A final note on inflation reduction!

TUESDAY, AUGUST 9, 2022

Elsewhere, anthropology rules: Reactions to yesterday's events at Mar-a-Lago represent a sprawling anthropology lesson. 

The lesson involves what happens to people—the things we people will say and do—when our nations divide into tribes.

As of today, our tribal division is much more advanced, but we'll postpone that discussion. For now, let's take one more look at the idea that the Inflation Reduction Act involves inflation reduction.

We'll start with Paul Krugman's new column. Here's what Krugman says:

KRUGMAN (8/9/22): Republicans like Mitt Romney are trying to lump this legislation in with last year’s American Rescue Plan, which they claim caused inflation to spike.

Never mind whether this claim is true. The key thing is to do the math. The Inflation Reduction Act calls for spending less than $500 billion over a decade, compared with the American Rescue Plan’s $1.9 trillion in a single year—and will actually reduce the deficit. That’s why independent analysts find that it will have little effect on inflation.

According to Krugman, independent analysts "find that [the Inflation Reduction Act] will have little effect on inflation." As we noted a few days ago, that's what the CBO has officially said.

Krugman links to an analysis by the Penn Wharton Budget Model. The analysis he links to says this:

PENN WHARTON: The Act would very slightly increase inflation until 2024 and decrease inflation thereafter. These point estimates are statistically indistinguishable from zero, thereby indicating low confidence that the legislation will have any impact on inflation.

More specifically:

PENN WHARTON: We estimate that the Inflation Reduction Act will produce a very small increase in inflation for the first few years, up to 0.05 percent points in 2024. We estimate a 0.25 percentage point fall in the PCE price index by the late 2020s. These point estimates, however, are not statistically different than zero, thereby indicating a very low level of confidence that the legislation will have any impact on inflation.

To the extent that they can make an estimate, Penn Wharton says the act will (very slightly)   increase inflation up to and including 2024. 

On the brighter if utterly pointless side, they estimate a small drop in the rate of inflation "by the late 2020s." That said, they offer a "very low level of confidence that the legislation will have any impact on inflation" at all.

With that, Penn Wharton largely agrees with the official assessment by the CBO. As noted, this is the analysis that Krugman, a top economist and an expert, has chosen to cite today.

We mention this because we looked in last night on the NBC Nightly News. At the end of a very brief report on this legislation, cable's own Ali Vitali had this cheerful, upbeat exchange with guest host Tom Llamas:

LLAMAS (8/8/22): The bill is expected to pass in the House. What are experts saying on how it will affect the current inflation crisis?

VITALI: Tom, top economists say this bill will put downward pressure on inflation. A group of former Treasury secretaries from Democratic and Republican administration had urged Congress to pass it, saying investments in energy and health care will fight inflation and lower costs, while setting the table for long-term economic growth.

Vitali seems to be referring to this brief, August 3 statement by five former Treasury secretaries—four Democrats and one lone Republican. 

These top economists devoted exactly two words to their analysis of the bill's likely effect on inflation. Vitali chose to go with that, embellishing what the former secretaries said while failing to mention the CBO and pretty much everyone else.

This is the world we live in today. We're living in a market economy. Alert consumers can shop around to find the news product they like.


17 comments:


  1. Oh dear. What in the world compels you, dear Bob, to read Paul Krugman, one of many an idiot dembot?

    ...oh, never mind. Anyhow, how do you like this one, dear Bob:

    CBS Censors Own Documentary After Ukraine Outraged.

    Funny, is it not?

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    1. ma0 ma0 * ,!, ,!,

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    2. Over time, Zero Hedge expanded into non-financial political content,[c] including conspiracy theories and fringe rhetoric[3][28] advancing radical right,[15][29] alt-right,[30][31][32] and pro-Russia positions.[1][33][34][35] Zero Hedge's non-financial commentary has led to multiple site bans by global social media platforms, although its 2019 Facebook ban[36][37] and 2020 Twitter ban were later reversed.[15][38]

      Delete
  2. In an interview with Vanity Fair Maddow divulged her harrowing addiction to nougat that she has been hiding for years from the public which helps explain why she stole that boat.

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  3. If the bill originally contained provisions that would have had a greater impact on inflation, reducing it more than chance, would you rename it after those provisions were stripped from the bill in order to secure support by Manchin & Sinema? I think Somerby is being disingenuous. He knows what was removed from the bill but he does not consider what would have been the effect had those tax-related provisions been left in.

    Disingenuous = dishonest, in my opinion.

    Now Somerby makes a big fuss about this, as if Democrats were deliberately trying to fool the public, when instead a good liberal would be talking about the measures left in the bill, the ones that passed, because they are helpful to people and will address significantly national problems, such as global warming. But what does Somerby do? He pretends the Dems are trying to hoodwink voters, not help people live better lives.

