12.01.21

As Fed Chair Admits Inflation Is Not Transitory, Biden Must Back Off His Bill That Would Accelerate It

As Americans Continue To Get Hit Hard With Inflation, The Federal Reserve Chairman Is Admitting That The Price Spikes Are Not Transitory, Meaning It’s Long Past Time For The Biden White House To Drop Their Reckless Taxing And Spending Plans, Which Will Only Fuel Further Inflation

SENATE REPUBLICAN LEADER MITCH McCONNELL (R-KY): “A famous economist once said that inflation is the only form of tax that can be levied without any legislation. But what’s remarkable about 2021 is that Democrats did directly legislate a big chunk of this inflation into existence! It is unusually traceable to deliberate policy decisions they have made…. Washington Democrats had already decided months ago they’d try to use the temporary pandemic as a Trojan horse for permanent socialism. Remember last spring, when one of the seniormost House Democrats called it, ‘a tremendous opportunity to restructure things to fit our vision.’ Or earlier this fall, when President Biden, himself, said the pandemic, ‘does present us with an opportunity.’ For Democrats, this go-around, it has never been about what families need. It has only been about what activists want. So we got the first massive spending bill in the springtime. And now, a majority of Americans ‘worry they won’t be able to afford what they need during the holidays due to inflation.’... But Democrats aren’t offering the country any contrition, any apology, or any course-correction. Amazingly enough, they want to come back around for an even bigger bite at the apple. They want to try to inflate their way out of inflation. Our colleagues have spent months huddled behind closed doors, neglecting the most basic governing duties, writing another reckless taxing and spending spree that even the most conservative estimates say would add about $800 billion to deficits over the next five years alone. They want to take the inflationary fire they helped start and pour jet fuel on it…. Inflation is hurting the American people and Democrats want to print, borrow, and spend trillions more. The most out-of-touch agenda you could possibly imagine.” (Sen. McConnell, Remarks, 11/30/2021)

  • LEADER McCONNELL: “You might have noticed that the chairman of the Fed said the use of the word transitory in front of inflation should be discontinued. Meaning, obviously, inflation is not transitory, it’s going forward. The principal driver of that inflation is the American rescue package passed on a totally partisan basis earlier this year. The only way to keep inflation from getting worse would be to kill the reckless tax and spending spree, and we hope that’s the ultimate fate for that ill-advised proposal.” (Sen. McConnell, Press Conference, 11/30/2021)

SEN. JOHN BARRASSO (R-WY): “I view this as a back-breaking bill for the country with the kind of expenses, the spending, the adding to the debt, the inflation, the taxes that are going to hit the American people. And, you know, for Joe Biden to say we have to spend even more money on top of inflation, I mean, to me, this is Alice in Wonderland logic. He’s the Mad Hatter out here. He continues to try to mislead the American people, first saying the cost will be zero, zero, zero, when the budget analysts have said it’s going to be hundreds of billions of dollars added to the debt. People’s taxes are going to go up. [H]e said, oh, no, only if you make over $400,000 a year. That’s not what the tax experts are telling us…. So, on all of these issues and inflation across the board people saying, we’re looking at persistent inflation. We cannot ignore inflation. That is the thing that’s going to hurt our economy the most.” (Fox News Sunday, 11/28/2021)

SEN. JONI ERNST (R-IA): “Iowans really want solutions for these issues. And what I can tell you is that it is not a solution for inflation when you spend trillions of dollars more.” (Sen. Ernst, Press Conference, 11/30/2021)

SEN. JOE MANCHIN (D-WV): “Inflation is now more than transitory. We found out it’s not transitory. And on top of that, you have this new strain of Covid they’re very much concerned about. No one knows what effect it’s going to have. And you have inflation on top. So all these things give you cause to pause…. I’m really concerned about the high gas prices…. I heard an awful lot over the Thanksgiving break that prices were high and people are very much upset about that.” (“Manchin Holds Off On Committing To Moving Biden Agenda This Year,” Bloomberg News, 11/29/2021)

 

The Fed Chair Has Admitted What Most Ordinary Americans Have Known For Months: The Inflation Consumers Are Struggling With Is Not ‘Transitory’

FEDERAL RESERVE CHAIRMAN JEROME POWELL: “I do think that the threat of persistently higher inflation has grown. ... But clearly, the risk of more persistent inflation has risen.” (U.S. Senate Banking, Housing, and Urban Affairs Committee Hearing, 11/30/2021)

