On Monday’s broadcast of the Fox News Channel’s “America Reports,” Rep. Ro Khanna (D-CA) said that government spending is a cause of inflation, but it was needed to avoid a recession and that while the Inflation Reduction Act will bring inflation “down a bit,” in order to solve inflation in the immediate term, “I don’t think that the ultimate source of inflation is going to be this act that will bring it down. I think it’s going to be Fed policy.”
Khanna said, “Obviously, inflation is an issue, people are still paying too much for food, for basic products, for their needs. But how do we solve this, how do we make sure that wages rise and prices come down? There’s only one way, and that is we have to make more things in America, we have to produce more, we need productivity to go up. And a lot of the president’s policies, particularly the CHIPS Act and the Inflation Reduction Act, [are] about bringing manufacturing back to America and solving supply chains.”
He added, “Well, let’s just be honest about what the causes of inflation are. First of all, it was the Fed. The Fed was buying back mortgages for way too long, Larry Summers, and other economists have said that. Second, yes, there was government spending. But it was both under President Trump and under President Biden. It was in response to a historic pandemic, $3 trillion spent under President Trump, there was about $2 trillion spent under President Biden. Now we can say, was that all necessary? I believe it was to get us out of a massive possible recession and to help get us back. The biggest cause, though, has been the supply chain crisis.”
Later, Khanna stated that the Inflation Reduction Act is “going to bring down prices, but not immediately. I’m going to be candid about it. It’s going to bring down — it’s going to save $200 to $300 on energy costs for people, especially as they go get new heat pumps and as they go [get] electric stoves. It’s going to bring down some of the Medicare costs for prescription drugs. But here’s what we need to do, you said car prices are up. Why? Because we’re not making enough semiconductor chips here. You said gas prices are up. Why is big oil paying a windfall profits tax in Europe, they’re proud and fine to pay it. Shell is saying we’re fine to pay it to help Europeans, and yet, they’re fleecing the American public.”
Co-host Sandra Smith then asked, “By how much will it bring down that headline inflation rate that is now 8.3%, and when?”
Khanna responded, “I think it will bring it down a bit, but I don’t think that that — the biggest reason I supported it is because it’s going to allow us to make more things in America, solar, batteries, wind energy, electric vehicles instead of China. I don’t think that the ultimate source of inflation is going to be this act that will bring it down. I think it’s going to be Fed policy.”
Follow Ian Hanchett on Twitter @IanHanchett
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