Fight Inflation by Lowering Deficits, Not Boosting Them
Yesterday, President Biden told reporters the Administration was nearing decisions on whether to cancel student debt by executive order and whether to endorse a gas tax holiday. Media reports also suggest Senate Democrats may be nearing agreement on a reconciliation bill that includes new revenue, drug savings, climate investments, and net deficit reduction.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
Inflation is surging at the fastest pace in four decades, and policymakers need to start taking that seriously. Cancelling student debt or extending the current payment pause will worsen inflation while delivering substantial benefits to higher-income Americans and driving up future tuition costs.
A gas tax holiday would modestly reduce prices at the pump but exacerbate overall inflationary pressures and increase demand for an energy source already short in supply.
Together, these policies could cost the federal government $250 billion or more over a decade at a time when debt is already headed toward record levels. These policies aren’t solutions; they are gimmicks that shift costs onto taxpayers and consumers.
Instead of making the Federal Reserve’s job harder, Congress and the President should be working to assist the Federal Reserve in its inflation-fighting efforts. A reconciliation bill that boosts tax revenue, lowers drug costs, and reduces deficits would represent an important step in the right direction.
Deficit-boosting legislation is part of how we got into this mess; it’s not going to get us out of it. The White House should put an end to ongoing COVID relief and focus its attention on deficit-reducing legislation.
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