White House Press Secretary Jen Psaki was called out by PolitiFact for claiming, in reference to the $1.75 trillion spending bill, that "no economist out there is projecting that this will have a negative impact on inflation.”
Turns out even PolitiFact is willing to acknowledge that statement is just “wrong.”
“Numerous economists, including some who are supportive of the White House’s agenda, have gone on the record saying there probably will be inflationary effects, especially in the near term, if the bill is passed,” the fact checker said in its summary.
"I’m an economist, and I disagree," Douglas Holtz-Eakin, president of the center-right American Action Forum, told PolitiFact.
"We know there’s lots of spending in the bill, and that it’s front-loaded" into the earlier years, he said. "If you cut taxes and increase spending, financed by debt, that will put upward pressure on inflation."
Other economists have expressed the same view.
• Ethan Harris, head of global economics research at Bank of America: "You should wind up with primarily a deficit-financed spending bill that is going to be rolled out in an economy near full employment … . It will make the labor market even hotter and create even more price pressure.’’
• Michael Feroli, chief U.S. economist for JPMorgan Chase: "Right now, anything that expands aggregate demand is not warranted, not advisable. … The economy seems to be operating pretty close to its capacity constraints."
Some economists have said the inflationary effects will be modest and manageable, but that they will exist.
For instance, Noah Smith, a former Bloomberg opinion columnist and a former assistant professor of finance at Stony Brook University, wrote, "I expect Biden’s bills to push upward on inflation, rather than downward. That said, the inflationary impact will be very small." (PolitiFact)
The Build Back Better legislation passed the House last week 220-213, with one Democrat joining Republicans in voting against the bill, which now faces an uncertain future in the Senate.
According to Fox News, this was the first time PolitiFact fact-checked a claim from Psaki since she became White House press secretary.
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