Washington, D.C. – Inflation has taken a heavy toll on the purchasing power of the American consumer. According to the most recent data, which tracks the rise in prices for August 2022, prices are up 0.4 percent over the previous month.
That works out, on an annualized basis, to 8.2 percent. In practical terms that means, for example, that the cost of food items – which overall were 0.8 percent more expensive in August than in July of this year – is projected to rise by 11.2 percent from January to December of this year.
Most Americans have never seen prices rise by so much in such a short time. You have to go back to the recession that started under Jimmy Carter to find a comparable period of price instability. Yet President Joe Biden, who as recently as last week called the American economy “strong as hell” when compared to the rest of the world, finds himself unsure of what to do.
He should take a lesson from Ronald Reagan, who used pro-growth tax cuts to stimulate growth and bring the economy back from the abyss. Working with Paul Volker, the then-chairman of the Federal Reserve who pushed higher interest rates through to put the break on inflation – as current Fed Chair Jerome Powell is now doing, too late to make an immediate difference – the Reagan tax cuts of 1981 put the nation on the road to a long boom that lasted through nearly to the end of George W. Bush's second term.
Instead, Biden, who as recently as the end of summer was bragging about having set the record for job creation, now wants people to believe he inherited a lagging economy. He can't have it both ways, taking credit for the good while passing the buck for the bad. The economy is running out of gas, both figuratively and – now that the Saudis have cut back on oil production – literally. Whether we're in a recession now, after two consecutive quarters of negative growth, is academic. Bad news is coming.
At least that's the conclusion of a group of economists surveyed by The Wall Street Journal. They expect U.S. gross domestic product to shrink in the first two quarters of 2023 rather than experience limited growth as they previously thought. They put the possibility of a recession in 2023 at 63 percent, the paper recently reported, saying it was “the first time the probability has topped 50 percent since July 2020.”
Worse, a majority of CEOs surveyed by CNBC said they believed a recession was coming in 2023. A majority of them, 51 percent, said they would be considering layoffs in the next six months while more than a third of corporate chief financial officers surveyed by the Job Creators Network said the U.S. economy would be in a recession before the end of the year if it wasn't in one already.
The principal cause of the downturn, when it comes, if it's not already here, will be the inflation injected into the economy by the stimulus spending Biden pushed through Congress during his earliest days in office.
The results of his mismanagement of the economy in pursuit of hard-left outcomes are astounding. Gas prices, which peaked months ago, are still up nearly 20 percent from where they were a year ago – and are considerably higher than when he came into office. The cost of electricity is up 0.7 percent from August and up 15.5 percent annually. Housing costs are up 0.7 percent over the same period and up 6.6 percent annually. The price of a new car is up 0.7 percent from July and 9.4 percent annually while used cars are up 7.2 percent on an annualized basis.
People can feel it where it hurts the most, in the pocketbook. Every time they go shopping or pay bills. More than half of American workers' paychecks have fallen behind the pace of price hikes, which hasn't been a problem for so many people since July 2011. They're working harder while their purchasing power whittles away. It's the steepest pay cut, the Dallas Fed reports in a new study, in 25 years.
The good news is the voters know, and they're ready to make a change. A New York Times/Siena College poll published Monday said of those likely to vote in November, 26 percent picked the economy as their No. 1 issue. Another 18 percent said inflation alone was their top issue. None of that is good news for the Democrats on the ballot next month.
Since Biden is unwilling or incapable of doing anything to stop either the inflation or the spending, it's up to the Republicans to do it for him. Drastic measures are called for, at least by Washington standards. That means spending less money next year than has been spent this year. It means holding the line on funding the government during a post-election “lame duck session” when House Speaker Nancy Pelosi will use the proxy votes in her pocket turned over by defeated Democrats who claim to be home with a COVID cold to push through one last round of spending hikes – enough to last the progressive bottom feeders who keep her party in power so they can to survive two years of gridlock.
The GOP has to say ‘no' to that, even if they only control the House of Representatives. If they have to mark time until the new Congress is sworn in, so be it, even if that means a temporary government shutdown. The optics of that might be bad – Biden would blame it on the GOP and his message would echo through the land like Paul Revere's cry in the dark of night warning of the coming British invasion.
If that happens, the new Republican leadership team must not blink. They must not turn, for the optics of a nearly bankrupt nation led by indecisive politicians – Britain, we're looking in your direction – are even worse.
The time is now to stand for policymakers wishing to revive the American economy to stand their ground. Not by making outrageous demands the president cannot agree to for political reasons of his own. The Republicans who may end up in control of one or both congressional chambers in January don't have him over a barrel, at least not yet. They need to go to the American people with a plan to restore the American economy to the healthy status it enjoyed before bad decisions by policymakers during the pandemic shut it down. They need to explain what it is and why it will work, facing a severe headwind the whole time.
It will feel at times like the effort is failing, but those leading it must not be deterred. The American people are not dumb. They are smart and they understand the importance of being able to reap the rewards of hard work. They will go along, once it is made clear to them that the policy changes necessary are in their best interest as well as the country's.
The people will go along as long as the new leaders in Congress spend their time trying to persuade the country to be with them rather than making deals under the Capitol dome to win votes. It will be hard. There will be damage. But, as Mrs. Thatcher said famously so many years ago, “First you win the argument, then you win the vote.”
Joe Biden's done more than any Democrat since Jimmy Carter to help the Republicans win the argument about taxes and spending. It's been a painful experience for many but sometimes our eyes can be distracted from the prize. Now is the time.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
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Watch the fireworks explode
slow joe has NO clue as to the economics. Reagan had the right idea and it worked for a long time- until the democrats took control of the House and started the “free shit” program. There is NO SUCH thing as “free”. Your are just passing the bill to the already stressed taxpayers. If you want to fix this- EASY- change the tax code where EVERYONE pays a small perecentage(from the first dollar) in taxes. They will have skin int he game and pay attention to where taxpayer monies go. Read Steve Forbes.