- Americans cite government spending as a major cause of inflation.
- But many welcome the inflation easing measures that over 15 countries have taken.
- The federal states’ economic stimulus measures are smaller and more targeted than the federal government’s relief measures.
Americans consider inflation to be the biggest problem facing the country today, and most think government spending is a big reason. But many are still open to getting another stimulus check from their state to help them cope with higher prices.
In an April poll by right-wing advocacy group Americans for Prosperity of 1,500 respondents, 73% of respondents said government spending was a “main cause” of higher prices — 51% of 1,000 respondents told Navigator the same thing in July, with an additional 29% saying so a “minor cause”. A Pollfish poll of 500 American adults last month found that 44% of Americans believed government spending was the “biggest cause” of inflation, followed by corporate greed and supply chain issues at 32% and 30%, respectively .23%.
But with over 15 state governments, including California and Florida, taking steps to give residents some relief, there’s reason to believe many Americans are hoping their states will do the same. The same September Pollfish poll – which showed a 5% margin of error – found that 75% of respondents “support the idea of stimulus checks as the government’s response to inflation”. A May poll of more than 1,700 Californians by the Public Policy Institute of California found that 62% supported the state’s $18 billion inflation support plan, the majority of which will be used for relief payments.
There was also significant support for quasi-stimulus measures such as student debt relief, despite fears by some that this could be inflationary. A September YouGov poll found that 48% of American adults supported President Biden’s student debt relief plan, versus 34% who opposed it — 18% were unsure.
A “collective irrationality” between the desire for “free money” and the fear of inflation
Beginning Oct. 7, up to 23 million Californians making less than $250,000 a year will receive a stimulus check of up to $1,050. Florida is sending one-off payments of $450 per child to 60,000 households, and Delaware and South Carolina plan to give many residents $300 and $800 in tax breaks, respectively.
If state governments believed that this additional relief would be accompanied by significant backlash from their residents, they would probably be much more reluctant to hand it out — especially with the midterm elections approaching this fall. This suggests that residents are at least not strongly opposed to the kind of stimulus many have blamed for inflation.
“There’s a real political reason for doing this,” Mark Brewer, a political science professor at the University of Maine, said in March of Maine’s inflation support proposal. “But at the same time, it’s also clear that this is an election year, and in an election year there are few things as popular as giving voters what voters see as free money from the state.”
However, some of these apparent contradictions can be explained by the fact that states’ stimulus measures during the peak of the pandemic are smaller and more targeted than federal controls – and therefore should have a much more modest impact on inflation.
A spokesman for California Gov. Gavin Newsom told Insider they believe the state’s inflation controls would have a minimal impact on California’s inflation because they account for just 0.3% of the state’s $3.4 trillion economy. In addition, the government expects households to use some of the income to pay down debt or top up savings rather than just buying goods.
Much of the funding also comes from substantial budget surpluses, which have prompted some states to authorize these payments.
In California, the government is pushing against a state cap on government spending, which is one of the reasons the state sends money to taxpayers. In Indiana, the government is required by law to return a portion of its surplus to residents.
But it could also be that some Americans don’t see these beliefs as entirely contradictory. Californians, for example, could ultimately benefit from the extra government dollars in their pockets — even if it contributes to nationwide price pressures that hurt Americans without government controls helping them keep up.
“These inflation support payments will export inflation to the rest of the United States — some are also emerging in California, Harvard economics professor and adviser to former President Barack Obama Jason Furman wrote Sept on Twitter. “Californians, online, will come out on top.”
But Furman added that if other states made inflation support payments, Californians would “lag behind”: “All of this has an unfortunate individual state rationality, and that adds up to collective irrationality.”