Guest column submitted by U.S. Senator Mike Crapo
In August, consumer prices rose 8.3 percent relative to a year earlier, rising higher and faster than economists predicted and more than double the historic long-run average of 3.3 percent. The Biden Administration’s inflationary policies have led to an average consumer price inflation rate of 6.1 percent during his term in office, more than triple the inflation average over the four years prior to Biden taking office, and far above the 1.4 percent he inherited in January 2021. Overall prices have risen 13.2 percent since the President took office.
On the day the disappointing August inflation data were released, President Biden held an event at the White House to celebrate the misnamed “Inflation Reduction Act,” which the nonpartisan Penn Wharton Budget Model says will, if anything, raise inflation in the first few years of enactment. The inflation news caused the stock market to tumble by 1,200 points, the index’s worst day since June 2020.
When asked in a recent interview about what the Administration can do to address runaway inflation, the President downplayed the subpar state of the economy, saying, “[The August] inflation rate month to month was just--just an inch, hardly at all…” In reality, the inflation data was hardly reason to celebrate.
Widespread inflation is not under control, and Americans are struggling to make ends meet as essentials like food, electricity and rent are becoming less affordable. From the time President Biden assumed office in January 2021 to August 2022, milk prices have increased 19 percent, eggs 47 percent, bacon 21 percent and potatoes 20 percent. Electricity costs are up 23 percent, energy costs are up 49 percent and gasoline prices are 68 percent higher than in January 2021. The Senate Joint Economic Committee estimates that, compared to January 2021, Idahoans are spending an average of $776 per month and $9,312 more per year to keep up with inflation.
Rental costs have shot up 8 percent from January 2021 to August 2022, and homeowners are far from safe from inflation’s sting. To battle inflation, the Federal Reserve has been hiking interest rates to weaken demand. An increase in rates means it is costlier to obtain funds, so borrowing rates for American families rise as well. A typical 30-year mortgage rate was 2.7 percent when Biden took office. It currently stands above 6.0 percent—the highest level since the 2008 financial crisis--representing a significant increase in mortgage payments and squeezing new homebuyers out of the market entirely. In Boise, the median monthly mortgage payment has exploded from $1,084 in 2020 to $2,592 today.
The Administration took a vibrant, growing, low-inflation economy and implemented inflation-fueling partisan policies, driving the economy into recession and high inflation. Rather than correct course, they doubled down and spent another $700 billion in the “Inflation Reduction Act” on a Green New Deal wish list and another $80 billion to hire IRS auditors to squeeze more out of taxpayers at all income levels. This army of IRS agents comes in addition to President Biden’s “inflation tax,” which is responsible for the 2.8 percent decline in real hourly earnings Americans experienced from August 2021 to August 2022.
Before the pandemic, Americans were experiencing one of the strongest economies in a lifetime. Employment was up, wages were up, capital came back to the United States, and the inflation rate hovered around the Federal Reserve’s 2.0 percent target. We should be getting inflation under control by unleashing American energy; cutting the red tape of burdensome regulations; and stopping unrestrained government spending. We know these pro-growth policies work, and I will continue to fight for them.
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