Point: Lisa LaBriola
Rising inflation is an issue that affects us all, and the financial pressures continue to affect our homes, families and communities. But what doesn’t help is the simplistic political rhetoric that lays responsibility for global inflation solely on a specific set of US policies.
There are many factors contributing to our economic status. Some are one-off events, such as the global pandemic and the war in Ukraine. These events have other side effects, such as labor and supply chain shortages as the Federal Reserve aggressively raises interest rates to help curb inflation and control price growth.
First of all, we can recall that during the COVID-19 pandemic, people were spending much less and saving more because no one had a clear idea of where the virus would end. us economically. This spending behavior has led to deflation in our economy. As the economy began to bounce back and businesses returned to their operations and travel began, the high demand created a bottleneck and increased inflation. Simply put: demand was higher than supply.
To combat the potentially devastating impact on our economy during the pandemic and subsequent recovery, Congress passed a bipartisan spending package as well as other policies aimed at easing the economic woes .
This $1.9 trillion pandemic relief package included support for small businesses, $1,400 stimulus checks (for those who qualified), expanded access to health care, child tax credits, funding for schools to help them reopen, financial support for state and local governments and testing and vaccination sites, to name just a few. This plan was needed to give people a fighting chance to combat the negative economic consequences of the pandemic.
In fact, not only did it help individuals, but according to Moody’s analysis report “Global Fiscal Policy in the Pandemic” from February 24, “without ARP, the US economy would have come close to suffering a recession in the spring of 2021. ” So what has this done to our inflation rate?
Although economic stimulus dollars brought by economic recovery spending have had an impact on the rise in inflation, it is not as high as you might think. In fact, of the 8% rise in inflation only 2.5% of that could be attributed to spending on economic stimulus.
Additionally, the Treasury Department recently announced that the federal deficit will shrink by $1.4 trillion in fiscal 2022 as surging tax revenues and a reduction in pandemic spending helped cut the budget gap in half. This was seen as confirmation that the fiscal economic policies are working.
The United States is far from the only country that is feeling the effects of this inflation and it is not really right to defend otherwise.
Counterpoint: Sage Naumann
I agree with my fellow columnist that it is unhelpful to simplify complex issues like inflation for the sake of political victory, but we differ on the question of how much blame is to be placed on the federal government and the Federal Reserve. .
Supply chain issues stemming from the COVID-19 pandemic have undoubtedly contributed to the rise in inflation, but that’s only one small piece of the puzzle.
To see the whole picture, the actions of those in charge of fiscal and monetary policy over the past several years must be carefully considered. I will warn you if you are expecting a certain political party to be valid with this accounting, you will be disappointed.
Admittedly, understanding fiscal and monetary policy is not an easy matter, but the principle at play is quite simple. The government spent a huge amount of money it didn’t have, so it issued debt. That debt was bought — primarily by the Federal Reserve — which then handed over newly printed dollars in exchange. Those dollars are then distributed throughout our economy. Much of this money was not taken from any particular group of people, nor was it reallocated from another government program. It was created. The result was that the dollars in your bank account became worth much less because there is now more money in circulation. In February, the money supply had increased by more than 40% over two years.
President Joe Biden, along with congressional Democrats, have pumped an incredible amount of money into our economy, the most notable example of this being the American Rescue Plan, which amounts to $1.9 trillion of the approximately $5 trillion in spending of the government under this administration.
In four years under President Donald Trump, the national debt has increased by nearly $8 trillion, approaching what President Barack Obama added to the debt in twice his time in office. Meanwhile, the Federal Reserve failed to recognize the impending inflationary crisis, only starting to raise interest rates in the last few months.
Unfortunately, the policy failures do not end there. Fortunately, I only have so many words to make you sad.
It’s easy to blame inflation on COVID-19 or Vladimir Putin’s unjustified war, but it ignores the worrying trend of government interference that will continue to destabilize our economy for generations to come. Ignoring the $31 trillion in national debt we have incurred is foolish. While it may seem like an election year that Democratic or Republican elected officials can look to the not-so-distant past, there’s nothing stopping you from holding them accountable.
The lesson we should learn is not necessarily that one political party is going to blame another party (as tempting as that may be), but rather that the people we raise to the These offices are about the organic nature of our economy.
As they flip those switches and turn those knobs, they do so with an incredible paucity of information, so the actions they take should be done with an abundance of caution and under our watchful eye.
Lisa LaBriola is a principal at Husch Blackwell Strategies and has been a member of the Senate staff for nearly ten years. She served as chief of staff to former Senate Minority Leader Lucia Guzman and former Senate President Leroy Garcia. The views expressed here are her own and do not reflect the views of any other organisations. Sage Naumann is a conservative commentator and strategist. He is the vice president of communications at 76 Group and was previously a spokesman for the Colorado Senate Republicans. Follow him on Twitter @SageNaumann.