Economist Art Laffer slams Dems' reconciliation bill as 'pro-inflation,' 'anti-economy'
Manchin, Schumer agreed to pared back version of Build Back Better last week
Former Reagan economic adviser Art Laffer warned on "Cavuto: Coast to Coast" on Monday that the Democrats’ reconciliation bill will "increase inflation and hurt the economy."
He went on to blast the bill as "pro-inflation" and "anti-economy."
Laffer made the argument five days after after Sen. Joe Manchin, D-W.Va., announced that he came to an agreement with Senate Majority Leader Chuck Schumer on the reconciliation bill after more than a year of negotiations among Democrats.
Manchin frustrated Democrats for months, consistently refusing to support party-line legislation that, at one point, Democrats wanted to cost over $3 trillion. Democrats termed that legislation "Build Back Better," and Manchin shut down negotiations on it late last year.
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However, with Democrats grasping for a legislative win ahead of the midterms, Schumer, D-N.Y., kept up talks directly with Manchin through the spring and summer. In a lengthy statement, the moderate senator said Wednesday those talks resulted in a deal for a slimmed-down bill that includes tax, climate and prescription drug provisions.
Laffer argued that the bill "is a lot better now than it would have been without Manchin."
He stressed that it is a "less damaging bill today than it would have been had we had ‘Build Back Better.’"
"Here we sit with this bill, which will hurt the economy, it will increase inflation, and it is going to slow down growth, but it is much less bad than it would have been with ‘Build Back Better,’" the economist continued.
Laffer then argued that "we really need tax cuts now, we need deregulation now, and we need to reduce government spending, not increase government spending."
"All of these are in the wrong direction," he continued.
The vast majority of Americans will pay more in taxes as a result of Democrats' inflation bill despite President Biden's pledge not to raise taxes on those making under $400,000 per year.
The Inflation Reduction Act — unveiled Wednesday and endorsed by President Biden — would increase tax revenue by $16.7 billion from Americans earning less than $200,000 a year, according to a nonpartisan analysis from the Joint Committee on Taxation (JCT) published Friday. Nearly every tax bracket would pay more in taxes with those making below $10,000 per year seeing the largest uptick, the analysis showed.
Meantime, the Labor Department revealed last month that inflation accelerated more than expected to a new four-decade high in June.
The department said the consumer price index, a broad measure of the price for everyday goods, including gasoline, groceries and rents, rose 9.1% in June from a year ago. Prices jumped 1.3% in the one-month period from May. Those figures were both far higher than the 8.8% headline figure and 1% monthly gain forecast by Refinitiv economists.
The data marked the fastest pace of inflation since December 1981.
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Laffer argued the bill, which includes "lots of taxes," will "reduce the rate of growth of output, employment and production, which means if you shrink the supply of goods and services, that means their prices go up, not go down."
He also argued that government spending increases demand "so you’re reducing supply and increasing demand," which will "increase inflation from where it would have been without this bill."
Fox News’ Tyler Olson, Hillary Vaughn, Jason Donner Haris Alic and FOX Business' Thomas Catenacci contributed to this report.