- THE FEDERALIST - Joe Popularis - FEB 28, 2022 -
US. inflation is nearing levels not seen since the 1970s and early 1980s, at 7.5 percent year-over-year as of January, the largest rise in four decades. The issue is a major concern for voters, and Democrats face historic midterm losses. Inflation has even killed the Biden agenda thus far—Sen. Joe Manchin’s primary reason for nixing “Build Back Better,” a mess of largely corporatist priorities from a disjointed Democratic base, was his fear that it would push up prices further.
The left, however, is making a ridiculous effort to say that inflation is not a problem or even good for working-class Americans. CNN has run articles to this effect. New York Times writer Sarah Jeong says inflation concerns are “driven by rich people … because their parasitic assets aren’t doing as well as they’d like and they’re scared” that government stimulus—supposedly directed at the bottom half of earners—is why.
The idea that somehow government spending benefits the poor or working-class more than the rich is ridiculous. Just look at the stimulus since 2020, and its effects.
Stimulus Directly Caused the Current Inflation
Inflation took off in the second quarter of 2021, after a new Democratic Congress poured a $2 trillion in federal overspending they called “stimulus” on an economy that had already received a combined $2.8 trillion in stimulus in 2020. Republicans can blame Democrats, with some justification, but the seeds of higher inflation were already sown.
History should judge the federal government’s pandemic response harshly. A several-week lockdown may have been acceptable without hindsight, given concerns about mass deaths and an overwhelmed medical system. But as soon as the virus was known to be much less deadly than feared, and that there was no great strain on the medical system, the federal government should have punished states needlessly maintaining activity restrictions.
The original stimulus bill, passed by congressional Republicans and signed by President Trump, was ill-conceived. The payroll protection program (PPP) ended up lining the pockets of business owners with taxpayer dollars far more than protecting payrolls. Large chunks of it were stolen by fraudsters, while many employers then had incentives to not seek or call for a return to normality.
Meanwhile, enhanced unemployment paid unemployed persons $600 extra per week, on top of regular unemployment. This means a job paying roughly less than $60,000 could not compete with the benefits. Even when these benefits were extended in early 2021 at a reduced amount—$300 extra per week—millions avoided the workforce.
Between PPP and extended unemployment, billions were stolen, some by criminal gangs and especially by foreigners. One group of experts alleges that up to half of all U.S.
unemployment benefits, $400 billion, was stolen by mostly foreign criminals.
By mid-2021, a huge amount of money was chasing a fixed amount of goods and services—with the services shortage exacerbated by enhanced unemployment and school closures hampering the return to work, and the goods shortage caused by America’s overreliance on production overseas, especially China. Computer chip shortages are of particular concern, affecting everything from electronics to auto production. Here, note the criminality of U.S. policymakers allowing America’s chip supply to be produced in Taiwan.
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