President Joe Biden claimed that Democrats’ policies have not contributed to the nation experiencing its highest inflation rate in 40 years.
“I’m sick of this stuff. We have to talk about it because the American people think the reason for inflation is government spending more money. Simply not true!” Biden said at a House Democratic retreat in Philadelphia on Friday.
Biden: “I’m sick of this stuff … the American people think the reason for inflation is government spending more money. Simply not true!”
— RNC Research (@RNCResearch) March 11, 2022
House Speaker Nancy Pelosi argued the same day that their government spending plans reduce the debt over time, thus are not inflationary.
“When we’re having this discussion, it’s important to dispel some of those who say, well it’s the government spending. No, it isn’t. The government spending is doing the exact reverse, reducing the national debt. It is not inflationary.”
The GOAT of insider trading Nancy Pelosi on inflation.
Btw, ALL BS.
— The G.O.₳.T! (@TheJohnKimShow) March 12, 2022
Experts say there are multiple reasons for the inflation rate hitting 7.9 percent in February, the highest since 1982, but the unprecedented levels of government spending are definitely a contributing factor.
In a November piece for The New York Times, former Obama administration Treasury Department official Steven Rattner identified the Democrats’ $1.9 trillion American Rescue Plan, passed in March 2021, as the “original sin” leading to the current high inflation rate.
“[The Democrats] can’t say they weren’t warned — notably by Larry Summers, a former Treasury secretary and my former boss in the Obama administration, and less notably by many others, including me,” he wrote.
“We worried that shoveling an unprecedented amount of spending into an economy already on the road to recovery would mean too much money chasing too few goods,” Rattner explained.
The unemployment rate had fallen from a pandemic high of 14.7 percent in April 2020 to 6.2 percent in February 2021, the month before passage of the American Rescue Plan.
After the Gross Domestic Product fell approximately 31 percent in the second quarter of 2020, it rebounded nearly 34 percent during the third quarter and has remained in positive territory since.
Rattner claimed the problem with the American Rescue Plan was that it was creating even more of a demand while many workers still sat on the sidelines receiving government benefits.
“The bill — almost completely unfunded — sought to counter the effects of the Covid pandemic by focusing on demand-side stimulus rather than on investment. That has contributed materially to today’s inflation levels,” Rattner wrote.
“Now, between the government payments and underspending during the pandemic, American consumers are sitting on an estimated $2.3 trillion more in their bank accounts than projected by the prepandemic trend,” he further stated.
According to USA Facts, the bill included over $413.6 billion for stimulus checks, $350 billion for state and local governments, $242.4 billion for enhanced unemployment benefits, $170.5 billion for schools, $88.5 billion for enhanced child tax credits, $87.7 billion for transportation and $21.6 billion for rental and utility assistance payments.
Much of this money was “printed” by the Federal Reserve buying the debt, flowing even more money into the nation’s economy.
The amount of the national debt held by the Fed has increased from $3.5 trillion prior to the outbreak of the pandemic to $6.1 trillion by the end of last year.
Market watchers have also pointed to Biden’s energy policies as being inflationary.
In the early days of Biden’s presidency, he signed executive orders under the auspices of addressing climate change that included suspending oil and gas exploration leasing on federal lands and reinstating an Obama-era carbon dioxide emission federal fee to oil-drilling operations, which had been lowered significantly under former President Donald Trump.
Additionally, the Biden administration shut down oil exploration in the Arctic Wildlife Preserve, limited oil exploration in the National Petroleum Reserve in Alaska and canceled the Keystone XL pipeline from Canada.
Biden blames the historic gas prices and inflation on Vladimir Putin.
But gas prices were on the rise well before Russia’s invasion of Ukraine, and inflation has been surging for almost a year. pic.twitter.com/7hO1XnzGyk
— RNC Research (@RNCResearch) March 14, 2022
Biden made these moves, and now, the U.S. is producing 1 million fewer barrels a day than at its peak under Trump.