Do You Think Biden’s Bill Will Add to Inflation?

Number of the Day: The most relevant or interesting figure in personal finance

43%

That’s how many registered voters think the Build Back Better bill—Democrats’ social and environmental government spending plan—would make inflation worse if passed, according to a new poll. 

The skeptics outnumbered the 26% who said they thought the bill would actually help inflation—as President Joe Biden’s administration has argued—though including the 15% who estimated it wouldn’t have an effect one way or the other, those worried about the impact were relatively evenly split with those who weren’t. The Morning Consult/Politico survey, conducted over the weekend, also showed that despite any inflation concerns, registered voters supported the bill by a margin of 49%-38%, with 13% saying they didn’t know how they felt or had no opinion.

Inflation fears broke down along party and generational lines in the poll, with more Republicans and older voters saying that it would make things worse. Prominent Republicans like Gov. Larry Hogan of Maryland have criticized the bill for containing “massive tax hikes” that are especially ill-timed with soaring inflation. Douglas Holtz-Eakin, a former economic adviser to President George W. Bush, said the bill would sustain the “fires of inflation” in a column for The Hill.

Other economists don’t think the plan—which spreads out $1.7 trillion of spending various programs over 10 years—would contribute much if anything to the trend of rising prices, though to some extent consumers’ expectations of inflation end up influencing inflation. Even Lawrence Summers, President Bill Clinton’s former Treasury Secretary, who warned about inflationary effects from previous pandemic relief bills, told the Washington Post that this one is different, an opinion echoed by others. 

“We don’t think that BBB would meaningfully add to current inflationary pressures,” Gregory Daco and Nancy Vanden Houten, economists at Oxford Economics, wrote in a commentary. Unlike previous relief, most of the spending would be spread out over time and offset by tax increases and spending cuts, they wrote. 

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