OP-ED: Inflation could wreck American wealth
In just the four months that Joe Biden and Kamala Harris have been in office, we’ve experienced a border crisis, a gas crisis, and a war in the Middle East. Now, we’re also on the verge of an inflation crisis.
Since 2012, our inflation rate has been around 2% or under. But in April, it was announced that our inflation rate had ticked up to 4.2%, and it may keep going up. This is a problem because when the inflation rate rises, which can happen when the federal government prints money to keep up with a massive spending increase, our dollars have less purchasing power and prices go up.
If you’re looking to remodel your kitchen, buy a bigger house to fit your family, or take a road trip this summer, you should expect to pay more to do those things than you otherwise would have just last year or in 2019.
Everywhere we look, prices are rising.
Lumber prices have increased 340% in the past year, and Americans looking to buy homes should expect to pay over $35,000 more for a newly built house. Food and even the price of diapers are rising, squeezing Americans and especially lower and middle income households.
We have also seen gas prices rise as a key pipeline responsible for delivering fuel all over the Eastern Seaboard was attacked by Russian hackers and had to shut down operations for days.
If the gas crisis is a candle flame and lumber prices are a campfire, then growing inflation is a forest fire that has ignited, and may eventually burn through our entire economy.
I’ve described Joe Biden and Kamala Harris as Jimmy Carter and Walter Mondale 2.0. But when it comes to inflation, Biden might actually be worse than Carter. Faced with rising inflation, higher prices and voters’ discontent, Carter gave a speech in 1978 proposing to “hold down government spending, reduce the budget deficit and eliminate government waste” to tackle inflation.
Biden, by contrast, doesn’t talk about massive government spending, our $28 trillion national debt, and our growing deficit. In his joint address to Congress in late April, Biden never uttered the words “debt,” “federal spending” or “reduce” — except when it came to the amount of carbon dioxide in the air.
Biden has proposed a $6 trillion budget, and Congress already passed a $1.9 trillion bill Biden wanted ostensibly for COVID-19 relief. But only 9% of that bill went to actual COVID-19 relief, and the huge price tag on the bill is part of what’s driving the inflation we’re seeing today.
As the author Ronald Wright once said, each time history repeats itself, the price goes up. I sincerely hope no one tells Biden what comes after a trillion.
And how is Biden going to pay for all of this new spending? By raising taxes. He’s been very transparent about that. Basically, if you’re an American and you’re working, your taxes are going up. He’s going to raise corporate taxes, individual taxes, the death tax, the capital gains tax. He’s raising taxes on everything. In fact, Biden wants to raise the American corporate tax rate from 21% to 28%, which would put it higher than Communist China’s 25% corporate tax rate.
Even Larry Summers, who served as secretary of the Treasury under President Bill Clinton and director of the National Economic Council under President Barack Obama, argued in a recent article about Biden’s $1.9 trillion COVID-19 bill that “macroeconomic stimulus” could “set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.”
But here’s the good news — after Jimmy Carter came Ronald Reagan. The American people were tired of inflation, constant crises and a president who didn’t have the strength to fight back.
Politics has a natural pendulum sense to it — things tend to go too far, and then they go back in the other direction. The far left is driving the train right now, and we need to reduce federal government spending and make the case that free markets, low taxes and low regulations work. That’s what we need to do to pull our country and our economy back from the damage we’re about to see over the next couple of years with Biden and the Democrats in charge.
In the Senate, I’ll be fighting to curb inflation and for policies that promote fiscal sanity. The strength of our economy depends on it.
U.S. Sen. Ted Cruz (R-Texas). This editorial published originally in The Dallas Morning News.