In order to protect the American people from inflationary spending, U.S. Senators Tim Scott (R-S.C.) and John Thune (R-S.D.) recently introduced the Inflation Prevention Act (IPA). This bill would make it out of order to consider new legislation estimated to increase inflation if year-over-year inflation rate is above 4.5 percent. This restriction could only be waived with a three-fifths majority of lawmakers.
This legislation is four pages long, outlining the policy clearly:
SEC. 2. POINT OF ORDER AGAINST SPENDING THAT WILL INCREASE INFLATION UNTIL INFLATION IS NOT GREATER THAN 4.5 PERCENT.
(a) POINT OF ORDER.—
(1) IN GENERAL.—In the Senate, it shall not be in order to consider a provision in a bill, joint resolution, motion, amendment, amendment between the Houses, or conference report that provides new budget authority and that is estimated to result in an increase in the Consumer Price Index for All Urban Consumers, as published by the Bureau of Labor Statistics, unless the annualized rate of increase in the Consumer Price Index for All Urban Consumers most recently published by the Bureau of Labor Statistics is not more than 4.5 percent.
Cosponsors of this legislation include Senators Chuck Grassley (R-Iowa), Rick Scott (R-Fla.), Joni Ernst (R-Iowa), James Lankford (R-Okla.), Todd Young (R-Ind.), Marco Rubio (R-Fla.), Bill Hagerty (R-Tenn.), John Hoeven (R-N.D.), and Steve Daines (R-Mont.).
This bill is especially necessary now as inflation surges and Democrats repeatedly attempt to pass trillions in new government spending.
The harm of rampant inflation is blatantly obvious to most Americans outside of Washington. The average U.S. household spent $3,500 more in 2021 due to inflation, according to a Penn Wharton University of Pennsylvania Budget Model analysis.
Low-income households were disproportionately harmed, as those households spent about 7 percent more while higher-income households spent about 6 percent more. For example, between November 2020 and November 2021, the bottom 20 percent spent $309 more on food, $761 more on energy, $476 more on shelter, $390 on other commodities, and $224 on other services.
Most recently, the consumer price index, or “inflation,” increased by 7 percent on an annualized basis, a 40-year high. In January 2021, before Joe Biden took over the presidency, annual inflation was at a stable 1.4 percent.
Not only is inflation harming consumers by increasing household costs, but it could also have long lasting economic damage. Inflation is eroding purchasing power, especially given that wages are decreasing. Real average hourly earnings dropped by 2.4 percent on an annualized basis.
According to a new Gallup poll, 71 percent of low-income households have reported experiencing financial hardship due to rising prices. Of the 71 percent, 28 percent of low-income households say they have experienced “severe hardship” due to rising prices, and 42 percent say they have experienced “moderate hardship.”
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.”
Even so, President Biden and Congressional Democrats still seek to pass trillions in new spending, with the full awareness that this kind of spending would be inflationary.
If lawmakers refuse to take inflation seriously in desperate times, there must be guardrails in place to protect the American people. Lawmakers should support Sens. Scott and Thune’s Inflation Prevention Act (IPA).