US Chamber of Commerce Bulletin: Questions About Reconciliation + Inflation Threatens the EconomyNovember 11, 2021
- The partisan reconciliation bill conceals its cost and its impacts on the economy.
- Inflation’s up 6.2%, and passing the reconciliation bill will only make it worse.
- Here are the facts on infrastructure: It’s 100% real physical infrastructure, and it won’t worsen inflation.
- On Veterans Day we honor and support those who have given so much for our country.
Developments That Matter
We Have Questions about the Reconciliation Bill
Yesterday, the Chamber sent Congress some questions about the multi-trillion-dollar tax-and-spend reconciliation bill.
Why it matters: The House of Representatives made the right decision in delaying a vote on this partisan bill. But it still remains a threat to our fragile economic recovery and future prosperity.
- What is the impact on near-term inflation given that so much of the spending and tax cuts will occur in the next two to five years?
- What is the impact on workforce participation given the large amounts of transfer payments that are not connected to work?
- What is the true cost of the bill if you do not include the arbitrary sunsets of tax and spending provisions that are clearly intended to be permanent?
- What impact will these arbitrary sunsets, especially with childcare and pre-K education, have on state governments and the private sector?
Our take: “We have the highest inflation in 31 years, employers are struggling to fill a record number of job openings, and the current draft of the reconciliation bill uses gimmicks to cover up well over $1 trillion in spending,” said Chamber Executive Vice President and Chief Policy Officer Neil Bradley.
- “It would be the height of irresponsibility for Members of Congress to vote on this multi-trillion-dollar tax-and-spend bill with no clear understanding of its true cost or the real-world impact of the policies.”
Reconciliation Bill Will Make High Inflation Worse
The Bureau of Labor Statistics (BLS) just confirmed what we all knew: prices rose sharply in October.
Why it matters: On annual basis prices rose a whopping 6.2%. This is the highest inflation level since November 1990 – 31 years ago.
By the numbers:
- Energy is up 30% annually, and gas increased 6.1% last month and is up 50% from a year ago.
- Energy prices jumped a stunning 4.8% and are up 30% annually.
- Food prices rose 0.9% over the month and are up 5.3% annually.
Big picture: This is not a “transitory” event. Prices have been increasing sharply since March (see the chart above), and it’s not going to slow any time soon. The supply chain issues and worker shortages, combined with consumers and businesses expecting inflation, will keep prices high.
Be smart: The reconciliation bill would worsen the situation. As currently constructed, the bill funds consumption in the near-term and pays for it by taxing investment over the long-term. In just the next year it would provide a minimum of $120 billion in transfer payments and tax cuts. More payments will put more money into the system, putting upward pressure on prices.
Bottom line: We have called on Members of Congress to demand a full accounting of how the reconciliation bill will add to inflation before it is brought up for a vote. If elected officials want to do something about skyrocketing prices a good place to start is by not making the problem worse.
—Curtis Dubay, Senior Economist, U.S. Chamber of Commerce
Top Of Mind
Facts About the Bipartisan Infrastructure Bill
The bipartisan Infrastructure Investment and Jobs Act that passed the House of Representatives last week and is awaiting President Biden’s signature makes a record investment in our nation’s infrastructure.
- But many still have questions about what exactly is in it. Here are some facts.
Fact #1: It’s 100% real infrastructure, and one of the largest investments in physical infrastructure in history.
- It addresses clean drinking water, wastewater disposal and treatment, safe roads, and a reliable electrical power grid. It also makes the biggest investment in passenger rail since the creation of Amtrak and the single largest dedicated bridge investment since the construction of the interstate highway system.
Fact #2: It funds $1.2 trillion in physical infrastructure, including $550 billion in new funds for much needed investment.
Fact #3: The bill will not lead to more inflation.
- Economists agree that making improvements to roads, bridges, ports, airports, railways, and other transport routes will help businesses operate more cost-effectively and result in consumer savings.
Our take: "We're ecstatic we are going to finally make a long overdue investment in our nation's infrastructure,” Chamber Executive Vice President and Chief Policy Officer Neil Bradley told CNN.
Why it matters: This long-awaited promise kept by Congress will help the business community fuel our nation’s recovery.
Honoring and Supporting Veterans
On Veterans Day, we honor our veterans and all they’ve done to keep our country safe and the American Dream alive.
What we’re doing:
- We honor veteran-owned businesses like Virginia-based Flags of Valor, who hire veteran workers and support veterans’ charities.
- Yesterday, the U.S. Chamber Foundation’s Hiring Our Heroes graduated 650 fellows from its Corporate, Military and Caregiver, and Salesforce Fellowship Programs.
- Virtually attend the 11th Annual Lee Anderson Hiring Our Heroes Awards Gala, presented by USAA, on November 17.
- Help Hiring Our Heroes procure wreaths for National Wreaths Across America Day on December 18. Learn more about being a sponsor or volunteer.
Why it matters: All the opportunities America offers would not be possible without their dedication to service. In return we work to help veterans, transitioning service members, and military spouses find meaningful employment, so they can continue contributing to our country.
Small Business, Big Impact
How to Become a Certified Veteran-Owned Business You can win more federal contracts and bring in new customers.
Chamber In Action
- The Oklahoma Supreme Court agreed with an amicus brief submitted by the Chamber Litigation Center that public nuisance doctrine should not be expansively applied to the manufacturing, marketing, and selling of lawful products.
- ”Solving the workforce shortage includes greater access to quality childcare, better connections of education to employment, more pathways to employment for underserved workers, and more learners and workers with the necessary skills for in-demand jobs,” writes Senior Vice President Cheryl Oldham reflecting on the Chamber Foundation’s Talent Forward event.
- In a letter to the U.S. Trade Representative yesterday, the Chamber and other business associations support efforts to advance a “comprehensive WTO reform agenda.”
- The Chamber Foundation received $6.3 million in grant funding from Walmart, Lumina Foundation, the Annie E. Casey Foundation, and the Charles Koch Foundation to support innovative workforce initiatives aimed at filling open jobs, closing the skills gap, and fueling America’s economic recovery.
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