As a debate over the impact of President Joe Biden's Build Back Better bill continues, John Leahy, professor of public policy and economics, discussed the economics of the bill.
"Inflation is the result of too much demand chasing too little supply," he said. "Anyone arguing that the bill is inflationary can point to any standard economic textbook: An increase in government spending should increase demand and thereby increase inflation. This will happen even if the spending is fully paid for through taxes, since the government spending increases demand one for one and the taxes reduce demand only to the extent that firms or consumers reduce their spending as a result, and this reduction is typically less than one for one."
