Issue That’s Likely to Sweep Republicans to Power Presents Issues for Both Parties

One of the biggest national issues driving the congressional midterm elections is inflation. The polls show it and it’s entirely possible rising prices could swing partisan control of the House and Senate.

But as is almost always the case, inflation isn’t an issue that fits nicely inside a Team Red or Team Blue box. It’s a sprawling, insidious problem that neither political party has the plan, or the moral authority, to address.

Stated simply, inflation is a case of too many dollars chasing too few goods are services – a monetary problem. And while politicians from Team Red and Team Blue have done their level best to make inflation worse through blinkered economic policies, whether inflation rises or falls ultimately is a question for central banks, like the Federal Reserve. And its record so far isn’t cause for celebration.

As Harvard’s Ken Rogoff writes in Foreign Affairs, taming the inflation beast will take more time, effort and painful trade-offs than politicians or central bankers are willing to admit:

…thanks to a host of factors including deglobalization, rising political pressures, and ongoing supply shocks such as the green energy transition, the world may very well be entering an extended period in which elevated and volatile inflation is likely to be persistent, not in the double digits but significantly above two percent. Most central bankers insist that they can make no bigger mistake than allowing high inflation to linger so long that it starts pushing expectations of long-term inflation by any noticeable amount, and it is probably fair to say that the majority of Wall Street economists buy that argument. But they may be facing more painful choices over the next decade, and certainly in the immediate future.

Compounding the difficulty of those choices is that with rates reaching more “normal” levels, debt servicing costs rise to levels that many politicians, and some central bankers, haven’t seen in their careers. Those debt payments trump other concerns and priorities state entities and pols may have.

Skipping a payment, or otherwise fiddling with the debt, all but invites a bond market reaction – whether it’s a simple downgrade, as happened to the U.S. in 2011 when Standard & Poor’s stripped the country of its AAA bond rating over a debt concerns or a bond revolt like the one that shook the U.K. and spurred Liz Truss’s resignation.

No one in official Washington of either major political party has the inclination, or courage, to admit that very hard choices lie ahead for the U.S. economy. Voters should demand such a discussion now, before the elections, if for no other reason than to put the pols on record so they can be held accountable for their actions in the months ahead.

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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