, there is plenty to like in the legislation.” [Twitter, 7/31/22]

Jason Furman, Former Chairman of the Council of Economic Advisers: “The Inflation Reduction Act is what the country needs right now--helping to address one of our biggest long-run challenges (climate change) while making progress on our biggest short-run challenge (inflation) while protecting the most vulnerable.” [Twitter, 7/27/22]

Jason Furman, Former Chairman of the Council of Economic Advisers: The Schumer-Manchin Bill Will Ease Inflation and Climate Change. “The Inflation Reduction Act is fundamentally different. It’s smaller and contains no large upfront deficit increases. In fact, it would reduce the deficit by more than $300 billion over the next decade. It could end up saving more than that, since properly funding the Internal Revenue Service will likely generate substantially more revenue than congressional estimators believe. The bill also creates a new precedent for paying for routine extensions of tax breaks. This is something both parties have routinely ignored in the past. Deficit reduction is almost always inflation-reducing.” [Wall Street Journal, 7/28/22]

Larry Summers, Former Treasury Secretary: “This is an important step forward in fighting inflation.” … “First, this reduces budget deficits, and so by reducing budget deficits, it reduces the level of demand in the economy. Second, this reduces prices directly by going after prescription drugs and getting lower prices and a better deal for taxpayers when they purchase prescription drugs. Third, this increases supply by stimulating energy production and by subsidizing and supporting our energy transition to renewables. So, less demand, more supply, and direct, better bargaining for lower prices, those are the things that are involved in reducing inflation.” … “This bill is fighting inflation.” [CNN, 7/28/22]

Larry Summers, Former Treasury Secretary: “I have been making the argument for quite some time that the right public investment program is not inflationary and could contribute to a reduction in inflation. And I think the deal that Senator Manchin and Majority Leader Schumer reached, with the strong support of the White House, meets that test in three ways. It reduces demand, because it will bring down the budget deficit over time, because, unlike what we did a year-and-a-half ago, we're raising more revenue than we're increasing spending. So we're taking funds out of the economy. We're putting direct pressure on prices that are too high. That's what the measures about pharmaceuticals, to use the government's purchasing power, are all about. And we're taking a set of steps that will expand the availability of energy and reduce the price of energy. And that means people will hoard less. That means they will hold smaller inventories because they won't be looking for big price increases. And that too will contribute to lower prices. So, I believe that this is disinflationary policy that's also going to make the economy more efficient. It's also going to preserve the environment and also is going to make us have a fairer society.” [CNN, 7/28/22]

Larry Summers, Former Treasury Secretary: “Less demand, more supply & direct better bargaining for lower prices--those are the things involved in reducing inflation. The bill reduces the deficit & the level of demand in the economy, reduces prescription drugs prices & increases supply by stimulating energy production.” [Twitter, 7/28/22]

Joseph Stiglitz, Nobel Prize Winning Economist: “The compromise agreed to under the rubric of the Inflation Reduction Act of 2022 is far more than just an act addressing inflation—although it does that in several ways. It simultaneously addresses several key and long-standing problems facing our economy and society. First, on inflation: There is a simmering debate on the causes of inflation, but whatever side one takes in that debate, this bill is a step forward. For those worried about excessive demand, there is more than $300 billion in deficit reduction.” [Roosevelt Institute, 7/28/22]

Treasury Secretary Janet Yellen: “The reconciliation package announced yesterday will help ease inflationary pressures by lowering some of the biggest costs families face, including energy, health care, and prescription drugs, while making historic investments in fighting climate change and reducing the deficit.” [Twitter, 7/27/22]

Gene Sperling, White House American Rescue Plan Coordinator and Former Director of the National Economic Council: “Joe Manchin and Larry Summers all agree this is not only paid for, but reduces the deficit by at least $300 billion. They agree that it's anti-inflationary. And they agree it's going to lower prescription drug prices, lower energy prices, and lower health premiums for 13 million and that, when you look at it as a whole, it is an anti-inflationary bill. And I think that there is wide support for that assessment even among people who we have had disagreements about inflation with in the past.” [Fox News, 7/28/22]

White House Council of Economic Advisers Chair Cecilia Rouse: “Cecilia Rouse, who chairs Mr. Biden’s Council of Economic Advisers, said in an interview on Thursday that the plan would make ‘a meaningful contribution’ to a wide range of ongoing government efforts to reduce inflation. That includes the administration’s work to clear pandemic-clogged supply chains and the Federal Reserve’s rapid moves to raise interest rates, which are intended to cool the economy by making money more expensive to borrow and spend. Ms. Rouse said the bill’s effects could begin to show up in economic data, which could in turn lead the Fed to alter its path of rate increases. ‘It could very well make a difference to their own policymaking,’ she said, ‘because to the extent that they see that inflation is coming down, while employment is remaining robust — so we have we still have maximum employment or a strong labor market that makes their life easier — they will be able to start to moderate their own policies.’” [New York Times, 7/28/22]

White House Council of Economic Advisers Member Jared Bernstein: “But on the inflation side, we all agree we've got to do more. And here, we really need to talk about some legislation. The Inflation Reduction Act was a critical breakthrough yesterday in negotiations. This will lower the cost of the prescription drugs. It will lower the cost of health insurance. It will lower the cost of investing in an electric vehicle. It will -- in tandem with the CHIPS Bill, it will stand up a domestic American semiconductor production industry, all of which over the longer term will put long-term downward pressure on prices. Near-term relief when it comes to drugs and health insurance, long-term relief when it comes to these investments. So, that's another really important aspect of our plan to help ease inflationary pressures.” [Fox, 7/28/22]

White House Council of Economic Advisers Member Heather Boushey: “The Inflation Reduction Act would help families save money on key expenses. Take prescription drugs: Americans spend *more than* people in any other OECD country on pharmaceuticals including prescription drugs. The Inflation Reduction Act would make prescription drugs cheaper by allowing Medicare to negotiate lower prices (saving the government *and* households money). Economic research suggests that renewable energy sources can push down wholesale electricity prices, reducing costs for households and industries.” … “Second, the bill also has provisions to lower costs for households to ease the transition to clean energy.  For example, it includes a $10,000 direct consumer rebate that returns money to families when they buy heat pumps or other high-efficiency heating & cooling appliances.” … “Together, all of these pieces add up to hundreds of dollars each year in savings for American households.” [Twitter, 7/31/22]

White House National Economic Council Director Brian Deese: “The single most important thing that we can be doing, that Congress can be doing is moving on legislation that provides some relief to consumers and also reduces price pressures in our economy and the Inflation Reduction Act that Senator Schumer and Senator Manchin outlined yesterday is probably the best way we can do that." [The Hill, 7/28/22]

White House National Economic Council Director Brian Deese: “The Inflation Reduction Act is exactly what our economy needs. The prescription are economy needs right now, to the point you are making. Inflation is high and we need to bring prices down, we need to give some relief to consumers while also helping to bring inflation down in the economy as a whole. So what this bill would do: it would reduce the cost of prescription drugs, allow Medicare for the first time to negotiate for prescription drugs, which lowers costs in Medicare, and it also lowers costs for  seniors and people with chronic conditions, lower the cost of health care for 13 million Americans, and invest prudently in energy in a way that will lower costs and help us meet our climate goals. All of those things are ready made for the economic circumstances that we face today.” [MSNBC, 7/31/22]

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