We received another sign today that the astronomical inflation not seen in 40 years is slightly declining. Yet Democrats at this vulnerable time want to ram through a massive, $768 billion tax-and-spend bill that will unravel progress against painfully high price hikes.
Today the Bureau of Labor Statistics reported that wholesale inflation, tracked in the Producer Price Index for final demand, fell 0.5% in July–this following Wednesday’s Consumer Price Index report dropping slightly to 8.5% in July from 9.1% in June.
The producer price index measures final-demand wholesale prices and dropped slightly in July largely because of falling energy prices. Despite the monthly drop, the PPI still saw a sharp year-over-year gain of 9.8%. The annual increase was the lowest since October 2021 and the monthly move was the first decline since April 2020.
Throughout this inflation crisis, it’s become evident that we have a producer problem, not slack consumer demand. The falsely-named “Inflation Reduction Act,” passed by the Senate and likely approved Friday in the House, will hurt producers at precisely the time we need to remove barriers for producers. This will make prices higher and inflation worse.
A new report from Committee to Unleash Prosperity found the Inflation Reduction Act “contains multiple negative incentives on work and investment that will have substantial negative effects on the U.S. economy.”
These negative effects include reduced incentives for businesses to invest because of the corporate tax increase, the negative effects on work due to the expansions in health care subsidies under the Affordable Care Act (subsidies not tied to working) and a negative impact on new drug development due to new federal price controls on the pharmaceutical industry. The Inflation Reduction Act Medicare price controls (we know how well price controls worked under former President Richard Nixon — a total flop) will push drug makers to raise prices for private health plans, creating a domino effect of rising employer and employee healthcare costs.
The Committee projects the rate of inflation and the federal budget deficit are both likely to rise, not fall. It also estimates the impact of these policies over the next 10 years include a drop in employment of 900,000 jobs, annual GDP reduction of 1.2% and a drop in average household income of roughly $1,200.
Government should be scrambling to get out of producers’ way, not throwing up higher barriers. The 15% corporate book tax is a new alternative minimum tax (AMT) that will negatively affect more companies over time because it’s not indexed for inflation. And even though the new 15% corporate AMT would apply only to companies with a three-year average adjusted book income above $1 billion, you can be sure those costs will be passed along to consumers and smaller businesses that buy goods and services from these bigger firms.
The Democrat-created, new 1% tax on stock buybacks will reduce returns to shareholders — especially hurting retirees who live on fixed income or rely on investment returns to live.
It boggles the mind how Democrats can so quickly reverse any positive economic trend. It’s time voters give them a November wake-up call.