On Wednesday’s broadcast of Bloomberg’s “Balance of Power,” Rep. Jim Himes (D-CT) stated that while he thinks it won’t be big, the debt ceiling bill will be “deflationary,” and “is likely to help the Fed slow down inflation.” Himes also stated that there isn’t anything in the bill “that I necessarily want to celebrate” and he’s not happy about the bill, but it’s better than defaulting.
Himes said, [relevant remarks begin around 27:45] “I think the technical term for this bill is it’s kind of a nothingburger. Nothing in there that I necessarily want to celebrate. This is, after all, a sort of ransom list of things that the Republicans wanted. But it’s really pretty marginal in its effects. So, am I happy about it? No. Is there a plan B, by the way, if this bill goes down? No there is not. And so, at the end of the day, voting no in such a way as to have this bill go down, with the catastrophe that would unleash on global economic stability would be an irresponsible thing to do.”
He added that he doesn’t agree with using the debt limit as leverage, and that while he believes more people will be added to SNAP benefits under the bill, it will expand work requirements, and it’s not a “major” policy change.
Himes concluded, “Well, again, as a fiscal policy, I don’t think this deal is that big. I’ve said that a couple of times now. So, it is likely to be marginally deflationary, which, with inflation still operating at wherever it is today…that’s not necessarily a bad thing. I don’t know if it’s going to do the Fed’s job for it. The Fed has obviously been doing exactly what the Fed is supposed to do in inflationary environments, raising interest rates. That is uncomfortable for people who haven’t seen [rising] interest rates in a generation, like Silicon Valley Bank and like borrowers. But, look, I think this bill, in a very marginal way, is likely to help the Fed slow down inflation. But it’s not going to be dramatic by any stretch of the imagination.”
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