- The Washington Times - Wednesday, April 13, 2022

Who could have guessed the federal government injecting nearly $6 trillion in stimulus into the U.S. economy over a two-year period would lead to record-high inflation?

Apparently not 17 recipients of the Nobel Memorial Prize in Economic Sciences, who signed an open letter in support of President Joe Biden’s $3.5 trillion “Build Back Better” plan. In their professional opinion, more federal spending on social programs and infrastructure projects would somehow “ease longer-term inflationary pressures.” White House press secretary Jen Psaki repeatedly cited these Nobel honorees to put down any reporter who questioned the wisdom of the government recklessly printing money even as inflation rates started to climb.

“Opponents [of Build Back Better] and even [Democratic West Virginia Sen. Joe] Manchin argue that pouring more money into the economy will only make [inflation] worse,” an intrepid reporter observed to Ms. Psaki in December, in a bid to see if the administration shared those concerns.

Her answer: “Well, what we know is what 17 Nobel economists — laureate economists — have conveyed, which is that this will help address inflation.  We know that economists across the board — many, many across the board — have conveyed that this will help address what we see as rising costs.”

Flash-forward four months: Inflation has hit a 40-year high, with prices rising 8.5% in the last year. The inflation trend started at the onset of Mr. Biden’s presidency, after Congress passed a $900 billion stimulus relief package, and then a few months later followed it up with another $1.9 trillion in COVID-19 and economic support spending.

In total, more than $6 trillion was spent on keeping the economy from collapsing at the height of the pandemic, spanning both the Trump and Biden administrations. Unprecedented pots of taxpayers’ money were handed out to Americans — $3,200 in cash assistance through three rounds of stimulus payments, a massive infrastructure package, expanded unemployment insurance, business subsidies, mortgage and student loan forbearance and a more generous child care tax credit.

As a result, during the pandemic, Americans had significantly more cash on hand than they did before, according to a study from JPMorgan Chase Institute. Not surprisingly (or maybe not surprising for those who aren’t Nobel laureates or White House apologists), consumers spent the windfall, resulting in too much money chasing too few goods — the root cause of inflation.

What’s the Biden administration’s solution? Spend more money. Mr. Biden is touring the country this week, promoting round two of his Build Back Better agenda (yet to be renamed) that looks to continue the welfare relief provided in the previous COVID-19 packages. Despite plunging unemployment rates, he recently extended the student loan moratorium, which disproportionately benefits the rich and educated, and wants to make permanent the child care tax credit, increasing America’s dependency on the federal government.

What the Biden administration doesn’t seem to get is that with the official jobless rate at 3.6% and employers struggling to find workers, our economy no longer needs stimulus. The best thing the federal government could do now to reduce inflation is to restrain demand by eliminating COVID-19 welfare payments, cut spending and encourage the Federal Reserve to boost interest rates. To increase supply, it must cut taxes and work on deregulation.

As columnist Richard Rahn pointed out in these pages, we are in the first stages of a global money meltdown. The lack of fiscal discipline has caused a sharp rise in the ratio of government debt to GDP to over 100% — meaning the cost of paying off our federal borrowing debts will rise faster than the government can bring revenues, resulting in higher inflation and eventually economic collapse.

Americans are already feeling the pain. They also understand that, although Russia’s war in Ukraine may be contributing to higher energy and food prices, inflation began creeping up well before that in early 2021. In August, The Washington Times was already tracking “Bidenflation” by recording how much McDonald’s prices were spiking from the year prior, at a time when the experts at the White House were still calling the rise in inflation “transitory.” Last summer, a large order of fries averaged $3.89 — a 106% increase from 2020. Today it costs $4.19, in some localities.

Overall, soaring inflation has led to a de facto 2.7% pay cut for all Americans in the last year, despite gains in average wages as well.

Through his grandiose spending policies, Mr. Biden envisioned himself becoming a transformative liberal president like Franklin D. Roosevelt. He continues to push for an expanded welfare state and refuses to cut spending, deregulate industry or lower taxes. He blames everyone but himself for high inflation and leans on his band of Nobel laureates to back him up when voters, using basic common sense, question his judgment.

Undeterred from his socialist ideals, Mr. Biden’s presidency is bound to feel less like Roosevelt’s and more like Herbert Hoover’s — who took office in 1929, the year the U.S. economy plummeted into the Great Depression.

• Kelly Sadler is the commentary editor at the Washington Times.

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