  • POWELL: “So, I think the word transitory has different meanings to different people. To many, it carries a time -- a sense of short lived. We tend to use [the word transitory] to mean that it won’t leave a permanent mark in the form of higher inflation. I think it’s probably a good time to retire that word and try to explain more clearly what we mean.” (U.S. Senate Banking, Housing, and Urban Affairs Committee Hearing, 11/30/2021)
  • SEN. MIKE CRAPO (R-ID), Senate Finance Committee Ranking Member: “I noted in your opening statement that you indicated that inflation pressures will linger well into next year. You do stand by that?”
    POWELL: “Yes, I think we can now see certainly through the middle of next year, that’s an expectation. You know, we’re forecasting is not a perfect art as you may have noticed so, but yes, right into the middle of next year and, you know, that’s our expectation. But of course, what’s happened is that date has been pushed out repeatedly as supply side problems have not really improved.” (U.S. Senate Banking, Housing, and Urban Affairs Committee Hearing, 11/30/2021)

Chairman Powell: ‘If You Think About Families That Are Living Paycheck To Paycheck, They’re Feeling High Gas Prices, Soon Enough, Heating, Oil Prices, Food Prices’

POWELL: “I think that if you think about families that are living paycheck to paycheck, they’re feeling high gas prices, soon enough, heating, oil prices, food prices. They’re certainly feeling that. And, you know, this is our job. Our role is to make sure that this higher inflation does not become entrenched.” (U.S. Senate Banking, Housing, and Urban Affairs Committee Hearing, 11/30/2021)

 

The OECD Is Also Forecasting Higher Than Anticipated Inflation In The U.S. Next Year

“The pickup in inflation rates around the world will be longer-lasting and sharper than previously anticipated, with a growing risk that households and businesses grow accustomed to faster price rises, the Organization for Economic Cooperation and Development said in its latest forecasts for the global economy. … Releasing the last of its four reports on the economic outlook this year, the OECD said it now expects consumer-price inflation in the U.S. to average 4.4% in 2022, up from 3.1% when it last released forecasts in September.” (“Global Inflation Set to Be Higher for Longer, Says OECD,” The Wall Street Journal, 12/01/2021)

OECD CHIEF ECONOMIST LAURENCE BOONE: “People have been saying that higher inflation is transitory for 10 months or so. I would completely understand if some people started to become skeptical about that.” (“Global Inflation Set to Be Higher for Longer, Says OECD,” The Wall Street Journal, 12/01/2021)

 

The White House Said For Months That They ‘Rely’ On The Federal Reserve’s And The OECD’s Views Of Inflation, So When Will They Stop Pushing Policies That Will Only Make Inflation Worse?

REPORTER: “White House officials have previously said they think inflation is transitory. Is that still the view of the White House right now?”
WHITE HOUSE PRESS SECRETARY JEN PSAKI: “That’s the view of the Federal Reserve and outside economic experts, most importantly.” (White House Press Briefing, 11/23/2021)

REPORTER: “Is there any concern in the White House that the embrace of the Fed’s use of transitory at best makes your job more complicated, month over month, to explain what’s going on with inflation; at worst could be misleading for folks who don’t necessarily get that ‘transitory’ may mean a year or longer?”
PSAKI: “Well, the way we view it is that it’s important to preserve the independence of the Federal Reserve, and that can give the American people and the markets confidence in what their projections and their predictions are. And that’s long been — long been how these issues have been approached throughout history. And we think that’s important to continue that trend.” (White House Press Briefing, 10/13/2021)

REPORTER: “Does the White House still believe that inflation is a transitory problem?”
PSAKI: Well, I know the Federal Reserve comes — I understand he’s a representative of the Federal Reserve, though… and it is under their purview, but they do have regular updates on predictions of inflation and what it looks like in the coming year. I don’t think they have revised that — unless you tell me otherwise — officially.” (White House Press Briefing, 10/12/2021)

PSAKI: “As you well know, inflation is the purview of the Federal Reserve. They make projections. We rely on those projections. Those continue to say that it’s transitory and will come down next year.” (White House Press Briefing, 10/08/2021)

PSAKI: “Well, the Federal Reserve and the OECD and others have also said inflation is expected to come down. They continue to say it’s transitory.” (White House Press Briefing, 10/04/2021)

 

