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When will Inflation Reduction Act start reducing inflation? White House stumped for an answer

From Bernie Sanders to Ivy League studies, prominent voices have expressed doubt about Biden's signature legislation bringing down costs.

October 17, 2022 5:54pm

Updated: October 17, 2022 11:06pm

President Biden said in August that the massive Democrat spending and tax bill supported by the White House was a "Godsend" that "tackles inflation by lowering the deficit and lowering costs for regular families."

However, when asked exactly how long until that vision of the Inflation Reduction Act comes to fruition, Biden's White House isn't too sure.

On Monday, a reporter asked White House Press Secretary Karine Jean-Pierre for a timeline on when Americans can start feeling some relief from historically high inflation.

"In regards to the Inflation Reduction Act, early next year they will see some of the pieces of that when you think about energy costs, when you think about the Medicare kind of benefits from that," responded Jean-Pierre. "So, we'll see some movement on that early next year."

Jean-Pierre noted that gas prices have gone down since reaching record highs during the summer and touted a plan to reduce the cost of hearing aids.

One day earlier, White House economic adviser Cecilia Rouse was similarly asked during an appearance on CNN when the Inflation Reduction Act will start to bring down inflation.

"So, the — many parts of the bill will start to take effect next year," said Rouse. "For example, there are tax credits for energy to help people weatherize their homes and also bring down other forms of energy costs. So, we are focused on helping to make that transition to clean energy in a way that brings down energy costs for families. So, this is, this is tough. There's no question about it."

Both officials' comments came after the Bureau of Labor Statistics announced last week that inflation was higher than expected in September, rising 8.2% year-over-year.

That surge was largely driven by rent and food prices, which continue to rise and more than offset lower gas prices — as well as outpace workers' real wages, which continue to decline when adjusted for inflation.

Meanwhile, so-called core inflation, which excludes volatile food and energy prices, spiked 6.6% last month compared to a year earlier, the largest increase since August 1982.

Still, the White House insists it's taken the right course of action and the economy is in good shape.

In response to the latest figures, Biden acknowledged last week that "prices are still too high" before adding: "Because of my economic plan, the United States is in a stronger position than any major economy to take on this challenge. And my policies — that Democrats delivered — directly tackles price pressures we saw in today's report, like health care."

Jean-Pierre backed up her boss on Monday.

"The president understands ... that inflation is an issue, high costs is an issue for the American people, and so he's been very clear about making that his number one economic priority," she said. "And he has done the work."

Jean-Pierre cited the Inflation Reduction Act, chiding Republicans for opposing it.

Rouse similarly touted Biden's signature legislation, saying while "it doesn't directly speak to food, it does go to medical care, it goes to energy costs, and we are focused on trying to help families get through this."

The chair of the White House Council of Economic Advisers added that the current U.S. economy "is stronger than almost every other economy."

Biden himself echoed that sentiment on Monday, claiming the economy is "strong as hell" while eating ice cream at a Baskin-Robbins in Portland, Ore.

Over the weekend, Biden championed the Inflation Reduction Act while delivering a speech in Portland.

"Folks let me tell you something: Every single Democrat in Congress voted for the Inflation Reduction Act, and every single Republican voted against it," he said. "Now the congressional Republicans are telling us it's their number one priority if they win is repeal the Inflation Reduction Act."

Experts and even progressive lawmakers have warned the legislation won't live up to its name.

For example, Douglas Holtz-Eakin, president of the American Action Forum, recently told Just the News that the Inflation Reduction Act "won't reduce inflation," explaining that most of the spending is up front and relief on inflationary pressure won't be felt for years.

A recent study by the University of Pennsylvania reached a similar conclusion.

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

Sen. Bernie Sanders (I-Vt.), who voted for the bill, said on the Senate floor that "according to the [Congressional Budget Office] and other economic organizations that study this bill, it will, in fact, have a minimal impact on inflation."

Multiple recent studies have found that inflation, which is currently at its highest levels in four decades, will cost families thousands of dollars this year. The legislation is projected to impose additional tax costs over the next decade.

Regardless of the longer-term effects, however, Democrats may be in trouble in the short term.

Polling has consistently shown for months that the economy and inflation are the top issues for voters, that voters trust Republicans more than Democrats to handle them, and that a majority of voters disapprove of Biden's handling of these issues.

The next inflation figures from the Labor Department aren't scheduled to come out until Nov. 10 — two days after Election Day.

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