Prepared Floor Remarks by U.S. Senator Chuck Grassley of Iowa
Inflation Caused by Over-Spending is Hurting Everyday Americans
Monday, June 7, 2021

 
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.
 
That should give Congress pause.
 

First, do no harm.