In a recent press conference, Psaki told reporters that “no economist out there is projecting that this will have a negative impaction inflation.”
Despite her insistence that economists are largely in support of the “Build Back Better” plan, economists have stated otherwise:
“Is it really true that there’s not a single economist who thinks the bill will boost inflation? No,” PolitiFact reacted in an article. “Many economists have stated for the record that they think the inflationary impact of the bill will be small and brief. But we found lots of economists who say they expect modest inflationary pressure, at least initially.”
In another briefing, Psaki was asked, “Why should Americans not be concerned that injecting another $1.75 trillion or more would further raise inflation?”
“Because no economist out there is projecting that this will have a negative impact on inflation,” she responded. “And actually, what it will help do is it will help increase economic productivity. It will help economic growth in this country.
“That, and the Build Back Better Agenda will help reduce inflation,” Psaki said, “will help cut costs for the American people over the long term.”
PolitiFact found many economists who disagreed with her statement:
“I’m an economist, and I disagree,” Douglas Holtz-Eakin, president of the American Action Forum, told the fact-checking site.
“We know there’s lots of spending in the bill, and that it’s front-loaded” he explained. “If you cut taxes and increase spending, financed by debt, that will put upward pressure on inflation.”
PolitiFact went on to explain that this is basic economic theory.
“Inflation is the result of too much demand chasing too little supply,” said John Leahy, a professor of macroeconomics at the University of Michigan. “Anyone arguing that the bill is inflationary can point to any standard economic textbook: An increase in government spending should increase demand and thereby increase inflation.”