Republicans keep misattributing inflation to President Joe Biden and Congressional Democrats for working to continue the government spending Republicans supported last year to save the economy from complete pandemic disaster and to invest in projects and tax policy to undo the neglect and wealth hoarding wrought by Republicans under the previous administration. We thus must keep correcting them.
As usual, Rapid City capitalist John Tsitrian is on the job, explaining basic economics to our willfully blind Senator John Thune:
All of us are aware that prices have been increasing noticeably in the last year, with inflation growing at something like a five percent annual rate. Is government spending to blame? No. This is about a spike in consumer demand coming after the horrendous drop in the economy during the pandemic-created recession, with that demand surge coming just at a time when we’re seeing the worst supply chain bottleneck ever. Federal Reserve Board Chairman Jerome Powell states it plainly: “Bottleneck effects have been larger and longer-lasting than anticipated. While these supply effects are prominent for now, they will abate. And as they do, inflation is expected to drop back toward our longer-run goal.”
As to Biden’s stimulus program creating the inflationary surge that Thune predicts, 15 Nobel Prize winning economists disagree. In fact, they argue precisely the opposite will occur, saying that inflationary pressures will actually ease if Biden’s plans go into effect. A few weeks ago they wrote an open letter that concluded, “because this agenda invests in long-term economic capacity and will enhance the ability of more Americans to participate productively in the economy, it will ease longer-term inflationary pressure” [John Tsitrian, “Thune Says Biden’s Plans Will Cause Inflation. History and 15 Nobel Prize Winning Economists Say Thune Is Full of It,” South Dakota Standard, 2021.11.01].
Reuters notes that the global inflationary uptick can’t have come from the policies of one nation’s nine-month Presidency. Reuters points instead to rebounding global energy demand and huge household savings stoked by last year’s much bigger coronavirus relief finally unleashed in this year’s more open markets. Reuters also reminds us that the supply-chain snarls that are driving prices up come from accelerated demand (that’s what I said!) and long-standing just-in-time inventory practices:
Republicans also want to blame Biden for the supply-chain shortage that has contributed to inflation.
But experts say the COVID-19 pandemic has disrupted every aspect of the global supply chain, from manufacturing and transportation to logistics, and not only in the United States but worldwide, at a time when the pandemic has also sparked a buying spree. The problem is partly due to a decades-old business strategy that aims to keep inventories lean [David Morgan, “Explainer: Republicans Blame Biden for Inflation, But Are They Right?” Reuters, 2021.11.01].
President Biden is pushing a variety of government actions to ease supply-chain bottlenecks, including stockpiling more resources to reduce the chances of just-in-time disruptions. Just-in-time manufacturing still makes some sense—manufacturers cannot afford to maintain enormous inventories—but factories keeping lean inventories depend on robust infrastructure to deliver the parts and raw materials they need when they need them, and President Biden has been advocating (and South Dakota Republicans have been resisting) infrastructure upgrades all year.
Blaming President Biden for inflation defies the facts: manufacturing has been roiled for a year and a half by the shocks of a pandemic that overturned the assumptions of steady availability of parts, materials, and labor, and the current President is working harder to enact real policy solutions to the resulting supply-chain problems than the previous administration ever could. Today’s Republicans are obviously more interested in laying false blame for problems for more political gain than in solving problems for the common good.