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Life is more expensive, which means everyone got a pay cut. And people are not happy about it.
Still high gas prices. High rent. The service costs. It all has a cumulative effect. And wage increases have not kept pace with inflation.
$1,000 a day at Disney. A more specific example, affecting people lucky enough to be considering a vacation, is the fact that a family of four is now spending more than $1,000 for a single day to park their car and head to Disneyland park. And that’s before food or souvenirs, according to CNN’s Natasha Chen.
turning tide. Worsening and persistent inflation, so far unchecked by rate hikes, remains a motivating force in American politics. And poor economic sentiment is tilting the political landscape toward Republicans, according to CNN polling director Jennifer Agiesta.
“The general political mood of the nation — the one that was shaping up for the Democrats after the fall of Roe v. Wade was slightly more favorable through the Supreme Court — may tip more in favor of Republicans,” Agiesta writes.
What Would Republicans Do? It’s worth thinking about how different the economy will be if Republicans lead the House or Senate.
Campaigning Republicans have attempted to capitalize on the ongoing sticker shock, blaming government spending primarily for inflation, an argument that mixes the energy spike caused by Russia’s war in Ukraine and the one caused by the ongoing Covid-19 supply chain problems caused by the pandemic.
Here’s a lengthy comment from Minority Leader Kevin McCarthy — who is set to become Speaker of the House next year if the Republicans win in November — as he appeared on Fox Tuesday:
“Every American needs to be asked this one question: “Could you afford to give up a month of your salary?” 95 percent of Americans will say no. But the Democrats took that away from you. Because a month of your wages is 8.3% of youright Full year – inflation is higher.
That’s why eggs are higher when you go to the store. Youhave got milk higher, your gas prices higher. It is democratic politics that brought about this. That’s why in the Commitment to America we will be energy independent, that lowers your prices. We’re going to take away this runaway spending. We make America more productive to curb inflation What the Democrats have brightshould us.”
Control of the House and/or Senate would certainly give Republicans an opportunity to curb further spending driven by the Biden administration. And for an idea of what they support, visit McCarthy’s Commitment to America website. It contains few details, but has three basic principles:
- “Contain wasteful government spending…”
- Enact “Pro-growth tax and deregulation policies…” (cut taxes and regulations)
- “Make America energy independent…” (specifically through oil and gas exploration)
As for the tax and regulation ideas, those are longer term ideas as they would require a Republican president.
A fourth pledge to end dependence on China and solve supply chain problems does not contain any concrete political ideas.
For his part, President Joe Biden has included independence from China and the build-up of U.S. manufacturing in part in his climate policy, announcing on Wednesday $2.8 billion in grants for U.S. battery supply chains under the authority of the bipartisan infrastructure bill passed last year .
McCarthy has suggested Republicans will go further and even use the debt ceiling, which is likely to be reached early next year, as leverage to force spending cuts. It’s a more overt endorsement of the tactic that would theoretically result in the US defaulting on its commitments.
For an assessment of what Republicans can and could achieve on inflation, I spoke to Douglas Holtz-Eakin, an economist and president of the American Action Forum, a nonprofit organization that doesn’t support political positions, but a center-right -point of view represents . He is a former director of the Congressional Budget Office and was economic policy adviser to Senator John McCain’s 2008 presidential campaign, but he is not affiliated with any party.
The first thing to know, Holtz-Eakin said, is that the primary job of controlling inflation belongs to the Federal Reserve, not Congress or the White House.
However, he believes — along with other economists like Democrat Larry Summers — that government spending, and particularly the American Rescue Plan Act, passed shortly after Biden took office without Republican help, has helped fuel inflation.
“Not making the same mistake is something Republicans can control, there’s no doubt about that,” he said. “They can block things if they control the house and that would be beneficial” to curb spending.
While Holtz-Eakin said it is incorrect to say that Biden and the Democrats caused inflation, they certainly helped accelerate it.
“It is very clear from the data that inflation will spike sharply in April 2021 immediately after the checks expire to implement a $2 trillion stimulus in our economy,” he said.
“We’ve seen this movie a million times,” Holtz-Eakin said, rattling off various ideas put forward to control deficit spending and government Fault.
“People talked about it forever on both sides and there wasn’t a single difference in the results,” he said. Debt has steadily increased. It is currently close to $31.4 trillion. At some point, he argued, someone would have to get serious about making fiscal policy more sustainable.
While America’s bailout plan would never have happened if Republicans had control of the House of Representatives, Holtz-Eakin also said something important about spending even when there are promises to cut spending.
“Broadly speaking, Congress tends to spend more and pay less taxes and run deficits,” he said. “Broadly speaking, it’s always more inflationary than not, directional.” But a GOP majority would certainly lower the level of spending, he said.
Predictions of a recession are mounting as the Federal Reserve tries to stem inflation by raising interest rates.
“Once inflation is there, all you have is bad decisions,” Holtz-Eakin said. “They need to raise interest rates and tighten financial conditions. That means fewer jobs and fewer retail sales, fewer housing starts and all sorts of bad decisions.”
These decisions are made regardless of who sits in the House of Representatives and Senate.
“Ownership of the economy usually falls to the president, who is blamed or credited for what happens under his oversight,” he said.
The President tried again on Wednesday to put even the slightest dent in gas prices by officially announcing another release from the Strategic Petroleum Reserve – 15 million barrels in December – although unlikely to have much of an impact.
The rest of the government is also trying to do its part in alleviating the inflationary burden:
That means none of these actions are likely Make Americans think differently about the economy ahead of Election Day.