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With less than two weeks until the midterm elections, it’s galling to me to see Republicans making headway in their effort to present themselves as better stewards of our economy than the Democrats. It’s a lie. Of course, when we talk about the economy in this context, we’re really talking about inflation. Other than inflation, the state of the economy is quite good, with the unemployment rate near a post-war low and virtually all of the pandemic-related job losses now recovered.
Regardless, Republicans are hoping and expecting the electorate to hold Democrats responsible for our currently unacceptable rate of inflation. Unfortunately, it seems that not enough of the public have realized that (a) it’s a dishonest accusation and (b) the Republicans haven’t offered a credible path forward that could reasonably be expected to solve the problem. Republicans cite the “excessive” government support offered in connection with the American Rescue Plan and the Inflation Reduction Act as causing the inflation, giving little acknowledgment to the covid-related supply chain problems we experienced starting with the onset of the pandemic or to the market disruptions caused by Russia’s war in Ukraine. Somehow, the fact that inflation is a world-wide problem rather than purely a US concern is lost on the Republicans. For them, nothing matters except the Democrats’ culpability. How disingenuous is that?
At present, with Democratic control in Congress and the White House, we’re poised to do the right thing. The appropriate fiscal policy to fight inflation calls for a contractionary stance to reduce upward price pressures, and that’s what we’re currently doing. Arguably, the single most meaningful indicator of that policy is the federal deficit. A rising deficit is expansionary; a falling deficit is contractionary. We’re at a point now where the deficit has declined significantly from its Covid-related peak, and it is projected to continue declining through 2023. This transition from expansionary to contractionary policy occurred largely because of the cessation of much of the support that had been authorized under the Covid-Relief Plan. The Covid-related increase of spending was expansionary; the subsequent cutoff has been contractionary. With inflation being our primary economic focus. our contractionary policy is as it should be.
I suppose inflation critics on the Republican side may believe that the current policy is not sufficiently contractionary. Satisfying these critics would require cuts in government spending, including social security and Medicare expenditures. You may not hear all that many of the current crop of Republican candidates loudly broadcasting this position, but their reticence is a cover. Kevin McCarthy, the presumed next majority leader in the House if Republicans gain control has gone on record with the Republican game plan. His intention is to use the leverage of the upcoming debt limit authorization bill to extract exactly these kinds of cuts. It’s worth remembering that this party introduced more than 60 bills to kill Obamacare. McCarthy’s stated objectives should be taken seriously.
Ya gotta hand it to Republicans. If at first you don’t succeed, try and try again, even at the expense of precipitating a crisis of lasting consequences if the debt limit ceiling isn’t raised. It’s nothing short of ludicrous to believe that the party willing to jeopardize the credit standing of the United States to achieve its political goals should be the architect of our economic policy. And if the threats to critical and popular safety net programs and to the credit standing of the US weren’t serious enough, McCarthy also added some unneeded uncertainty as to the strength of our nation’s commitment to the support of Ukraine. Not satisfied with sabotaging domestic government programs and responsibilities, McCarthy and his cohorts are ready to screw things up internationally, as well.
Perhaps my biggest beef with the Republican orientation to fighting inflation is the resistance to tax increases for higher income taxpayers. For those genuinely committed to a more aggressive effort to combat inflation than that offered by the Democrats, lowering the deficit should take high priority. The commitment to do so, however, without reliance on raising taxes gives a lie to their purported concerns. It’s not just that Republican’s won’t support tax increases, all the while bemoaning the level of inflation we’re facing, they’re looking to cut taxes — a policy prescription akin fire fighters bringing kerosene to douse the flames of a burning building.
If tax increases were on the table, undoubtedly those increases would fall heavily on higher earners. Perish the thought. It’s a bit rich to hear Republicans criticizing Biden and the Democrats for not dealing with inflation appropriately while ruling out raising taxes. Instead, by focusing exclusively on cutting back on safety net spending, their policy platform would impose the cost of fighting inflation disproportionately on the members of our society that can least afford it and who likely bore little responsibility for our current level of inflation in the first place.
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