Inflation Reduction Act Should Be Named ‘Exactly the Opposite,’ Will Have ‘Disastrous Effects’: Finance Professor

The Democrats’ Inflation Reduction Act will not reduce inflation as claimed and might end up harming the American economy, a finance professor said in an interview with NTD.

“They really didn’t name this inflation reduction act correctly, it should be exactly the opposite,” Michael Butler from Stockton University said in the interview. The Act will neither reduce the country’s high inflation nor speed up economic growth, he said. The economy has had two consecutive quarters of negative GDP growth, which indicates a recession.

As such, the American economy is currently in stagflation, which refers to a “stagnant economy with inflation.” The last time the United States was in stagflation was during the time of the Carter administration (1977-1981), Butler said.

In the last three fiscal years, including the current one that ends in September, the federal government will have spent $7 trillion more than its tax revenues on a country with a $23 trillion economy. “That excess demand is very inflationary,” the professor said.

“So the worst thing to be doing at this time when you have excess demand is to continue to government spend and add more excess demand,” he said. “That’ll make the inflation problem worse. Now, they’re gonna argue ‘We’re gonna raise taxes, so the inflation problem won’t be worse.’ All the tax increase will do is slow down the recovery.”

Back in 1980, the Fed raised interest rates and triggered “a recession to get out of the recession,” Butler said, adding that in 1982, Congress cut down taxes significantly, after which the United States enjoyed a 25-year economic expansion.

To get the country out of stagflation today, Butler said the government needs to reduce its spending as well as reduce taxes for all Americans and businesses. However, the Inflation Reduction Act does “exactly the opposite” and is

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