Finance Committee Republicans Request Information on the Adverse Effects of High, Persistent Inflation on the Federal Budget

Washington, D.C.–In light of high and accelerating inflation, Senate Finance Committee Republicans, led by Ranking Member Mike Crapo (R-Idaho), are asking the Congressional Budget Office (CBO) for detailed information on the harmful effects inflation has on the federal budget.  As inflation continues to hammer pocketbooks of Americans, it also eats up fiscal space by increasing deficits and debt, and acts like a stealth tax on households and businesses.

From the letter:

“Increased inflation leads to more federal spending and more federal revenue.  The added revenue stems partly, and unfortunately for taxpayers, from nominal inflationary gains that do not show up as purchasing-power-adjusted gains for federal taxpayers.  The stealth-like nature of inflation taxes, and revenues that flow from them, should not be viewed as an economic plus.”

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“Adverse effects of inflation on the federal budget, including likely increased payments to service outstanding debt, absorb fiscal space and crowd out a host of national priorities, ranging from low-income support programs to national defense to disaster relief.”

The senators also cite a budget workbook on CBO’s website that suggests a persistent one percent inflation increase above CBO’s baseline projection made early last year could increase deficits by nearly $2.3 trillion over a 10-year period.  They ask the CBO for a description of budgetary effects of high inflation; inflation that persists; and,…