Ever since inflation shot to the top of the public’s worries, President Biden and his fellow Democrats have sought to show they are on the case, even naming their signature tax, climate and healthcare bill the Inflation Reduction Act. Passing it is the “most consequential thing that Congress can do” to keep inflation from getting worse, Mr. Biden declared Wednesday.
There are two problems with this. The first is that the claim largely rests on estimates that the bill will, over 10 years, reduce the budget deficit by about $300 billion, thereby reducing aggregate demand and inflation pressure. But the timing and composition of the bill mean it will actually have virtually no impact on inflation in the next few years, when it matters most.
