“Inflation may not feel like a direct tax, but it has an identical effect on your wallet” — Bruce WD Barren, PhD
Inflation, the hidden tax, disproportionately affects middle and lower-income Americans.
Price surges on everyday essentials such as gasoline and food are a looming concern for America’s families just as we enter into a post-pandemic era.
Some want to ignore the problem, but the Administration is privately expressing concerns about the devastating effects of long-term inflation. The latest trillion-dollar spending spree that has little to do with pandemic recovery is already contributing to inflation.
Here is how
The Biden administration recently gave a bit of simple advice to businesses that are unable to find workers: Offer them more money.
This recommendation, included in a White House memo about the state of the economy, gets at a fundamental tension in an economy that is returning to full health after the coronavirus pandemic.
Businesses are coping with spiking prices for goods such as steel, plywood, plastics and asphalt. Yet workers, after enduring a year of job losses, business closures and social distancing, are no longer interested in accepting low wages.
Administration officials say the White House is not trying to target a specific wage level for workers. But officials say higher wages are a goal of President Biden and a byproduct of his $1.9-T relief package and at least $3.5-T in additional spending being proposed for infrastructure and education.
Republicans say that Mr. Biden’s policies have already let loose a torrent of inflation that will hurt the economy. The outcome of these competing forces could decide the trajectory of the US economy as well as the factors weighing on voters in next year’s elections.
The wage pressures feeds into some anxiety about inflation. The Biden team sees the 0.8% month-over-month jump in consumer prices in April as temporary, a sign of consumer demand and the bottlenecks that naturally occur when an economy restarts.
The Senate’s Republican leader, Mitch McConnell (R-KY), says he has seen enough from the data so far. He has told voters that Biden’s decision to provide an additional $300 a week in unemployment benefits and the spending in his relief package are hurting the economy.
Mr. Biden’s relief package was geared toward helping to boost wages, with enhanced unemployment benefits, new monthly payments to parents, aid to restaurants and money for state and local governments to increase pay for essential workers.
“We’re in uncharted waters across the board,” said Tyler Goodspeed, an economic adviser for President Trump (45) who is now a fellow at the Hoover Institution. “We’ve never had a recession like this. We’ve never had a recovery like this.”
Part of the dispute between Mr. Biden and Republicans is a more fundamental one on how economies grow.
The administration has embraced a philosophy of investing in workers and providing them with benefits to make it easier for them to juggle life responsibilities and jobs.
The Republicans believe the Key is to minimize taxes and other barriers for employers so that lower operating costs lead them to invest and hire. The Republican National Committee issued an analysis Friday saying that the GOP’s principles for growth were superior because the average unemployment rate in states led by party officials is 4.6%, while Democratic states have an average unemployment rate of 6.3%.
Republicans see the $300-a-week federal unemployment payment as discouraging people from working because they can earn more money by staying unemployed. Their view is that this limits how many jobs can be created and how high wages will ultimately rise.
There are 23 states, all with Republican governors and GOP-controlled legislatures that plan to block the enhanced federal benefits in June, under the belief that the loss of income will cause people to take jobs.
Have a healthy week, Keep the Faith!