Prepared Floor Remarks by U.S. Senator Chuck Grassley of Iowa
Unlike Washington Elites, Iowans Know Inflation is Real
Wednesday, July 14, 2021

 
Over the previous two weeks, I enjoyed travelling around Iowa holding county meetings and visiting with employers and employees. It’s always refreshing to hear directly from Iowans. As I often say, Washington is an island surrounded by reality.
 
There is no better example of this than how the Biden administration and Washington elites talk about inflation and rising prices. To them, inflation is “transitory” or the result of “base effects”.
 
To the Iowans I spoke with, inflation is real and persistent. I heard concerns about inflation wherever I went. It’s affecting people’s lives right now.
 
I heard how inflation was cutting into family budgets making it hard to make ends meet. I heard how prices of grocery staples, such as meat, milk, fruits, and vegetables are on the rise along with all manner of household goods.
 
Yet, the President and his top economic advisers say inflation is nothing to worry about. Or, as the President’s Treasury Secretary put it, “I don't think there's going to be an inflationary problem. But if there is, the Fed will be counted on to address them.”
 
They shouldn’t be so nonchalant. As we know from the 1970’s, once inflation takes off, getting it back under control can require very painful measures. As former Clinton Treasury Secretary Summers recently stated, “the Fed has had almost no success gently bringing down inflation once an economy has started to overheat.”
 
Unfortunately, instead of taking inflation seriously, the current Administration appears intent on stoking its flames. In his budget, the President proposes government spending and debt at levels previously only seen temporarily during war or economic recession.
 
The non-partisan Congressional Budget Office (CBO) and economists surveyed by the Wall Street Journal both recently raised their inflation expectations. CBO raised its inflation projections because “output now exceeds its potential level sooner and by a larger amount than previously anticipated.”
 
Output exceeding its potential is economic speak for the economy is starting to “overheat.”
 
Consumer price data released yesterday shows inflation heating up. In June, prices climbed 5.4 percent over the prior year compared to 5 percent in May. Moreover, core inflation, which omits volatile food and energy goods, rose at its highest rate in 29 years.
 
The trillions of dollars in new spending proposed by the President could set inflation ablaze. If that occurs, it’s not going to be the wealthy and Wall Street elite that pay the price.
The average hardworking American living paycheck to paycheck and the retiree on a fixed income will pay more for less.
 
The President would be well served to listen more to everyday Americans about how rising prices are affecting their lives today. He might then realize pursuing another multi-trillion dollar spending spree isn’t worth the risk. It could fan the flames of inflation and devastate the livelihoods of average Americans.
 

It’s incumbent upon the President and Congress to avert catastrophe by pursing responsible fiscal policies. We can’t just expect the Federal Reserve to clean up our mess if we act irresponsibly. By that time it could already be too late.