REMINDER: Many Economists Project Democrats’ Reckless Taxing-And-Spending Spree Will Increase Inflation Next Year And Warn That ‘The Risk Of Fueling More Inflation When It Has Reached Record Highs Outweighs The Potential Benefits Of Passing A Big Spending Bill’

“[M]any researchers, including a forecasting firm that Mr. Biden often cites to support the economic benefits of his proposals, say the bill is structured in a way that could add to inflation next year, before prices have had time to cool off. Some economists and lawmakers worry about the timing, arguing that the risk of fueling more inflation when it has reached record highs outweighs the potential benefits of passing a big spending bill that could help to keep prices in check while addressing other social goals. Prices have picked up by 6.2 percent over the past year, the fastest pace in 31 years and far above the Federal Reserve’s inflation target.” (“The White House Says Its Plans Will Slow Inflation. The Big Question Is: When?,” The New York Times, 11/11/2021)

  • “Many economists say it could create a short-term stimulus because the plan is structured to raise money gradually by taxing wealthier Americans, who are less likely to spend each additional dollar they have, and redistribute it quickly to people who earn less and are more likely to spend newfound cash. Because of the difference in timing between when the government spends money and when it starts to bring in more revenue, the bill is expected to pump money into the economy in its early years.” (“The White House Says Its Plans Will Slow Inflation. The Big Question Is: When?,” The New York Times, 11/11/2021)
  • “The roughly $2 trillion tax and spending bill being championed by President Joe Biden will act to push up inflation next year if passed by Congress. That’s according to three senior economists -- Mark Zandi at Moody’s Analytics, Douglas Holtz-Eakin of the American Action Forum and Harvard University professor Doug Elmendorf -- who appeared on a virtual panel sponsored by the National Association for Business Economics on Wednesday.” (“Top Economists See Biden’s Spending Plan Adding to Inflation,” Bloomberg, 11/17/2021)

STEVEN RATTNER, Former Obama Administration Counselor to the Treasury Secretary: “[I]nflation worries are top of voters’ minds. So the [Biden] administration should come clean with voters about the impact of its spending plans on inflation. Build Back Better can be deemed “paid for” only if one embraces budget gimmicks, like assuming that some of the most important initiatives will be allowed to expire in just a few years. The result: a package that front-loads spending while tax revenues arrive only over a decade. The Committee for a Responsible Federal Budget estimates that the plan would likely add $800 billion or more to the deficit over the next five years, exacerbating inflationary pressures.” (Steven Rattner, Op-Ed, “I Warned the Democrats About Inflation,” The New York Times, 11/16/2021)

Even an analysis by Mark Zandi, chief economist of Moody’s Analytics, and Democrats’ favorite economist, found the implementation of Democrats’ multitrillion dollar taxing and spending bill would increase inflation annual growth from 3.8 to 4.0 in 2022. (“Macroeconomic Consequences of the Infrastructure Investment and Jobs Act & Build Back Better Framework,” Moody’s Analytics, 11/04/2021)

JASON FURMAN, Former Obama Administration Council of Economic Advisors Chairman and Harvard Economist: “It’s more likely a small positive for inflation in 2022…” (“The White House Says Its Plans Will Slow Inflation. The Big Question Is: When?,” The New York Times, 11/11/2021)

DOUG ELMENDORF, Former Director of the Congressional Budget Office and Harvard Economist: “That will tend to push up GDP and employment and inflation -- which is not the policy impulse we need right now.” (“Top Economists See Biden’s Spending Plan Adding to Inflation,” Bloomberg, 11/17/2021)

 

‘Not Since Americans Came Home From World War II Has Inflation Percolated Through The U.S. Economy Like It Is Now, And It Could Continue To Do So For Months To Come’

“Not since Americans came home from World War II has inflation percolated through the U.S. economy like it is now, and it could continue to do so for months to come.” (“Not Since Americans Came Home From World War II Has Inflation Run Through The Economy Like It Is Now,” CNBC, 11/24/2021)

NEW YORK: “Frank Barbera, president of Barbera Homes in the Albany, N.Y. area, said this period of rising prices is unique in the 30-year history of his family business. ‘The costs definitely went up faster than the price. Our average home is up over $60,000 and that’s just hard costs passed along. The average two-by-four for example over the course of the past year from July, 2020 to roughly the same period in 2021, went from $4.30 to $11.36,’ he said. The two-by-four is now about 50% lower but lumber is still volatile. Barbera said other building materials have also gone higher, including a 20% increase in insulation this year.” (“Not Since Americans Came Home From World War II Has Inflation Run Through The Economy Like It Is Now,” CNBC, 11/24/2021)

