Here’s How Republicans Will Deal With Inflation

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Life is more expensive, which means that everyone gets a cut in his salary. And people are not happy with that.

Gas prices are still high. high rents. service cost. It all has a cumulative effect. And wage increases have not kept pace with inflation.

$1,000 for a day at Disney. A more specific example that affects people lucky enough to consider a vacation is the fact that a family of four will now spend over $1,000 for a day to park and hop on at Disneyland. So before food or souvenirs, According to CNN’s Natasha Chen.

turning tide. Exacerbating and persistent inflation, which it has so far refused to tame by raising interest rates, remains a motivating force in US politics. According to CNN Polling Director Jennifer Agesta, the bad economic mood is shifting the political landscape toward Republicans.

“The nation’s general political mood–which was somewhat more favorable to Democrats after the Supreme Court’s overturning of Roe v. Wade–may have tilted more in favor of the Republicans,” Writes Agest.

What will the Republicans do? It’s worth thinking about how the economy differs with Republicans in charge of the House or Senate.

During the campaign, Republicans tried to capitalize on the ongoing poster shock and blame inflation on government spending, an argument that ignores the energy surge caused by Russia’s war on Ukraine and supply chain issues caused by the ongoing Covid-19 pandemic. .

Here’s an extended offering from minority leader Kevin McCarthy — who will become House Speaker next year if Republicans win in November — when he appeared on Fox on Tuesday:

Every American should be asked This is one question: “Can you forgo one month’s wages?” Ninety-five percent of Americans would say no. But that’s what the Democrats stole from you. Because one month’s wage is 8.3% of yous Overall year – inflation is even higher.

That’s why when you go to the store, the eggs are higher. You areE Milk got higher, petrol prices higher. It’s the Democrats’ policies that brought it on. That’s why in the commitment to America, we’ll be energy independent, lowering your prices. We’ll take that unbridled spending away. We will make America more productive to reduce inflation, what or what Democrats BsWe should. ”

Control of the House and/or Senate would almost certainly give Republicans the ability to crush any additional spending by the Biden administration. And to get an idea of ​​what they support, check out McCarthy Commitment to America website. It contains some details, but has three basic principles:

  • Curbing wasteful government spending…
  • Enact “pro-growth tax and liberalization policies…” (reducing taxes and regulations)
  • “Make America Energy Independent…” (specifically through oil and gas production)

In terms of tax and regulatory ideas, these are long-term ideas because they require a Republican president.

The fourth promise to end dependence on China and ease supply chain problems does not include specific policy ideas.

For his part, President Joe Biden wrapped up partial independence from China and incorporating American manufacturing into his climate policy, announcing on Wednesday $2.8 billion in grants For US battery supply chains subject to the authority of the bipartisan infrastructure law passed last year.

McCarthy suggested that Republicans would go further and even use the debt ceiling, which will likely be reached early next year, as leverage to enforce spending cuts. It is a more public endorsement of the tactic, which, in theory, might see the United States fall short of its commitments.

To assess what Republicans can and can achieve about inflation, I spoke to Douglas Holtz-Eaken, economist and president of the American Labor Forum, a nonprofit organization that does not advocate political positions but does have a center-right view. . He is a former director of the Congressional Budget Office and was an economic policy adviser to Senator John McCain’s 2008 presidential campaign, but he is neither bipartisan.

The first thing to know, Holtz-Eakin said, is that the primary job of controlling inflation belongs to the Federal Reserve, not Congress or the White House.

However, he sees – along with other economists such as Democrat Larry Summers – that government spending, and in particular US bailout bill It passed without help from Republicans shortly after Biden took office, and helped drive inflation.

“Not making the same mistake is something Republicans can control, there’s no doubt about that,” he said. “They can block things if they take control of the House, and that would be beneficial” to curb spending.

While Holtz-Eakin said it’s not accurate to say that Biden and Democrats caused the inflation, they certainly helped accelerate inflation.

“It’s quite clear in the data that there was a spike in inflation in April of 2021 immediately after the checks came out, to implement a $2 trillion stimulus into our economy,” he said.

“We’ve seen this movie a million times before,” said Holtz-Eakin, referring to many of the ideas that have been put forward for spending and citizenship deficit control. religion.

“People on both sides have been talking about this forever,” he said, “and there wasn’t a single difference in the results.” The debt has risen steadily. It is currently set at Nearly $31.4 trillion. At some point, he said, someone is going to have to get serious about making fiscal policy more sustainable.

While the US bailout would never have happened if Republicans had taken control of the House, Holtz-Eaken also said something important about how spending would happen even when there were promises of spending cuts.

“On the whole, Congress tends to spend more, cut taxes, and tackle deficits,” he said. “On the whole, the trend is almost always more amplified than not.” But he said the Republican majority would definitely cut back on spending.

There is more and more Recession forecast The Federal Reserve is trying to curb inflation by raising interest rates.

“Once you have inflation, you will have nothing but bad choices,” Holtz-Eakin said. You have to raise interest rates and tighten financial conditions. That means fewer jobs, fewer retail sales, less housing starts and all kinds of bad decisions.”

These decisions are made regardless of who sits in the House and Senate.

“Ownership of the economy usually rests with the president, who is blamed or given credit for what happens under him,” he said.

The president tried again Wednesday to put even the smallest drop in gas prices into place with the official announcement of After another version of the strategic petroleum reserve – 15 million barrels in December – although it is not likely to have a significant impact.

The rest of the government is trying to do its part to ease the burden of inflation as well:

Having said that, none of these actions will likely be It makes Americans feel very different about the economy before Election Day.