How can it make sense to pass legislation to increase the spending power of the citizenry in order to stimulate economic activity and, at the same time, enact a series of new taxes that will diminish spending power?

First, in order to compensate for the diminishment of purchasing power that usually accompanies rising inflation, investors normally have demanded higher interest rates on their investment assets. This was particularly true in the 1977-81 era when inflation soared to almost 20% and interest rates rose to roughly the same level.