Despite all the claims coming from Democrats that inflation is “under control” and won’t continue deep into 2022, there are more concerning warning signs even some liberal economists are pointing to that say otherwise. Unlike Europe, which did less stimulus spending than the United States during the worst days of Covid-19 pandemic, America is experiencing the highest rate of inflation in 30 years, and it appears President Biden’s stimulus and spending plans are direct contributing factors. The current situation has a Carter-Reagan flavor to it.
Jason Furman, the top economic advisor to President Obama, says Democrats have gone off the rails when it comes to spending and the Biden administration bears the large share of the blame for the inflationary rates we’re currently seeing:
“A sizeable chunk of the inflation we’re seeing is the inevitable result of coming out of the pandemic,” said Furman, now an economist at the Harvard Kennedy School.
Furman suggested, though, that misguided policy played a role, too. Policymakers were so intent on staving off an economic collapse that they “systematically underestimated inflation,” he said.
“They poured kerosene on the fire.”
A flood of government spending — including President Joe Biden’s $1.9 trillion coronavirus relief package, with its $1,400 checks to most households in March — overstimulated the economy, Furman said.
“Inflation is a lot higher in the United States than it is in Europe,” he noted. “Europe is going through the same supply shocks as the United States is, the same supply chain issues. But they didn’t do nearly as much stimulus.’’
So rarely have Democrats, aside from Sen. Joe Manchin, been willing to acknowledge that inflation is a serious problem right now. President Biden on Wednesday seemed to be incredulous at how high prices are getting, asking Americans if they ever thought they’d be spending this much on gasoline. Maybe someone should nudge his arm and tell him it’s his fault:
Joe Biden: "Did you ever think you'd be paying this much for a gallon of gas?" pic.twitter.com/aqi36NkfI1
— RNC Research (@RNCResearch) November 10, 2021
When speaking on Wednesday, Biden claimed that more government spending will help ease the problems Americans are seeing right now by helping the supply side of the equation. That outcome seems unlikely given the root cause related to, um, too much government spending:
In a statement Wednesday, Biden acknowledged that “inflation hurts Americans’ pocketbooks, and reversing this trend is a top priority for me.” But he said his $1 trillion infrastructure package, including spending on roads, bridges and ports, would help ease supply bottlenecks.
So more spending will help curtail the inflation caused by too much spending. That argument seems destined to end in an inflationary spiral that Democrats are on the verge of driving into.
While Manchin supported the bipartisan $1.2 trillion infrastructure bill, he does not support the trillions more his party wants to spend on other programs due to fears of runaway inflation:
By all accounts, the threat posed by record inflation to the American people is not “transitory” and is instead getting worse. From the grocery store to the gas pump, Americans know the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day.
— Senator Joe Manchin (@Sen_JoeManchin) November 10, 2021
Manchin seems to be the only Democrat, aside from Sen. Kyrsten Sinema, perhaps, standing in the way of a real economic catastrophe being fostered by big-government liberal spending from the Democratic Party.
Bill Galston, a former policy aid to President Clinton, also doesn’t buy the arguments from his party that bigger spending bills will help tame inflation:
“I don’t think you enhance your case if you say, ‘Pass my bills and inflation will go down,’” said Bill Galston, a senior fellow at the Brookings Institution and domestic policy aide to former President Clinton.
“I really don’t think that for the public that’s a very credible argument,” he added.
Biden is getting buried on this issue, and his agenda and spending bills are the primary cause of the pain Americans are experiencing at the gas pump and grocery store. Democrats have been irresponsible when it comes to spending trillions of dollars on stimulus money, usually in the wrong places. It’s not that big-spending started with Democrats, it’s been a problem for both parties for decades now. The recent catalyst, however, started after Biden took office and the liberal spending spree began and still continues.
Some of the arguments Biden has used to rebut criticism over rising prices is that wages are rising alongside costs, so who cares about inflation? The only problem is that it’s simply not true:
After adjusting for today’s new inflation numbers, average hourly wages fell 1.2% from Oct 2020 to Oct 2021. Change in real average hourly earnings combined with a decrease of 0.3% in average workweek resulted in a 1.6% decrease in real avg weekly earnings https://t.co/6ybYIwIHBm
— Catherine Rampell (@crampell) November 10, 2021
That’s not good from a policy standpoint, and it doesn’t help Biden’s argument when the only point he’s claiming is demonstrably false. Inflation will continue to be an issue, and passing the Build Back Better massive trillion-dollar spending plan would be more like pouring jet fuel on the problem making a kerosene fire look like a birthday candle.
