No surprise: inflation will be an issue in the 2022 elections
Spiking prices for food, fuel, housing and a lot more have a way of shaking up the political world, and this recent spate of inflation data is no exception. And that’s posing a real problem for the party in power:
“I’ll be honest with you: My constituents are frustrated,” Rep. Angie Craig (D-Minn.) said in an interview. “Ordinary Americans, they’re worried about filling up the gas tanks. They’re worried about what’s on the shelves at the grocery store and how much it costs at the checkout line. A lot of folks don’t feel like Washington is doing anything about that.”
Democrats like Craig hoping to hold onto their seats in next year’s elections are striving to convince voters that their infrastructure and social spending plans will lift up middle-class families and boost an economy still struggling to emerge from the coronavirus shutdowns. At the same time, they’re facing withering attacks from Republicans that their expensive proposals will only make things worse, charges that Craig, a two-term lawmaker, dismisses as “scare tactics.”
It would be a rare thing, indeed, for even more government spending to be anti-inflationary. If anything, the Biden administration’s Build Back Better proposal would be akin to throwing gasoline on a fire. According to a report from the Congressional Joint Economic Committee:
Compounding the pressures of constrained supply, increases in household income from government stimulus measures may have ignited more lasting demand-driven inflation. If Congress continues to enact new government spending that further increases consumer demand while supply remains constrained, inflation could become worse. The American people would be better served by policies geared toward returning Americans to work and removing barriers to business investment in American workers.
Federal Reserve Chairman Jerome Powell recently acknowledged these inflationary risks, indicating that the Federal Reserve may soon begin reducing its asset purchases to counteract rising prices. Unfortunately, if extraordinary spending levels continue, monetary tapering or even tightening may not have its intended effect. Congress should therefore consider the inflationary risks of continuing its recent pattern of ballooning government spending.
But if Democrats want to say more stimulus is not inflationary, they are free to do so. Just as voters are free to observe whether the prices they pay for everyday goods and services continue to rise, fall, or flatten.