When I was first elected to Congress in the 1970’s, I ran
as Grassley, the inflation fighter.
Those who remember that time period know that inflation
is a real problem.
It knee-caps middle class prosperity and causes severe
hardship for those already struggling.
Inflation is a regressive tax as it hurts Americans more
the less money they have.
It’s also a stealth tax.
With the income tax, you can see how much the government
is taking out of your paycheck.
With sales tax, you see on your receipt what the
government took as its cut.
With inflation, the value of the dollar in your pocket is
reduced without leaving your wallet.
When Americans suddenly notice that it costs more to buy
the same groceries, it can be hard to know who to blame.
Did the store just decide to raise prices? Or is
inflation caused by mysterious economic forces beyond anyone’s control?
In reality, the federal government can directly cause
inflation by printing too much money to feed its spending habit.
Politicians like to promise freebies that someone else
will pay for, maybe “the rich”.
Who is the rich you might ask?
Well, don’t worry, it’s not you, the big spenders assure
us.
Don’t be so sure.
President Biden suggests that if rich people pay their
fair share of taxes, we can afford to spend another 4 to 6 trillion dollars.
In reality, if the government confiscated all the wealth
of all U.S. billionaires, it wouldn’t cover that bill.
Just asking them to pay a little more, as the president
suggests, will barely make a dent.
So who is going to pay that bill?
Don’t be fooled. You are.
Hard working Americans will be shouldering the cost of
Biden’s spending plans in the form of lower wages and higher prices at the gas
pump and in the checkout line at Hy-Vee.
Remember, prior to the pandemic, tax reform and a more
predictable regulatory environment contributed to the best economy America had
seen in decades.
Unemployment reached 50-year lows. Family incomes and
workers' wages experienced robust gains. In fact, wage growth was strongest for
low-wage workers. As a result, income inequality actually declined.
My colleagues across the aisle like to repeat the
falsehood that tax reform was just “tax cuts for the rich.”
Not true.
We eliminated loopholes that allowed some favored
corporations to avoid millions in taxes. By having more corporations paying
their fair share, we were able to lower the overall corporate rate to be more
in line with other countries, like Sweden and Denmark.
Tax reform meant more investment in America, creating
good, well-paying jobs for hardworking Americans.
The pre-pandemic thriving economy is poised to come
roaring back if the government just gets out of the way.
Raising tax rates while adding new tax giveaways for Democrats’
favored corporations that sign on to the green new deal, will kill the goose
that laid the golden egg.
While President Biden talks a good game about everyone
paying their fair share, he’s proposing an unprecedented spending binge.
This will only fuel inflation. That burden will fall hard
on middle class Americans and be devastating for low-income Americans.
There are already signs that inflation is starting to
kick in.
Have you ordered a hamburger at a restaurant lately?
I heard from an Iowan in Sioux City that at one furniture
store, a particular recliner that sold for $199 last year now sells for $249.
A leather reclining sofa sold for $1899 last year and
today costs $2599.
Price increases of 25 to 37 percent for furniture are
impacting the lifestyle of Iowa families right now.
Many homebuilding supplies have doubled or tripled in
price. This is partly due to the shortage of lumber.
I have called on the Administration to take actions to
address this, but the price increases are not limited to wood products.
President Biden’s economic advisors assure us this
inflation Iowans are seeing with their own eyes is just temporary or nothing to
worry about.
But, it is real and it is happening.
Economists from across the political spectrum are
starting to raise the alarm.
Larry Summers, President Obama’s chief economist, warned
that the $2 trillion Biden stimulus that was rammed through Congress on a
partisan basis was way too big.
He is quoted as saying, “I think this is the least
responsible macroeconomic policy we’ve had in the last 40 years.”
And more recently, in a Time Magazine interview conducted
after the release of the President’s Budget, he expressed concerns that “we are
injecting more demand into the economy than the potential supply…and that will
generate overheating.”
When a long-time Democrat economist of the stature of
Larry Summers sounds the inflation alarm, the President would be well advised
to listen.
The President’s spending plans would dump fuel on an
inflation fire that the Fed has ignored in favor of easy money policy geared
toward propping up Wall Street.
These spending plans would dump fuel on an inflation fire
that the Fed has ignored in favor of easy money policy geared toward propping
up Wall Street.
In the end, the poor and middle class will pay the price.
Income inequality will rise.
For all their lip service about taking from the rich and
giving to the poor, the Democrat big spending polices may stimulate stock
prices for the wealthiest Americans, while everyone else pays more for less.
I suggested in a speech about excess unemployment
benefits that politicians should emulate doctors and “first, do no harm.”
That applies to big spending plans when there are signs
of inflation.
Once inflation starts to run away, it’s difficult to
stamp out.
The Fed would have no choice but to aggressively hike
interest rates, which could then trigger a recession.
Coming out of a pandemic that caused so much hardship for
American families, the last thing they need is more economic hardship caused by
either inflation or a recession.
