The Inflation Reduction Act is an Orwellian Ruse

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A few billion dollars cannot move a multi-trillion inflation needle. Two types of inflation are in play: one is transitory, but the other is not. The Fed cannot control inflation, but we want to believe it can.

Congress has passed the Inflation Reduction Act (IRA), a degraded version of the failed $4 trillion Build Back Better Act. The IRA authorizes $433 billion in new spending.

But not to worry.

It raises $725 billion in new revenues (taxes), for a profit (“deficit reduction”) of $292 billion. We can argue about the assumptions that produce those numbers, but there are more important considerations: