On “Cavuto: Coast to Coast” Tuesday, former Congressional Budget Office Director Douglas Holtz-Eakin ripped Democrats’ Inflation Reduction Act for having “zero impact” on the inflation outlook, and said the White House should be “very concerned” about the state of the U.S. economy.
DOUG HOLTZ-EAKIN: That’s going to have zero impact on the inflation outlook. And by the way, they’ve already spent money that offsets that. They passed the $300 billion deficit finance CHIPS and Science Act. They passed an up to $600 billion increase in veterans benefits in the PACT Act. They have continued to do what Congress does: spend and borrow. And this bill will have zero impact on the inflation outlook.
If I was in the White House, I’d be very concerned. We have labor force participation rate that hasn’t gotten back to the February 2020 level before the pandemic. So there are about 3.5 million workers, fewer than otherwise would be. Productivity growth has been negative for two quarters, and so it’s workers and productivity that deliver increases in output, increases in the standard of living. So I’d be all-in focused on those things that increase long-run supply side growth, and that would be low taxes on the return to saving investment in innovation, incentives to work, a light touch regulatory burden.
And then this administration is doing none of those things. And so I’d be very concerned that even if inflation has peaked and the Fed can conquer it, that what comes out the other side is an economy that’s just not going to deliver for the American people.
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