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White House stands by Inflation Reduction Act after CBO warns inflation won’t fall as a result

Written by Javed Iqbal

The White House is defending the Inflation Reduction Act against a report from the nonpartisan Congressional Budget Office that suggests the legislation will not a meaningful lower inflation in the coming years.

“Can you address the new CBO analysis on the Inflation Reduction Act that says it would have almost no or negligible impact on inflation in 2022 and 2023,” press secretary in the White House Karine Jean-Pierre was asked during a Friday briefing.

Jean-Pierre replied: “You know, leading economists have said that this inflation reduction law, which has been analyzed by those who have been looked at by these economists, will actually reduce inflation.”

Jean-Pierre was then asked if her answer means she “rejects” the CBO report and if it is fair to call the legislation the “Inflation Reduction Act” when the CBO says inflation will not be meaningfully reduced.

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White House Press Secretary Karine Jean-Pierre speaks during the daily briefing at the White House in Washington, Wednesday, May 18, 2022. (AP Photo/Susan Walsh)

White House Press Secretary Karine Jean-Pierre speaks during the daily briefing at the White House in Washington, DC (AP Photo/Susan Walsh/AP Newsroom)

“Well, if you think about the Inflation Reduction Act, that will also have an effect on drug costs,” she explained. “Decreasing prices on drug costs, which will make a difference in a big way for seniors to families.”

Jean-Pierre went on to say the legislation will lower energy costs, the cost of utility bills and Medicare, while reducing the deficit by $300 billion.

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Inflation food prices

A man shops at a Safeway grocery store in Annapolis, Maryland. (Jin Watson/AFP via Getty Images/Getty Images)

“It’s going to make a difference,” Jean-Pierre said. “It’s going to fight inflation, and that’s why it should be called the Inflation Reduction Act, because that’s exactly what it’s going to do.”

Jean-Pierre was responding to a report this week from the CBO that said the bill would have a “negligible” effect on inflation.

“In calendar year 2022, passage of the bill would have a negligible effect on inflation, according to CBO’s assessment,” the office said. In calendar year 2023, inflation will probably be between 0.1 percentage point lower and 0.1 percentage point higher under the bill than it would be under current law, CBO estimates.

Jean-Pierre’s defense of the legislation comes the same day Senate Majority Leader Chuck Schumer, D-N.Y., said a group of 230 economists who warn that the legislation will increase inflation are “wrong”.

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“They’re wrong. I don’t know who that list was … it’s as clear as the nose on your face,” Schumer told reporters.

The economists wrote in the letter that American economy is at a “dangerous crossroads,” and the “inappropriately named ‘Inflation Reduction Act of 2022’ would do no such thing and would instead perpetuate the same fiscal mistakes that have helped precipitate the current troubling economic climate.” “

job growth in the United States unexpectedly accelerated in Julydefying fears of a slowdown in hiring, even as the labor market faces the twin threats of inflation and rising interest rates.

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Javed Iqbal

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