Superficially, the thinking seems reasonable. High price inflation means that welfare benefits will increase when they are uprated later this year. But low wage inflation means the government doesn't get much of an increase in income tax and national insurance. So, public borrowing will rise.
A moment's thought, however, tells us that inflation is not the issue here. Imagine that CPI inflation were, say, just 1 per cent and that nominal wages were falling, so that the gap between the two inflations is the same as it is now. We would have exactly the same pressures on the public finances - welfare benefits rising faster than tax revenues - but no inflation problem.
This tells us that the pressure on the public finances does not come from inflation, but from falling real wages. It is a real problem, not a nominal one.
From the point of view of the public finances, this problem cannot be solved by a shift of incomes from profits to wages; this would raise income tax only at the expense of corporation tax, with little effect on overall borrowing.
Instead, the problem for the public finances is simply that the economy is not growing fast enough to generate much growth in tax revenues; yes, revenues have grown this year, but this seem to be because the new 50p tax rate has not (yet?) had the adverse effects its critics claim. Blaming inflation is mere wibble, intended to distract us from this fact.
And herein lies the key point. High government borrowing is the legacy of the banking crisis. As Bank of England Governor Mervyn King said recently, "the squeeze in living standards is the inevitable price to pay for the financial crisis". And it is this squeeze that is reducing the growth in tax revenues and keeping borrowing high.
To put this another way, if the private sector cannot borrow from banks (the effect of which is weak economic activity), some other sector of the economy must borrow - and that means the government.
This means that government borrowing will fall significantly when and only when the banking system is fixed.
From this perspective, today's Budget is a red herring. Government borrowing is not determined by fiscal policy alone, but by the health of the wider economy. This Budget, then - like so many of its predecessors, both Labour and Tory - is an exercise in the illusion of control rather than in serious economics.
