Gaslighting is Democrats' real economic policy
Although the labor market has proven resilient, important economic challenges remain. Year over year inflation was lower in July than in June but remains highly elevated at 8.5%, and the economy just shrank for the second consecutive quarter.
Attempting to deal with economic peril, President Biden and congressional Democrats, instead of proposing sound policy to alleviate consumer pain, have repeatedly chosen to gaslight the American people. They must think sweeping problems under the rug or scapegoating others will somehow make our struggles disappear. News flash — it won't.
Most recently, congressional Democrats passed the so-called "Inflation Reduction Act," proving that politicians can name a bill just about whatever they want.
For one, the bill does not address the largest cause of inflation: the Federal Reserve's easy money policy, which led to a 40% increase in the money supply over a two-year period. And while deficit spending can contribute to inflation, the bill promises to, at best, reduce the deficit by just an average of $30 billion per year over a 10-year period — hardly a dent in deficits expected to run over $1 trillion. Unsurprisingly, an analysis by The UPenn Wharton School of Business concluded that the bill's impact on inflation will be "statistically indistinguishable from zero."
Not only does this legislation fail to impact inflated prices, but by raising taxes on corporations, it further harms workers already struggling with inflation. According to both the Kansas City Federal Reserve and William C. Randolph of the Congressional Budget Office, for every $1 raised by corporate taxes, an estimated $0.70 comes out of workers' wages.
The deceptively named bill and its tax increases could not come at a worse time as our nation enters a recession, another topic on which Democrats have attempted to gaslight Americans. Despite seeing consecutive quarters of GDP contraction, which is the most popular definition of a recession, the White House argued a couple of weeks ago that the economy is recession-free and "on the right path."
Yes, unemployment remains low, and inflation may have peaked, which are reasons for optimism. But in addition to the economy meeting the very definition of a recession, consumer debt is piling up as Americans struggle to cope with high inflation, rising interest rates are poised to make debt repayment more difficult, wages are growing slower than consumer prices, ad spending is down, consumer confidence is low, and small business sentiment remains depressed by historical standards.
Despite White House rhetoric, there is plenty of cause for apprehension. But the Democrats' policy of gaslighting is nothing new and merely represents a continued commitment to the playbook they've employed for months regarding economic issues.
First, Biden and his allies tried to lay the blame for rising prices at the feet of Vladimir Putin, decrying the "Putin Price Hike" ad nauseam. In reality, inflation was already at 7.5% and growing in January — a month before Russia invaded Ukraine — as a result of massive government spending and years of negative real interest rates.
Then Biden sought to scapegoat major oil companies for high gas prices, accusing them of price-gouging and urging them to increase supply to help bring down prices at the pump. But in order to blame any inflated prices on corporate greed, we'd have to imagine that corporations somehow didn't care as much about profits in years when prices were much lower. What are we supposed to believe — that profit-seeking companies just up and hit a greedy streak, and that's why prices are running high? We'd need to have an intense misunderstanding of economics to buy this line.
It's understandable that U.S. oil refiners are not rushing to pour investment into rapidly increasing the supply of oil, as politicians continue to exhibit extreme hostility toward fossil fuels. Businesses respond to expectations of future demand and the anticipated regulatory environment, and the left has made it clear: fossil fuels are on the out.
Whether we are discussing inflated prices or a recession, Democrats don't have a real plan, resorting to scapegoating, denial, and dishonesty time and time again. Their conduct exposes their contempt for the intelligence of the Americans they purport to serve, and, more importantly, it will do nothing to alleviate the financial pressure Americans face during these uncertain times.
Benjamin Ayanian is a Don Lavoie fellow at George Mason's Mercatus Center, a free market–oriented think-tank, and a contributor for Young Voices, a P.R. firm for young, pro-liberty commentators. His writings have appeared in The Wall Street Journal, Yahoo News, Newsweek, and more. His Twitter is @BenjaminAyanian.