Memo to Dems: Were the stimulus checks worth it?
In economics, the oldest lesson in the book is that "there's no free lunch."
Everything out there gets paid for somehow, and now Americans are about to learn the hard way about the actual cost of those stimulus checks that Democrats championed over the past two years. They doled out three tranches of them in the name of countering the effects of their beloved COVID lockdowns. According to USA.gov: "The IRS issued three Economic Impact Payments during the coronavirus pandemic for people who were eligible: $1,200 in April 2020. $600 in December 2020/January 2021. $1,400 in March 2021."
Now the piper has entered the room because there most certainly is a relation between those wonderful checks...and what we see now.
According to CBS News:
Americans are paying more to put food on the table, fill up their cars and heat their homes — a lot more. The surging cost of such necessities will cost the typical household an extra $5,200 this year, economists say in a stark illustration of the ongoing toll of inflation.
Inflationary pressures are not expected to abate this year, leaving the average family with an additional $433 in monthly costs for the same goods and services, Bloomberg economists Andrew Husby and Anna Wong estimate. Costlier food and energy, including gasoline and home heating, account for about $2,200 of that total, they said.
The findings come on the heels of an analysis earlier this month by Moody's Analytics that found inflation to be taking an additional $296 bite from the typical household budget each month. Inflation around the U.S. reached a new 40-year high in February, with consumer prices jumping 7.9% from a year ago — the fastest annual rate since the Reagan administration.
Seems the $3,200 in checks has led to a $5,200 bill for a large chunk of consumers. Does that sound like a bargain?
The culprit is not oil prices, not Putin, not supply chain issues, not transitory stuff, but federal money-printing.
According to Fox Business, the Federal Reserve of San Francisco pinned the whole thing on exactly that issue:
But now researchers at the Federal Reserve Bank of San Francisco are weighing in on the topic – and they say that massive government spending during the coronavirus pandemic has caused U.S. inflation to surge more than in other developed economies.
"Fiscal support measures designed to counteract the severity of the pandemic's economic effect may have contributed to this divergence by raising inflation about 3 percentage points by the end of 2021," wrote Òscar Jordà, Celeste Liu, Fernanda Nechio and Fabián Rivera-Reyes in the San Francisco Fed's weekly Economic Letter.
In the span of just two years, Congress unleashed a torrent of federal money to shield the economy from the coronavirus pandemic, approving roughly $6 trillion in relief measures. Lawmakers approved about $2 trillion under Biden and $4.1 trillion under former President Trump, according to a COVID money tracker published by the Committee for a Responsible Federal Budget, a nonpartisan organization based in Washington.
The majority of the money allocated for emergency spending — close to $4 trillion — stemmed from two pieces of legislation: the CARES Act, passed in March 2020, and the American Rescue Plan, passed in March 2021. The remaining money came from the Response and Relief Act (December 2020), Families First Coronavirus Response Act (March 2020) and the Paycheck Protection Program and Health Care Enhancement Act (April 2020).
Fox Business's writer loses his focus as he notes that Republicans are blaming inflation on Biden's spending, but that isn't as dismissible as they claim. Biden, after all, has spent a large chunk of the new cash out there and is trying to spend another $2 billion in his latest iteration of Build Back Better, meaning, he sure as heck isn't going to stop the ongoing direction of money printing to solve every problem. Inflation, as Milton Friedman noted "is always and everywhere a monetary phenomenon."
It's tempting to blame President Trump for this round of inflation, as much of what is in the pipeline now is the effects of the first stimulus checks issued on his watch, but Democrats can't do it, and that's for two big (and slightly comical) reasons:
One, it's not true — President Trump's big COVID relief spending bills came as a result of Democrats tacking on thousands of pet projects and spending priorities. Without those, the bills would have been significantly smaller, but Democrats wouldn't play ball otherwise, COVID or no COVID.
Two, Democrats are continuing on this same course now that they control the Legislative and Executive Branches of government. Instead of putting out the fire by cutting spending, they're pouring more gasoline on it.
They actually could blame President Trump for this if they wanted to, omitting the details about Trump's deal-making with the Dems, but that's a non-starter. That's because they'd have to admit that money-printing — and not Putin, not oil prices, not supply chain issues, not anything but money-printing brought on by huge government spending outlays — is the true cause of inflation. They'd have to admit that Milton Friedman is not so dead after all and actually still in charge (remember how Joe Biden insisted that Friedman isn't "running the show"?) to make the argument stick that Trump was behind this inflation surge. That will never happen because they'd have to admit that their aim to spend even more will be gas on the fire, and the way to stop this is to cut government spending.
What a quandary for them.
Realistically, it does demonstrate that they were behind the Trump era spending surges and are planning to do more of them with doddering Joe Biden.
Inflation, though, is hitting them hard and putting a damper on their plans as it gets ready to take them down in November.
Not surprisingly, the percentage of Americans who believe inflation is nation's No. 1 problem is also nearing a four-decade high, a Gallup poll this week found.
That's an ugly situation for a free-spending liberal to find himself in. Leftists can blame Trump only if they admit the truth about where inflation comes from. That will point the finger squarely at them. And with voters noticing how expensive those stimulus checks actually were, and laying the blame on the Democrats to boot, this won't end well for them.
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