Will Government Spending Solve Inflation Issues?

14November 2021

MINNEAPOLIS (WCCO) — On Monday, in a White House ceremony, President Joe Biden will sign the $1 trillion infrastructure bill.

The president is expected to continue push for his other big spending bill, the $1.7 trillion Build Back Better bill.

But with inflation at 6.2%, the highest rate in decades, there is debate over whether government spending is fueling the rise in price or if the spending will make it better.

The price of everything is going up, from natural gas for home heating to gas for cars and trucks and, of course, food costs. As Congress struggles over whether to pass the president’s $1.7 trillion Build Back Better bill, Republicans and some moderate Democrats argue the bill itself will contribute to inflation. But supporters say the bill, which is loaded with expense saving measures, will lead to economic growth and less inflation.

The House version of the bill contains tax cuts for most Americans, caps on childcare expenses, universal pre-K, extension of the child tax credit, four weeks paid leave and Medicare coverage for hearing aids. Democrats argue the cost savings for middle and low-income families will be transformative. Republicans see it differently. Democratic Congressman Dean Phillips and Republican Congressman Tom Emmer were guests on WCCO Sunday Morning. Congressman Emmer said,

“I’d call it the Build Back Broke plan, it’s $555 billion for Biden’s job-killing energy agenda that will increase energy prices on every American household,” Emmer said. “Think about this, the average Minnesotan is going to be paying 50% more foe energy to heat their homes this year than they did last.”

“Moody’s just announced that the Build Back Better Act, the second initiative, will not impact inflation,” Phillips said. “If anything, it’s going to reduce costs for families. Child care, cost of child care will drop by 50% within the first year.”

A vote on this bill in the House could come as early as this week, but moderate Democrats in the Senate still say it’s too expensive and the proposed tax increases on the wealthy and corporations will be a drag on the economy.

You can watch WCCO Sunday Morning with Esme Murphy and Mike Augustyniak every Sunday at 6 a.m. and 10:30 a.m.

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