The Penn Wharton Budget Model (PWBM) released its preliminary estimates of the budgetary and macroeconomic effects of Democrats’ reckless tax-and-spending spree earlier today.
Increases inflation through 2024
The model, an initiative of the University of Pennsylvania, found that Democrats’ misnamed “Inflation Reduction Act” would actually increase inflation for the next two years.
Here it is straight from the report:
“We estimate that the Inflation Reduction Act will produce a very small increase in inflation for the first few years, up to 0.05 percent points in 2024.”
Manchin’s most-trusted economic model
Politico reported last November that UPenn Wharton’s analysis is Sen. Joe Manchin’s (D-W.Wa.) prefered budgetary model:
“PWBM has proven influential with one particularly important audience: Sen. JOE MANCHIN (D-W.Va.), who takes its findings seriously, according to people familiar with the matter.”
Extending Obamacare subsidies permanently would cost nearly $160 billion more
Democrats have relied heavily on a budget gimmick that would extend sweetened Obamacare subsidies for three years rather than the full 10-year window of the legislation. When the Obamacare subsidies expire, Congress, and Democrats, in particular, would be under enormous pressure to extend the boosted subsidies. PWBM’s analysis shows the 10-year cost would be nearly $160 billion more than the current three-year extension.
“As written, the Inflation Reduction Act contains a sunset for the Affordable Care Act (ACA) subsidies provision at the end of 2025. Under an illustrative scenario where that provision was extended indefinitely, the 10-year deficit reduction estimate falls to $89 billion. The impact on GDP remains zero through 2040.”
Would have no impact on GDP though 2031
“We project no impact on GDP by 2031 and an increase in GDP of 0.2 percent by 2050. These estimates include the impact of debt and carbon reduction as well as capital and labor supply distortions from rising tax rates.”