Republicans' bogus inflation blame game

7 months ago 14

Joe Biden

AP Photo/J. Scott Applewhite

President Joe Biden speaks about deficit reduction in the Roosevelt Room at the White House in Washington, Friday, Oct. 21, 2022.

According to House Minority Leader Kevin McCarthy (R-Calif.), Democrats’ “radical policies created the worst inflation in a generation.” Sen. Rick Scott (R-Florida) attributes “raging inflation” to “the insane tax and spending spree of President Joe Biden and Democrats in Washington.” Sen. Ted Cruz (R-Texas) wants his constituents to use the hashtag “Bidenflation.” Sen. Josh Hawley (R-Mo.) claims the Biden administration has “pushed inflation to generational heights, and he still won’t take any responsibility.”

That is just a small sampling of the inflation blame game.

And these Republicans know — or ought to know — it’s bogus.

As Jerome Powell, who was appointed chairman of the Federal Reserve by President Donald Trump in 2017, has emphasized, “the current high inflation is a global phenomenon.” It has three mutually reinforcing causes:

1) pandemic-related lockdowns, layoffs, and school closings kept tens of millions of people at home during 2020 and the first of half of 2021. As vaccines became available and restrictions eased, many of them began spending more money. Supply chain disruptions prevented manufacturers and retailers from keeping up with consumer demand and prices spiked.

2) Sanctions placed on Russia for its unprovoked war against Ukraine severely reduced supplies of oil and gas on world markets.

3) A large number of workers, many of them seniors, did not return to their jobs in 2021 and 2022. The tight labor market drove up wages.

In 37 of 44 nations with advanced economies, a study by the Pew Research Center reveals, the rate of inflation in the first quarter of 2022 was at least twice what it had been in the first quarter of 2020. Inflation in the United States was 8.5 percent in July 2022. In Canada, the comparable figure was 7.6 percent. In the countries of the European Union 8.9 percent in July, rising to 9.1 percent in August. In the United Kingdom 10.1 percent. In Turkey 79.6 percent. The Organization for Economic Cooperation and Development, it is worth noting, forecasts that because the Fed in the United States began raising interest rates earlier than central banks in the European Union or the UK, it is likely to bring down inflation sooner.

Republicans point to the $1.9 trillion American Rescue Plan, which President Biden signed in March 2021 as the smoking gun of wasteful — and, they say, inflationary — government spending. They do not mention that at the time, 9.7 million Americans were unemployed, 4 million more than in February 2020; and 4.2 million Americans were long-term unemployed. Nor do they mention that — thanks in no small measure to the American Rescue Plan — the unemployment rate in the United States is now at an historic low. Or that the child tax credits in the plan, which Republicans have refused to renew, reduced child poverty by half.

Biden’s American Rescue Plan may well have contributed to inflation… but if so, then so too did the Trump administration’s COVID relief measures. With a price tag of $2.2 trillion, the CARES Act, signed by Trump in March 2020, sent $1,200 checks to tens of millions of Americans (many of whom were wealthy), provided enhanced unemployment benefits and a paycheck protection program that forgave loans to small businesses who retained their staff and aid to local and state governments. In April 2020, an additional $490 billion appropriation enhanced PPP. And in December 2020, a $920 billion Consolidated Appropriation Act included another check, this one for $600.

Moreover, self-proclaimed Republican “deficit hawks” were nowhere to be found while Donald Trump was in the White House and the GOP controlled the U.S. Senate and House of Representatives. Before the pandemic, when the federal government should have been accumulating surpluses or paying down the national debt, the United States had a great and growing deficit each and every year, approaching a previously unimaginable $1 trillion. When COVID arrived, the deficit on Trump’s watch skyrocketed to more than $2.7 trillion.

In his first year in office, President Biden cut that deficit in half. Although the Inflation Reduction Act, which Biden signed this summer despite opposition from every Republican in the House and Senate, has little or no immediate impact on inflation, it will cap out-of-pocket prescription drug costs for seniors, and reduce prices by allowing Medicare to negotiate with pharmaceutical companies on some of them, including insulin. By levying a minimum tax on large corporations with at least $1 billion in income, the legislation does not add to the deficit.

The ferocity of the Republicans’ inflation blame game seems designed to hide the fact that they have no clue about how to make substantial cuts in “wasteful spending” — or about what they can or will do to reduce inflation caused by forces outside of their control. Their primary goal — in all likelihood, their only goal — it seems clear, is to regain political power.

Glenn C. Altschuler is the Thomas and Dorothy Litwin Professor of American Studies at Cornell University. He is the co-author (with Stuart Blumin) of “Rude Republic: Americans and Their Politics in the Nineteenth Century.”

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