Surging Inflation Highlights Need for Deficit Reduction, Not Tax Cuts
CPI inflation set another forty-year record today, rising by 1.3 percent this month and 9.1 percent over the past year. CPI has already risen more than 6 percent in 2022, and the 2022 inflation rate would reach 11 percent if inflation were to continue its current trend. As lawmakers continue to negotiate a possible reconciliation bill, the Committee for a Responsible Federal Budget has suggested several ways they can help the Federal Reserve fight inflation. This includes by lowering health care costs and raising tax revenue.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
These inflation numbers are eyepopping, and taming it should be a top national priority. It’s become increasingly clear that the Federal Reserve is going to need help bringing inflation under control without causing a recession.
The best thing lawmakers can do in the near-term is pass a deficit reduction reconciliation bill. Legislation could temper excessive demand among those who can best afford to reduce their spending, and more directly lower prices by reducing prescription drug costs.
Unfortunately, some lawmakers continue to insist on cutting tax by increasing the $10,000 cap on the state and local tax deduction (SALT). This approach would be costly, regressive, and would add to inflation. The House-passed proposal would cut taxes by $50 billion per year, with almost 95 percent going to households in richest fifth of Americans.
The best way for Congress to prevent a recession is to help the Fed get inflation under control. That means increasing revenues and reducing spending, not cutting taxes for some of the wealthiest households in America.
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