    Somerby is an asshole, who doesn't deserve the helpful portions of this bill that did pass the Senate and will be signed into law -- the ones that inflation reduction was sacrificed to obtain. And who should Somerby be blaming for the changes? Manchin and Sinema -- but he doesn't say a word about them. Because Somerby is an asshole, who won't tell anyone the truth here about the 50 Republicans who wouldn't even vote yes to save our planet.

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  4. And yet, not one of the corporate-owned media outlets will tell you raising taxes will reduce inflation.
    Seems the “liberal” media has been Right/wing all along.

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  5. "VITALI: Tom, top economists say this bill will put downward pressure on inflation. A group of former Treasury secretaries from Democratic and Republican administration had urged Congress to pass it, saying investments in energy and health care will fight inflation and lower costs, while setting the table for long-term economic growth."

    This is not the same as saying that any impact will be long term and not exceed chance fluctuation in inflation rates. The unnamed and so-called independent analysts may be Republicans, in which case, they have no interest in telling us that there will be a longer term impact on holding down inflationary pressures. They simply say it will not result in much reduction in current rates, by itself. But holding down future increases is not nothing. Further, budget reduction is anti-inflationary in itself. But these so-called independents would have no reason to help Democrats by saying anything more positive. Independent means they don't work for the current government. Not that they have no political affiliations.

    Meanwhile, Somerby is obviously working overtime, to find someone who will say that this bill is wrongly named. He is NOT thinking about what the bill WILL do, nor about the impact of that on our economy, which is being described as positive. He is only playing his game of "gotcha" and it is a stupid and self-defeating game at that.

    Biden didn't cause this inflation -- the pandemic and war in Ukraine did that. He is doing what he can to control it, but he will not cause the predicted reduction in inflation either, because that too depends on global influences, not US actions. Republicans are bent on blaming Biden for inflation. What is he supposed to do, as a politician? Accept blame for something he didn't do? But Somerby really really wants to pin inflation on Biden -- because that is the Republican/conservative talking point. And Somerby's job here is to spread thoser conservative memes, whether they are bullshit or not. And that is what Somerby is by God doing. Yay yay yay yay yay yay for Somerby and his Republican friends.

    Meanwhile, he thinks we will accept this as media criticism and believe that he is some sort of super-smart inflation maven when he is just about conservative asshole toeing the party line, and pretending tribalism was invented on the left. Fuck that!

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  6. Bob,
    If you believe Biden should Nationalize the economy, just say so,

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  7. Krugman's column today is entitled: Did Democrats Just Save Civilization?

    Somerby forgot to mention that.

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    1. Ha. While spoil a "gotcha." This is, by the way, the first bill to ever have a somewhat lofty title. First one ever. Really.

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  8. "Alert consumers can shop around to find the news product they like."

    This has always been true. Even 100 years ago, many large cities had both a liberal paper and a conservative one. It is appropriate since we are shopping around to find the political candidate we like so we can vote for them.

    Somerby seems to think it is great when the mainstream media distorts Biden's accomplishments to obscure the very real things he has gotten done. He has said nothing about the media hype surrounding inflation, pretending instead that we are in terrible terrible trouble, just like the Republicans are saying. Biden should get credit for what he has done, including this latest bill, no matter what it is named.

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  9. Somerby won't tell you about this:

    "Trump never got Mexico to pay for the wall. But guess who did? I’ll give you a hint. It starts with the letters “Joe Biden”. Not a physical wall, which was never going to work anyway, but “smart” wall using advanced technology.

    Mexican President Andres Manuel L√≥pez Obrador agreed to spend $1.5 billion over the next two years to improve “smart” border technology during meetings Tuesday with President Joe Biden — a move the White House says shows neighborly cooperation succeeding where Trump administration vows to wall off the border and have Mexico pay for it could not."

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  10. Given that Democrats are better than Republicans when it comes to being tribal, why is Somerby treating us like this is all our fault?

    "Pew Research: “In 2016, about half of Republicans (47%) and slightly more than a third of Democrats (35%) said those in the other party were a lot or somewhat more immoral than other Americans. Today, 72% of Republicans regard Democrats as more immoral, and 63% of Democrats say the same about Republicans.”"

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    1. That's not tribalism, that's Republicans recognizing the undeniable truth about Democrats.

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  11. Well, you start with a bullshit premise and go downhill from there?

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  12. Democrats are stupid so you can slap a sunny name on a bad piece of legislation and they'll gobble it up wide-eyed and ask for more pain.

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    1. As Bob says, the nation is being torn apart by the extremes on both sides:The Republican Party and the entire modern conservative movement on the Right, and someone who eatches “The View” on the Left.

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