On Friday’s broadcast of CNBC’s “Squawk Box,” White House Council of Economic Advisers Chair Jared Bernstein stated that the Biden administration has “many” policies that are designed to provide stimulus “as the fiscal stimulus from the pandemic era responses fades.” And the Inflation Reduction Act is one of those policies.
Bernstein said, “I can tell you that, from the White House perspective, we’re doing all we can to…maintain the gains that we’ve had while continuing to make progress against inflation. And, look, you mentioned fiscal, many of our policies are geared towards kind of coming up and making sure that we have enough economic activity in this economy going forward as the fiscal stimulus from the pandemic-era responses fades. And so, that would be IRA, chips, so on.”
CNBC Senior Economics Reporter Steve Liesman then cut in to say, “But tell that idea that you guys are being fiscally responsible to the bond market, which freaked out in the last month, because of the — all this issuance coming down, and no sense at all of any fiscal –.”
Bernstein then cut in to respond, “So, I think, in a way, I think that conflates to two things. One is the very near-term question, which is, how do we get inflation back to where we need it to be — our work is not done — without sacrificing demand on that side of the equation, while, over the longer term, plotting a path toward deficit reduction and fiscal consolidation? So, the latter is what you’re asking about. And that really gets to our budget, where we have 2.5 trillion in deficit reduction, and that’s on top of the trillion in deficit reduction that came out of the debt ceiling agreement, which was an overwhelmingly bipartisan agreement. So, that was a good ending to a very tough story. But, in the near term, what I’m saying is that, as the labor market stays tight, as the spending on the Inflation Reduction Act comes into place, particularly in the manufacturing sector, standing up domestic semiconductors, domestic clean energy production, that’s helping to sustain demand going forward. And, over the longer term, our fiscal consolidation comes out of our budget, which, of course, means very serious political work to get that over the legislative [hurdle].”
Bernstein added that the IRA does have some spending cuts.
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