Spending

Families need a brake on inflation, not short-sighted spending gimmicks | News, Sports, Jobs


The consumer price index (CPI) hit a 40-year high in June, rising 9.1% from a year ago before stabilizing in July. According to one analysis, inflation is costing American families about $500 a month in higher prices.

Americans are feeling the pain, with a recent Quinnipiac poll revealing that 34% of voters see inflation as the most pressing issue facing the country.

We know how we got here. In response to the COVID-19 pandemic, Congress has passed several stimulus bills. Combined, this legislation increased the federal deficit by approximately $5.23 trillion.

This deficit spending – financed by printing money – increased the United States monetary base, or the amount of cash in circulation, by nearly 86% between February 2020 and December 2021.

Exacerbating inflationary pressures, stimulus checks provided many Americans with direct payments they did not need. These checks eventually became disposable income, creating a situation where too much money was chasing too few goods.

Nearly two years of rising inflation and falling real wages, combined with a looming recession, have sent Democratic Party approval ratings plummeting — and politicians are panicking.

The panic has led President Joe Biden and Pennsylvania Governor Tom Wolf to release spending proposals they say will “helping families cope with inflation.” Both proposals completely miss the mark.

Despite its name, Biden’s Cut Inflation Act has little to do with inflation; this is a typical tax and expense invoice. An analysis of the University of Pennsylvania’s Wharton budget model found that the legislation will have little to no impact on inflation and would in fact raise it slightly in the near term.

The Inflation Reduction Act will double the size of the Internal Revenue Service and increase overall taxes for nearly all income groups. And he spends nearly $370 million on corporate welfare for politically selected people. “green” companies.

Following Biden’s lead, Pennsylvania governor offers plan to deliver more “free money” to voters during an election year. Wolf recently renewed calls to send $2,000 stimulus checks to some Pennsylvanians.

While he previously came up with this plan using one-time federal funds, Wolf no longer has such funds — he just spent the remaining $2.1 billion on other projects. Instead, Wolf suggests funding those stimulus bonds with $500 million from state taxpayers.

This short-sighted gimmick tries to hide the fact that Wolf just signed a state budget that increases spending by 10.7% and spends $2 billion more than it takes in.

Incredibly, Wolf and Biden seem to ignore the reality that government overspending and stimulus checks helped create the inflationary mess and economic struggles that American families face today.

If politicians want to give the money back to taxpayers, they should emulate Colorado, where the Taxpayer Bill of Rights Amendment (TABOR) caps annual increases in state government spending and automatically returns any excess to taxpayers. . This year, Colorado residents and families will receive checks for $750 or $1,500, depending on their tax status.

The proposed legislation could create a similar benefit for households here in Keystone State. The Taxpayer Protection Act (TPA) is a proposed constitutional amendment that would institute a tax and spending limit, much like Colorado’s TABOR amendment. The TPA limits increases in state government spending to a formula tied to inflation and population growth. In years when incomes exceed forecasts, families would get a refund of their taxes.

Rather than push for more government spending ideas, lawmakers in Washington and Harrisburg need to stop making inflation worse. Irresponsible government spending has created the current economic environment. Getting public spending under control and passing fiscally responsible legislation is the way forward to give taxpayers the relief they need.

Nathan Benefield is senior vice president of the Commonwealth Foundation, Pennsylvania’s free market think tank.



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