Tuesday, August 23, 2022

President Biden pours “roughly half trillion dollars of gasoline on the inflationary fire already raging"

Right after Congress passed President Biden's spending bill, increasing subsidies to consumers for Electric Vehicles,
GM and Ford had raised the prices of certain electric models by between $6,000 and $8,500, roughly matching the $7,500 tax credit introduced under the inflation bill.
Anticipating crticism, GM and Ford say, "The price hike was 'completely unrelated' to Democrats' inflation bill," said a GM spokesperson. (link)

Now, Larry Summers has warned the President that student debt cancellation would make inflation even worse [as above, by increasing demand.] 

And, as deserving as college students may be, there are better uses for the money:

“Debt relief rather than head start? Adequate funding of fundamental science? COVID care? Strengthening opportunities for non-college workers? I don’t get it.”

UPDATE:  Megan McArdle (Wash Post) piles on:

How many ways can a single policy be bad? This one could cost the federal government somewhere between $400 billion and $600 billion, completely unpaid for. Its legality is at best an abuse of the law to address the “national emergency” of upcoming midterm elections. It will pour “roughly half [a] trillion dollars of gasoline on the inflationary fire that is already burning,” says Jason Furman, formerly the top economic adviser to President Barack Obama. And with the income caps set so high, it remains an extremely regressive policy, heaping benefits on the most affluent demographics, while leaving everyone else to pay the cost through some combination of higher taxes, lower benefits, or higher inflation and interest rates.

HT: Cramer 

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