Why the hell are prices so high?
Let’s face it, this is the reason so many U.S. voters are checking out Republican candidates these days. If the conservative party does well in the 2022 election, it chiefly has high inflation to thank for its good fortune.
The thinking is simple: U.S. President Joe Biden is a Democrat. Both chambers of the U.S. Congress are in Democratic hands. Inflation seems to have begun a rise in late 2021 to levels not experienced in decades.
But let’s not blame high prices on Grandma’s Medicare or our still-functioning public school system. Prices aren’t sky-rocketing because kids are learning to read and Grandma stubbornly insists on staying alive.
A CNBC article published in July points out what really going on with inflation here. The news source interviewed Michael Gapen, who heads the U.S. economics research team at Bank of America.
Gapen told CNBC that the high inflation rate can be attributed to three chief causes — “increases in household demand and supply-chain shortages due to the [COVID-19] pandemic, the war in Ukraine and the presence of a strong labor market.”
Left-wing U.S. lawmakers did not create the pandemic. And they did not ignore the pandemic or deny its effects on public health — conservatives did that.
Readers may remember that conservatives in Congress, led by then-U.S. President Donald Trump, refused to take COVID-19 seriously … until Americans began dropping dead in droves from the disease. Such mistakes ensured that restrictions had to be more severe and last much longer than they would have if they had been implemented sooner.
It’s the same with any disease: If you treat the problem in its first stages and immediately employ steps that keep you from catching or spreading the disease, those necessary actions are relatively easy. The longer you wait to put them into practice, the harder will be your return to health and normal life.
That continual refusal to take seriously such a deadly virus adversely impacted the U.S. economy as much as any other disastrous economic decision.
And let’s face it — public health decisions are economic decisions, as Mr. Gapen’s expert analysis makes clear.
“At the start of the pandemic, consumers began spending less because of lockdowns, and in turn, started saving more,” stated CNBC’s article discussing Gapen’s findings. “Then, when Covid-19 restrictions eased, people started spending more again,” added the news source.
“Companies, however, couldn’t keep up with this [sudden] increased consumer demand,” continued CNBC’s statement on Gapen’s analysis, adding that many companies “had reduced production because of the pandemic and experienced shipping delays as well as shortages in labor and key inputs.”
“The result of all these things? Higher prices for most goods and services,” stated CNBC.
And let’s remember, some of our greatest price hikes have been found “in gasoline, shelter, and food” pointed out CNBC in July — which the news source adds is a big matter, since “shelter, food, and energy are also the major categories that make up the Consumer Price Index, accounting for nearly 54% of the entire index.”
The Consumer Price Index is a measurement of the overall change found in consumer prices over a period of time for many top goods and services.
“Just as there are many causes of broad-based inflation,” continues CNBC’s statement on Gapen’s analysis, “there are many factors that have given way to higher energy prices as well.”
“Perhaps most notably is Russia’s invasion of Ukraine and Western countries’ resulting sanctions which put severe limits on the import of Russian oil,” the CNBC statement declares flatly.
“Both events played a significant role in rising energy prices and supply-chain issues, as has fluctuating consumer demand for gasoline.”
About the only major concern which voters may really pin on President Biden and the Democratic-controlled Congress is the strong labor market. We doubt any political group should lose votes because jobs are plentiful on their watch.
There are the remaining long-term economic effects of the COVID-19 fueled recession in the U.S., which began in 2020 when Donald Trump was president. But in fact it was left-wing ideas that pulled the United States economy out of that recession, points out a very informative report on the matter from the Center on Budget and Policy Priorities (CBPP), a major political policy think-tank.
“When COVID-19 began to spread rapidly across the United States in March 2020, the economy quickly shed more than 20 million jobs,” stated the CBPP study.
“Amid intense fear and hardship, federal policymakers responded,” continued the report, “enacting five bills in 2020 that provided an estimated $3.3 trillion of relief and the American Rescue Plan in 2021, which added another $1.8 trillion.”
“This robust response helped make the COVID-19 recession the shortest on record,” revealed the CBPP study, “and helped fuel an economic recovery that brought the unemployment rate, which peaked at 14.8 percent in April 2020, down to below 4 percent.”
“Two critical components of the fiscal response were Economic Impact Payments (EIPs) and the expanded Child Tax Credit,” stated the report, “which quickly delivered much-needed income to families struggling to pay their bills.”
“With both the EIP and the Child Tax Credit,” the report pointed out, “policymakers built on prior policies but with innovative design improvements to expand eligibility and make access easier.”
Most of this legislation was passed throughout 2020, when the impact of the pandemic was at its height — yet the U.S. inflation rate in 2020 was a mere 1.23%, a decline of 0.58% from 2019, according to MacroTrends. Thus the investments did not have an influence on inflation for that period.
Careful readers also will note that these policies are overwhelmingly left-wing actions. Even the Child Tax Credit — which at first glance might be perceived by some as a right-wing notion — to a great extent aided in the recovery effort because lawmakers worked to “expand eligibility and make access easier,” which typically are left-wing actions.
And in case you’re wondering dear readers: During the entirety of the COVID-19 epidemic, Democrats have had firm control of at least one Chamber of Congress. Since Jan. 20th, 2021, Democrats have controlled both chambers.
In fact, let’s remember just how the final round of such necessary stimuli became law …
On Feb. 2nd, 2021, U.S. Senate Democrats opened debates on a process that would give them the ability to pass the American Rescue Plan without Republican support, since the G.O.P. was firmly against the economic legislation.
The U.S. House passed the bill with a thin 219-212 approval.
“Two Democrats, Kurt Schrader of Oregon and Jared Golden of Maine, voted with the Republicans in the 219-212 vote,” pointed out CBS News at the time, adding that “not one Republican voted for the bill.”
In the U.S. Senate, things were even tighter. Vice-President Kamala Harris cast the tie-breaking vote on the bill, providing Senate approval.
“The final vote was 50-49 with all Republicans voting against the measure and all members of the Senate Democratic caucus supporting it,” stated USA Today just after the bill’s passage. “Sen. Dan Sullivan, R-Alaska, was not present for the vote,” added the news source.
So the Economic Impact Payments (EIPs) and the expanded Child Tax Credit are the very things that kept most U.S. citizens afloat during the height of the COVID-19 Pandemic — they certainly are what pulled us out of the recession.
No one can be too surprised that the current Republican Party led by Donald Trump — a man who’s filed for bankruptcy six times in private life — can’t seem to figure out how a modern economy works.
It’s hard for them to correctly see much of anything these days. Is that group really the one voters think can pull them out of the current economic mess?
