The Republicans use sleight of hand to blame the Inflation Reduction Act for the price increase

Republican vice presidential candidate JD Vance has introduced a new slogan in his effort to tie Democrats to inflation: Democratic presidential candidate Kamala Harris cast the tie-breaking vote for the Inflation Explosion Act.

Vance said this at least three times recently, including at a Sept. 16 rally in Sparta, Michigan. “Kamala Harris cast the tie-breaking vote on the Inflation Explosion Act,” he said. “It is the largest driver of inflation in the United States today.”

Vance, a U.S. senator from Ohio, speaks rhetorically; The Inflation Explosion Act is reminiscent of the name of the Inflation Reduction Act. President Joe Biden signed the bill after Harris broke a tie for president of the Senate in her role as vice president. Vance joined all Republicans in opposing the bill.

Other Republicans running for Senate have similarly argued that the Inflation Reduction Act, contrary to its name, has driven up prices.

In Montana, Republican Tim Sheehy posted

In Pennsylvania, an ad from the pro-Republican Senate Leadership Fund targeted Democratic Sen. Bob Casey, saying Casey “promised us his vote will reduce inflation.” It shows a clip of Casey saying these words in an August 2022 speech in favor of the Inflation Reduction Act.

The attacks are misleading.

After the passage of the Inflation Reduction Act, inflation did not increase; it fell. Although this was largely for reasons other than the act itself, it undermines the point of discussion.

A previous Democratic bill, the American Rescue Plan Act, is widely blamed for exacerbating inflation. The Republican message is not focused on this law; It incorrectly presents a different law with a catchier name.

Kevin Madden, a former presidential campaign aide to Sen. Mitt Romney, R-Utah, said Republicans were trying to turn the tables on Democrats by characterizing the Inflation Reduction Act as a spending bill that didn’t address the core drivers of inflation.

“Recognizing that inflation is a core concern for many voters, Democrats have sought to acknowledge the current trend line of inflation – which is trending downward, albeit at a somewhat stubborn pace – by pointing to their support and passage of the Inflation Reduction Act referenced “This is an important part of addressing these voter concerns,” said Madden, now a senior partner at Penta Group, an international communications and consulting firm.

“Republican messaging efforts have tried to flip the script,” Madden said.

What did the Inflation Reduction Act accomplish?

Biden signed the Inflation Reduction Act on August 16, 2022, after it passed along Democratic-led party lines in the House and Senate. Key provisions included reducing carbon emissions, allowing Medicare to negotiate drug prices, and increasing funding from the Internal Revenue Service.

When the law was signed, inflation was 8.3% year-over-year, not far below its June peak of about 9% – the highest in about 40 years.

In June 2023, inflation fell to 3% year-on-year and has been below 3.7% every month since. August’s 2.5% interest rate is similar to pre-pandemic levels and close to the Federal Reserve’s 2% target.

The Inflation Reduction Act has actually not played a major role in reducing inflation since mid-2022.

The bill’s provisions could one day help keep prices low, for example by allowing Medicare to negotiate some drug prices. However, parts of the law were phased in over several years and failed to have a significant impact in 2022 and 2023, when most of the two-thirds decline in the inflation rate occurred.

Economists said Federal Reserve interest rate hikes, falling oil prices and an economic slowdown in China played a more important role in easing inflation over the past more than two years.

The decline in inflation after the law’s passage belies claims like Vance’s that the Inflation Reduction Act is “the single largest driver of inflation in the United States today.”

It would be more accurate to cite another bill

If Vance and his allies had drafted a different bill with a less ironic name, they would have made a stronger case.

The American Rescue Plan Act, which Biden signed as a pandemic relief bill shortly after taking office, included $1,400 direct payments to about 85% of Americans, $360 billion to state and local governments, and $242 billion in expanded unemployment benefits.

As lawmakers worked on the measure, some economists, including Larry Summers, who led the National Economic Council under former President Barack Obama, warned that the bill would trigger inflation. Financial conservatives echoed the warning.

Economists now largely agree that the critics were right. They say the law put too much money in Americans’ pockets as the pandemic hampered global supply chains, meaning too much cash chasing too few goods and services. As demand exceeded supply, prices rose.

However, most economists also agree that the American Rescue Plan was not solely responsible for the rise in inflation. Economists say supply chain bottlenecks triggered the rise in inflation, and Russia’s invasion of Ukraine in 2022 – which caused a spike in oil prices and other trade disruptions – made it worse.

The Senate Leadership Fund ad tacitly acknowledges the sleight of hand: On screen, the ad shows Casey debating the Inflation Reduction Act in the Senate, but later says, “Casey’s vote made (inflation) worse” by offers a footnote relating to the American Rescue Plan Act.

When we contacted the Trump-Vance campaign, Republican National Committee spokeswoman Anna Kelly mentioned Harris’ role in passing the Inflation Reduction Act and the American Rescue Plan Act.

“Kamala Harris was the tie-breaking vote on both the failed $1.9 trillion stimulus plan and the Inflation Explosion Act – both of which resulted in a 20.3 percent increase in prices since Harris and Biden took office,” Kelly said. “Everyday Americans don’t care which of Harris’ out-of-control spending proposals resulted in higher taxes and less money in their pockets.”

However, focusing solely on inflation ignores parallel wage growth.

Since the adoption of the Inflation Reduction Act in August 2022, prices have risen by 6.4%, but wages have risen faster – by 8.5%. In other words, since the bill was passed, consumers have come out on top.