"Inflation Reduction Act", why is it questioned that it can't reduce U.S. inflation?

　　[Smart Look at the United States] Why is the "Inflation Reduction Act" questioned as unable to reduce U.S. inflation?

　　China News Service, August 16 (Zhongxin Finance Gong Hongyu) "As the House passes the Inflation Reduction Act, households will see lower prescription drug prices, lower health care costs and lower energy costs. "

　　After being voted through by Congress, Biden plans to formally sign the Inflation Reduction Act on August 16, local time.

In order to "sell" the bill, Biden tweeted several "fancy" tweets for several days to promote the considerable expected results of the bill.

　　"How can the bill curb inflation, and when can you tell the truth?" Different from the president's full confidence, many American people left messages to express their concerns.

More opponents pointed out that, in terms of content, the bill has little to do with curbing inflation.

Data map: US President Biden.

Photo by China News Agency reporter Chen Mengtong

Change the soup or not, is the bill "on paper"?

　　According to US media reports, the "Inflation Reduction Act" will increase government spending by more than $430 billion in total, while creating nearly $740 billion in fiscal revenue.

Among government spending, a record $369 billion was spent on tackling climate change, with a goal of reducing carbon emissions by 40 percent by 2030; $64 billion was spent on lowering the price of prescription drugs.

　　In terms of taxation, the bill will impose a 15% corporate minimum tax on large companies and a tax on those earning more than $400,000.

　　"Imagine a world where people open the hood of their car and see the words 'Made in America' on the battery. This is where the Inflation Cuts Act will take us," Biden tweeted.

　　But while he touted the effects of the Inflation Reduction Act, dissenting analysts and U.S. Republicans pointed out that the bill is just a "revamp" of the "Rebuild a Better Future Act" proposed by the Biden administration in 2021. Investments in environmental protection businesses and reductions in government deficits have few provisions against inflation.

Named the Inflation Reduction Act just to make it easier to pass Congress on a vote.

　　According to the estimation of Wharton's budget model, the actual impact of the "Inflation Reduction Act" on inflation is basically negligible, and it cannot play a role in reducing inflation and stimulating production, and the profits that can be obtained in the specific negotiation process cannot be estimated at present. , may not be able to reach the estimated 300 billion US dollars.

Data map: The streets of New York, USA.

Photo by Zhongxin Finance and Economics Gong Hongyu

Will US inflation "peak"?

　　In July, the U.S. consumer price index (CPI) was flat month-on-month and up 8.5% year-on-year.

At a time when the year-on-year CPI growth rate has eased and month-on-month gains have ended months of growth, optimists believe that U.S. inflation may have peaked and will trend lower in the coming months.

　　"There will be clearer evidence in the next month or two that inflation has peaked, but also evidence that the rate of decline is very slow," said Sima Shah, chief global strategist at Principal Global Investments. "American households will continue to suffer from rising prices. Severe pressure on their budgets and continued wage growth will take a toll on corporate profit margins."

　　Yi Zheng, chief macro economist at Huatai Securities, said that under the marginal weakening of U.S. energy prices and consumer demand in July, overall inflation and core inflation were lower than expected, but sticky inflation such as rents and wages were still strong. Factors such as "high volatility" energy prices have experienced marginal fluctuations,

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　　"It is expected that the impact of U.S. inflation on people's livelihood will continue for a long time." Yi Bao said.

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