CALIFORNIA: “[I]nflation fears are washing over this politically divided city north of Los Angeles [Santa Clarita] … as they watch prices go up at gas stations, grocery stores, restaurants and wholesalers, the painful sting of inflation is seeping deep into their mindsets …” (“In One California City, Rising Prices Overshadow Economy’s Strength, Spelling Trouble For Democrats,” The Washington Post, 11/30/2021)

ARKANSAS: “Two weeks ago, Mendy Hughes used $4 from her thinning bank account to pick up a family dinner from McDonald’s on her day off as a cashier at Walmart, the country’s largest grocery store chain…. ‘Food — it’s stressful,’ said Hughes, 47, of Malvern, Arkansas. ‘I think all day: ‘What am I going to buy when I get off [work] that I can afford? What am I going to get?’ It’s just hard.’ As prices have skyrocketed because of pandemic-driven price inflation, Hughes has found that her grocery budget has essentially dropped to zero, leaving fast food as the only affordable option to survive. The cost per pound of ground beef, for example, rose by about 19 percent nationwide from January to October, according to the Bureau of Labor Statistics, or BLS…. ‘It’s worse now because things have gone up so much,’ Hughes said. ‘I can’t even afford to buy a cart of groceries.’” (“‘I Can’t Even Afford To Buy A Cart Of Groceries’: Spiraling Inflation Leaves Some Grocery Workers Struggling,” NBC News, 11/30/2021)

 

Now Families Are Bracing For Holiday Sticker Shock

“Whether it’s a towering noble fir, a medium-sized Colorado blue spruce or even a fake plastic evergreen, expect to pay more for your Christmas tree this season. As they have with other goods, inflation and supply chain shortages are jacking up tree prices, according to the American Christmas Tree Association. And the group’s executive director, Jami Warner, has a word of advice for shoppers: ‘Get out there and buy one today.’ Prices are up 10% to 20% for live trees and 10% to 30% for artificial ones over last year, according to the association, which represents U.S. Christmas tree producers and retailers.” (“Inflation, Supply Shortages Drive Up Christmas Tree Prices,” The Washington Times, 11/30/2021)

“A mix of inflation, strong demand and diminished product availability are leading to some of the least-generous Black Friday and Cyber Week deals on record. Retailers appear to have ‘the lowest level of clearance goods in five years or more,’ observed Oliver Chen, an analyst with Cowen & Co…. Rob Garf, vice president of retail at Salesforce.com Inc., said the start of this year’s holiday season has ‘some of the lowest average discount rates that we’ve seen in recent history.’” (“Black Friday Discounts Less Generous Amid Inflation, High Demand,” Bloomberg News, 11/26/2021)

 

‘Americans Have Turned Decidedly Gloomy About Their Financial Outlook, And Inflation Is The Main Cause Of The Anxiety’

“Consumer confidence fell in November to the lowest level in nine months because of worries about high inflation … The index of consumer confidence dropped to 109.5 from 111.6 in October, the privately run Conference Board said Tuesday. It was the fourth decline in the past five months.” (“U.S. Consumer Confidence Sinks To 9-Month Low On Inflation And Covid Worries,” MarketWatch, 11/30/2021)

“The decline in the Conference Board confidence index followed an even bigger drop reported last week in the University of Michigan’s gauge of consumer sentiment, which fell in November to a decade-low of 7.4, compared to a final October reading of 71.7.” (“U.S. Consumer Confidence Falls In November To Nine-Month Low,” The Associated Press, 11/30/2021)

  • “Americans have turned decidedly gloomy about their financial outlook, and inflation is the main cause of the anxiety, according to a survey released [November 12th]. The University of Michigan reported that its survey of consumer sentiment fell to its lowest level in a decade in early November. It attributed the decline to ‘the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation.’ … In the Michigan survey, ‘rising prices for homes, vehicles and durables were reported more frequently than any other time in more than half a century.’ But inflation is hardly limited to big-ticket purchases — food items like meat are getting more expensive, driving up the cost of preparing Thanksgiving meals.” (“Inflation Is Driving A Sharp Downturn In U.S. Consumer Views About The Economy.,” The New York Times, 11/12/2021)

 

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SENATE REPUBLICAN COMMUNICATIONS CENTER

Related Issues: Inflation, Middle Class, Small Business, Economy