Democrats are facing major speed bumps in passing their social spending legislation after inflation clocked in higher than expected and the Congressional Budget Office found that their plans could add trillions to the deficit over the next decade.
The Bureau of Labor Statistics said on Friday that consumer prices increased 6.8% for the year ending November, the highest in nearly four decades. The new numbers threaten support for President Joe Biden’s Build Back Better legislation because centrist Democrats such as Sen. Joe Manchin have expressed concerns that more federal spending could further stoke inflation.
Immediately after the numbers were released, the U.S. Chamber of Commerce reacted by calling on lawmakers to slow down the spending bill and consider the effect its passage could have on the economy.
“With prices rising 6.8% over the past year, squeezing budgets for families and small businesses alike, it is time for Congress to hit pause on the reconciliation bill and not add any more fuel to the inflationary fire,” said Neil Bradley, the Chamber’s executive vice president and chief policy officer. “Rather than ‘building back better’ — the reconciliation bill will just be bringing back bad inflation.”
PELOSI: INFLATION NUMBERS ‘ONLY ADD URGENCY’ TO PASS BIDEN AGENDA
Just hours after lawmakers learned about the 6.8% inflation rate, they also learned that the House-passed version of the Democratic climate and social spending bill would increase federal deficits by $3 trillion over the next decade if its temporary provisions are made permanent, as Democrats say is their intention.
The Congressional Budget Office made the estimate at the request of Sen. Lindsey Graham, the top Republican on the Budget Committee, who has accused Democrats of budgetary gimmicks to reduce the headline price of their spending legislation. The House version of the bill has numerous spending measures that sunset early, which, if made permanent as Democrats intend them to be, would balloon the cost of the bill.
The previous scoring from the CBO only accounted for the legislation as it was written, sunsets included, and found it would increase federal deficits by $367 billion over the next 10 years.
“If you believe these programs go away after one, two, or three years, you shouldn’t have a driver’s license,” Graham, a South Carolina Republican, quipped during a Friday afternoon press conference addressing the CBO score.
Graham made a point of highlighting Manchin, who Republicans see as key to tanking Biden’s spending agenda. Graham even had a poster displayed on the dais that quoted Manchin in condemning provisions that sunset early in legislation but are intended to be permanent, something that Democrats have accused Republicans of doing in the past.
“What I see are shell games, budget gimmicks that make the real cost of the $1.75 trillion bill estimated to be almost twice that amount, if the full time is run out, if you extended it permanently, and that we haven’t even spoken about. This is a recipe for economic crisis,” the poster read, quoting Manchin from a November news conference.
Manchin, a West Virginia Democrat, holds the keys to Build Back Better's passage. Because the Senate is evenly divided, support from every single Democrat is needed, plus Vice President Kamala Harris’s tiebreaking vote. This has given him and fellow centrist Sen. Kyrsten Sinema of Arizona outsize power over the scope of the legislation and what is included in the final bill.
News from the CBO that the bill could balloon the federal deficit by some $3 trillion will likely give Manchin, who has expressed concern about adding to the federal debt in the past, some heartburn.
Graham said that he talked to Manchin after the CBO score was released and said he “was stunned” by the numbers.
“I think he felt vindicated in that his concerns were legitimate. … It’s the worst-kept secret, nobody believes these programs are going to end, Democrats want them to go on. Joe knows that, I know that, everybody knows that,” Graham said.
Chris Haynes, an associate professor of political science at the University of New Haven, told the Washington Examiner that the inflationary pressure combined with the new scoring on BBB does not bode well for Biden politically. He said higher inflation has the ability to erode the public’s confidence in Biden, which may make members of Congress more reluctant to tether themselves to his agenda.
“Higher inflation can only lead in one direction, which is a lower approval rating,” he said.
The professor also said the high CBO score could have a negative effect on Biden’s spending plans.
“The fact that CBO came out with that projection, you could certainly see that scaring off people like Kyrsten Sinema and Joe Manchin and some of the moderates of the House,” Haynes said.
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Manchin appears to be in no rush to pass the Biden spending legislation and is reportedly open to pushing back decisions on the bill until next year, which could spell even more difficulty for Biden, as 2022 is an election year.
Manchin’s office did not respond to a request for comment after the inflation numbers were released on Friday morning.