The inflation rate is surging, with consumer prices rising faster than they have in 30 years.
Economists are warning that inflation could be here to stay, and the public is growing increasingly concerned about rising prices. Yet despite this threat to our economic recovery, the Biden administration and congressional Democrats are pushing trillions of dollars of more spending. The Senate budget resolution proposes the biggest explosion of spending, deficits, and debt ever. It’s a massive expansion of government that would lead to rising inflation and slower economic growth.
After averaging just 2.1% annual inflation since 1991, consumer prices increased 5.4% in June, the highest one-year rate since 1990. Consumer prices have risen steadily this year, increasing every month of the Biden administration, from 1.4% in January to 2.6% in March, 4.2% in April, 5% in May, and 5.4% in June.
While some say the surge in inflation is transitory, a Wall Street Journal survey of economists last month found them forecasting several years of higher inflation, with the rising prices squeezing household budgets and disrupting business investment plans.
Some are warning that 1970s-style inflation might be coming back. That period saw inflation jump from 5% in 1970 to double-digit levels during a decade of expansive monetary policy and increased government spending. These worries about inflation have emerged as an economic weakness for Democrats. A recent Morning Consult poll found that 6 in 10 people believe that the Biden administration’s economic policies are responsible for the surge in inflation. Eighty-two percent of Democrats are very concerned about inflation, as are 90% of Republicans.
But Democrats continue to clamor for government spending.
After ramming through $1.9 trillion in spending this spring (on top of the $3.6 trillion spent last year on pandemic relief), Democrats are now pushing for another $3.5 trillion in social spending on top of the $1.2 trillion infrastructure bill. Showering the economy with so much new spending is reckless and irresponsible and a recipe for even more inflation and slower economic growth.
Republicans should make that point more robustly.
Bruce Thompson has served as a Senate aide, assistant secretary of the treasury for legislative affairs, and as director of government relations for Merrill Lynch for 22 years.
