For the last two months, Sen. Rob Portman has taken to the Senate floor once a week to issue an important warning. Namely, that President Joe Biden’s proposed multitrillion-dollar tax and spending bill would stoke even more inflation in an already overheated economy.
The senator’s repeated sounding of the alarm has been right on the mark.
- Consumer prices are up 6.2% over a year ago, the highest rate in 31 years.
- Producer prices are rising at an 8.6% rate, a record high.
- Gas prices are up 62% in the last year, soaring to a seven-year high.
- Grocery bills are surging, with meats, poultry, fish, and eggs increasing 10.5%.
After five straight months of inflation exceeding 5%, it is now clear that the inflation danger is real. The unprecedented stimulus spending spree is doing nothing to help. On the contrary, passing trillions of dollars of more spending would make this inflation even worse.
It’s not just Portman and Republicans who are concerned.
Democratic economic adviser Larry Summers has been warning for months that injecting so much stimulus spending into the economy would lead to soaring inflation. The Labor Department reports that inflation is “broad-based” and has wiped out all of the wage gains made this year.
The risks are real.
Combined with tax increases, this spending splurge could lead to the stagflation we had in the 1970s. That would mean a period of low growth, rising interest rates, and high inflation.
Bruce Thompson was a U.S. Senate aide, assistant secretary of Treasury for legislative affairs, and the director of government relations for Merrill Lynch for 22 years.
