Democrats
have been consistently wrong about inflation. This hearing is yet more evidence
they remain clueless about the economics of inflation and are in denial about
the role played by their reckless spending.
At
the start of last year, they told us inflation was nothing to worry about as
they pushed ahead with a $2 trillion liberal spending spree. According to them,
the real risk to our economy was spending too little.
This
argument never had any basis in reality. At that point, Congress had spent as
much on the pandemic in inflation-adjusted dollars as we had waging World War
II.
Democrats
ignored common sense and they ignored the warnings of prominent economists.
This included Larry Summers, who held top posts in both the Obama and Clinton
administrations, who cautioned that Democrat’s $2 trillion partisan spending
spree could “set off inflationary pressures of a kind we have not seen in a
generation.”
Since
then, Democrats have been trying to explain away inflation.
In
April of 2021, President Biden told us inflation was due to “base effects” from
prices being suppressed during the pandemic. In June, we were told inflation
was merely “transitory” and the result of bottlenecks in the supply chain.
These
remained the favored lines of argument until October, when inflation surged to
6.2 percent - the highest rate in 31 years. President Biden finally recognized
inflation as a problem and claimed addressing it was his “top priority.”
However,
instead of admitting government spending was the main contributor, he sought to
argue the solution was spending trillions more.
Thankfully,
the American people weren’t buying it. More importantly common sense Democrats
like Joe Manchin didn’t buy it either.
It’s
now clear high inflation endangers Democrat’s reckless tax and spending agenda.
As a result, Democrats are grasping at straws to find a scapegoat. Hence,
blaming inflation on “corporate greed.” Never mind that economists from across
the political spectrum overwhelmingly reject this theory.
79
percent of economists responding to a Chicago Booth School of Business survey
said they disagreed that “dominant corporations” is the cause of today’s
inflation.
Jason
Furman, President Obama’s chief economist, has stated that “corporate greed is
a bad theory of inflation” and called such arguments a “sideshow”. Larry
Summers has called such arguments “diversionary.” And Benjamin Page, a Senior
Fellow at the Liberal Tax Policy Center, has called them a “red herring.”
The
current Democrat rhetoric would be amusing if not for the disastrous
consequences that could result from misdiagnosing the cause of inflation
The
current focus on so-called corporate greed risks taking us down the failed road
of 1970’s style price controls and windfall profits taxes. Anyone who lived
through that time can tell you how these policies made things worse by reducing
supply. The result was rampant shortages - most notably gas lines around the
block.
