The consumer price index increased by 6.2 percent on an annualized basis before seasonal adjustment in October, a 31 year high, according to the Bureau of Labor Statistics (BLS). In October alone, inflation increased by 0.9 percent.
In January 2021, before Joe Biden took over the presidency, annual inflation was at a stable 1.4 percent. Inflation has remained consistently high since Biden took office. While inflation has already hit American families hard, Democrats are pushing policies which would make this problem even worse.
Since July of this year, the Biden administration has been insisting this problem would go away. Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen described this inflation as “transitory.” Evidently, those claims have not held up.
Not only does inflation harm consumers by increasing household costs, but it can also have long lasting economic damage. Inflation erodes purchasing power, especially when wages do not keep up.
The erosion of purchasing power is especially concerning given that wages are decreasing. Real average hourly earnings for all employees decreased 0.5 percent from September to October, seasonally adjusted. Real average weekly earnings decreased 0.9 percent over the month and hours worked in the average workweek decreased by 0.3 percent. In the past year, since October 2020, real average hourly earnings decreased 1.2 percent, seasonally adjusted.
People are working less and earning less while inflation surges, meaning that purchasing power is being eroded.
According to BLS, the cost of many goods and services have increased significantly over the past year:
- Gasoline has increased 49.6% in the past 12 months, 6.1% in October alone.
- Used cars and trucks have increased 26.4% in the past 12 months.
- Meats, poultry, and eggs have increased 11.9% in the past 12 months.
- Beef has increased 20.1% in the past 12 months.
- Bacon has increased 20.2% in the past 12 months.
- Fresh fish and seafood have increased 11.0% in the past 12 months.
- Furniture and bedding have increased 12.0% in the past 12 months.
- Bread and crackers have increased 7.5% in the past 12 months.
- TVs have increased 10.4% in the past 12 months.
88 percent of voters say they are concerned about increased inflation, according to a recent Harvard CAPS and Harris poll. When asked what causes inflation, the top three answers were “Massive government spending,” “Significant amounts of money being injected in the economy by the Federal Reserve,” and “Uncontrollable government deficits.”
Still, Democrats are moving forward with two multi-trillion-dollar bills, the infrastructure bill and the reconciliation bill. The idea that this level of wasteful spending, packed with handouts to green energy, big labor, and welfare expansion, is appropriate during a time of such high inflation is careless and short-sighted.
The reconciliation bill also includes massive tax hikes on businesses, like the 15 percent global minimum tax, 15 percent domestic minimum tax, and a new surtax on adjusted gross income (AGI) that will hit pass through businesses. This, similarly, will be passed on to consumers through higher prices. According to a 2020 National Bureau of Economic Research paper, 31 percent of the corporate tax rate is borne by consumers through higher prices of goods and services. By an 81 to 19 margin, voters believe raising taxes on corporations will increase the cost of goods and services, according to a new poll conducted by HarrisX.
The Biden administration and congressional Democrats should focus on growing the economy and helping businesses and working families. Instead, at the expense of Americans’ financial security, they are pushing tax increases and wasteful spending.