President Joe Biden bragged on Wednesday that the inflation rate for July had fallen to being up only 2.9 percent over last year.
That was a slight decrease from a 3 percent annual rate posted in June, NBC News reported.
“Folks, inflation has fallen below 3%, its lowest level since March 2021. Prices are still too high, and we have more work to do to lower costs for hardworking Americans — but we’re making real progress, with wages rising faster than prices for 17 months in a row,” Biden posted on X.
Folks, inflation has fallen below 3%, its lowest level since March 2021.
Prices are still too high, and we have more work to do to lower costs for hardworking Americans – but we’re making real progress, with wages rising faster than prices for 17 months in a row.
— President Biden (@POTUS) August 14, 2024
Do you know what happened in March 2021?
The Democrats passed the $1.9 trillion American Rescue Plan stimulus bill, which economists warned would be inflationary, given the economy was already well on its way to recovery from the COVID shutdowns.
The inflation rate was 1.4 percent when Trump left office in January 2021. It averaged 1.9 percent during his entire four years in office, among the lowest of any president going back to Dwight Eisenhower in the 1950s.
The month after the ARP was passed and hundreds of billions of borrowed and printed dollars began to flow into the economy, inflation went up to 4.2 percent and continued until it spiked at 9.1 percent in June 2022.
Did Biden’s policies hurt the economy?
Yes: 100% (381 Votes)
No: 0% (1 Votes)
In a February 2021 opinion piece for The Washington Post, former Clinton Treasury Secretary Larry Summers had cautioned Democrats that passing the ARP would “set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.”
After it passed the following month, Summers called it “the least responsible macroeconomic policy we’ve had in the last 40 years.”
Further, former Obama administration Treasury Department official Steven Rattner in a November 2021 article for The New York Times identified the ARP as the “original sin” leading to high inflation.
He pointed to Summers’ warning, as well as “many others.”
“We worried that shoveling an unprecedented amount of spending into an economy already on the road to recovery would mean too much money chasing too few goods,” Rattner noted.
In 2022 Larry Kudlow — a former top economic adviser to presidents Ronald Reagan and Donald Trump — argued that is exactly what happened.
He explained that the successful policy that brought inflation down under Reagan in the 1980s was known as supply-side economics, and it was the opposite course Biden took.
“The tax hikes and the environmental restrictions [under Biden] are suppressing the supply side of the economy — not enough goods. And the spending increases the demand side of the economy — too much cash,” Kudlow said.
“If you are going to spend more than you can produce, well, prices have to go up. And the obvious solution is to spend less and produce more.”
Biden pushed for passage of the $1.75 trillion Build Back Better in the fall of 2021, which did clear the House. It only would have further inflamed the inflationary pressures caused by the ARP, but thankfully, Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona put the kibosh on it going through the upper chamber.
And then the Republicans took back the House in November 2022, which greatly restricted any Biden plans for new additional spending.
The president really can’t take any credit for the inflation rate dropping.
Further, the new floor for prices created by his policies is about 20 percent higher than when he took office.
There can be little doubt if Kamala Harris wins in November and if the Democrats take back control of Congress, they will return to spending trillions we don’t have and cause inflation to spike yet again.
