In the quarter after the Inflation Reduction Act was passed by Democrats in 2022, the United States economy grew at a 3.2% annualized rate, beating expectations. The Chicken Little economists and Republicans who warned the massive spending bill would fuel inflation had been proven wrong, Democrats pointed out. Then-President Joe Biden bragged that the bill was “already delivering” results.
Economists might be terrible at making precise predictions. There are simply too many factors in play. But the basic rules of economics? They’re undefeated. Throwing billions into an overheated economy was going to help spike inflation. Just as slapping taxes on imported goods will, one way or another, be paid for by Americans. The cost is yet to be determined.
