Bill Clinton’s political braintrust famously wrote on the blackboard in their campaign headquarters,“It’s the economy, stupid.” In reality the economy was on a stronger footing then. Inflation was a fraction of what we’re experiencing today. Nonetheless, the Clinton campaign rode their economic message to victory over President George H. W. Bush that fall.
Fast forward. Today we have a Democratic administration celebrating the fact that the inflation rate was slightly less this month than last. They called it “welcomed relief.” It’s still the highest in 40 years! The modest decline is likely aided by slightly lower gasoline prices (also still among the highest in 40 years). Incredibly the White House held an event to tout the passage of the Inflation Reduction Act. With a straight face the President claimed that the 8.3% number represented “progress.”
Wall Street wasn’t buying the spin. They were selling. Smart money “celebrated” the worse than expected numbers with a 1276 point rout. Investors expect the Fed will be compelled to rapidly ratchet up interest rates which will drive the economy into recession. That is, assuming we are not in recession already.
All of this while our Secretary of the Treasury Janet Yellen seems befuddled. She doesn’t appear to understand the dynamics of the ditch we’re in. Neither do any of the other economic advisors in this administration. Worse, the former Federal Reserve Chair is clueless concerning the real causes of this inflation. It’s the inflation that’s hurting American families and robbing retirees of their life savings. Retirement nest eggs have lost 12% of their buying power just since Joe Biden was sworn in.
This week the Labor Department piled on with a report that confirms that average household income has been flat since this administration took office. That may be news to the President’s Council of Economic Advisors, but millions of American families have been living with that reality. Inflation is raging while household incomes are flat.
If all you have is a hammer, every problem looks like a nail. The Democrat solution to every crisis is to throw money at it. It’s the reason that our national debt has ballooned to over $30,000,000,000,000. It is the reason that the Democrats spent over $400 Billion on a bill they shamelessly called the Inflation Reduction Act. Money they did not have on programs that will not help. So they are reducing inflation by pouring Kerosene on a raging fire?
Republicans should respectfully suggest a different mantra—It’s the spending, stupid!
Over the last three years (yes, starting with Trump-Pence) our federal government has spent more than three trillion dollars that it did not have. Those dollars were either borrowed or printed by the Federal Reserve. Our friends on the Left are masters of redefining terms. A time-tested definition of inflation is too many dollars chasing too few goods. Flooding the economy with trillions in fiat currency will eventually make those dollars worth less. The notes for the shutdown nonsense and other wasteful spending are coming due. You see, all those free COVID shots weren’t really free.
As any farmer will tell you, when you’re in a hole…stop digging.
There are still a few fiscal conservatives left in Washington. They need to up their game and we must give them our full-throated support. We need to demand a plan to balance the federal budget within six years, just like the mid-90’s. Speaking from experience, today’s budget warriors will face withering fire from special interests on all fronts. It won’t be pretty.
Our fellow Americans need to understand that staying on this spending trajectory will lead to even bigger problems. It will mean protracted high inflation and a lower standard of living. Mounting interest payments on the massive debt will require higher taxes. Unchecked, it will ultimately lead to a collapse of the dollar.
In July the Congressional Budget Office predicted that the mounting debt would "raise borrowing costs throughout the economy, reduce private investment, and slow the growth of economic output over time.”
A sensible plan to balance the budget and begin paying down debt is the only way out. A great place to start is to limit the growth in the federal budget to the growth in the average family budget. Is there any good reason that the government’s budget should grow three or four times faster than the family budget? Runaway government spending steals from future generations and saps the lifeblood out of the private economy. Does anyone really believe that the government can spend and invest money smarter than Americans can on their own behalf? (Actually too many liberal elites do believe that.)
Our ancestors proved that we Americans can accomplish big things. Getting our fiscal house in order is not that big. Go forth boldly. Just keep repeating the mantra, “It’s the spending, stupid.” Once middle America understands the stakes, they will join the chorus.
Carpe’ Diem!
The author served on the House Budget Committee the last time the federal budget was actually balanced.
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