Sen. Joni Ernst brings prop to hearing showing seriousness of Biden's inflation
Sen. Joni Ernst brings prop to hearing showing seriousness of Biden's inflation
My Democrat colleagues in the Senate are busy seeding their progressive spending spree, determined to pump money into creating new child care and education entitlements, immigration overhauls and green energy subsidies that will flow to the wealthy and politically connected.
Under the guise of "infrastructure," this $3.5 trillion spending bill would instead overhaul our economy and society.
This spending will cause higher inflation, which, in turn, will mean higher prices and more debt for future generations.
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Inflation is hovering like an ominous drone over people in my home state of Wyoming and across America. Real hourly earnings are down nearly 2% from a year ago. This is because increased prices have outpaced any extra money in paychecks.
For all their touting of a 16-cent savings on summer cookouts, the Biden administration knows inflation is a big problem. The Labor Department found that prices of consumer goods leaped in June by the most in 13 years.
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Some of the price jumps are staggering. The Washington Post’s Heather Long noted recently that car rental costs are up 87%. Used cars and the gas to power them are up 45%. Airfare costs 24% more. Moving costs 17% more, with hotel prices jumping 16%. Many food staples are up more than 5%.
In Wyoming, a new house that last year cost $305,000 to build now costs $385,000. Even with low interest rates, that is a shock to a family budget.
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Financial experts are worried. In a Wall Street Journal survey this month, economists said they expect levels of inflation for the next three years to be the highest since 1993. Even President Obama’s former economic adviser is warning that America’s out-of-control spending will drive inflation.
The American people are equally concerned. A Harvard-Harris poll found that Americans considered massive government spending, the Federal Reserve’s stimulating policies, and untamed federal deficits as the top reasons for inflation. According to a Monmouth poll, 71% of respondents fear the inflationary results of Biden’s big-spending agenda.
Here’s the thing: We don’t need more stimulus. One is occurring naturally as we speak. Americans are flush with cash, and are stimulating the economy without the Fed’s or Congress’ help.
Since the 1950s, Americans generally have about 51% of GDP in deposits (money in their bank accounts or in readily accessible savings or money market funds). Right now, that number is 78%. That means Americans are sitting on trillions of dollars they were unable to spend during the pandemic. That money is already flowing into the economy, and it’s only going to flow faster as we fully reopen.
Prices simply cannot hold under this scenario – they will climb higher.
Combine this with the Fed’s current policies and congressional spending sprees, and we are setting ourselves up for even greater inflation. Given the pandemic, supply chains are unprepared to keep up with demand.
Prices simply cannot hold under this scenario – they will climb higher.
This brings us back to the Democrats’ spending bill. The American Enterprise Institute recently released a memo on inflation, finding that "a well-structured infrastructure plan" would not exacerbate inflation since it would boost the supply side of the economy by improving things like roads and bridges, which help fulfill demands for increased supplies.
On the other hand, President Biden’s spending spree would cause higher inflation, as it would give handouts without supporting supply. His inflated unemployment insurance is doing that right now.
As a senator who sits on all three transportation-related committees, I know we must fund real infrastructure projects. But there’s a simple truth that the Democrats are ignoring:
We can pay for needed infrastructure without spending more.
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The Democrats forced through a stimulus bill at the start of this Congress while millions of COVID relief dollars remained unspent. Today, a huge amount remains unspent. If we redirect that money to pay for infrastructure the American people actually need, we can avoid making inflation worse.
Americans agree that we need to repair our crumbling roads and bridges. What they don’t want is trillions of dollars that will boost progressive priorities but leave them with even less money in their pockets and paychecks.