“Good jobs and lower costs: That’s Bidenomics in action,” President Joe Biden said Wednesday, touting the June report on the Consumer Price Index (CPI) that showed CPI inflation had declined to an annual rate of 3.0%. Family Research Council President Tony Perkins criticized Biden’s “victory lap,” pointing out that “family are paying about a 15% increase when they go to the store” over what they paid before Biden took office.
“Does [Biden] think the American people forgot that [inflation] skyrocketed when he took office and is still higher than it was in January of 2021?” Perkins asked Heritage Foundation’s Public Finance Economist E.J. Antoni on “Washington Watch.” “That’s exactly what this White House is counting on, gaslighting the American people,” Antoni returned. Although it has declined from last year, he said, “inflation today is about 50% higher than where it was before Biden took office. And the reason for that is because government spending, borrowing, and printing of money is so much higher than it was only a few years ago.”
In March 2021, President Biden signed the American Rescue Plan, which passed Congress without Republican support, a $1.9 trillion spending package on top of the previous unprecedented COVID Spending. Biden then spent months attempting to persuade Congress to pass his Build Back Better plan, which at one point had a $6 trillion price tag. While even Democrats in Congress balked at so much spending with inflation already on the rise, Congress did pass, in 2021-2022, the Infrastructure Investment and Jobs Act ($1.2 trillion), the Inflation Reduction Act ($740 billion), the Chips and Science Act ($280 billion), and an omnibus spending bill in late 2022 ($1.7 trillion). Annual inflation increased from 1.7% in February 2021 to 7% in December 2021, later peaking in June 2022 at 9.1%.
“If we really had a discussion about the data, then it would be clear how much of a failure ‘Bidenomics’ has been,” Antoni continued. “You can very easily make the case that Bidenomics is what gave us that 9% inflation rate from about a year ago, and that it is the throttling of Bidenomics by a now-divided Congress that has brought inflation down. In other words, as we are borrowing, spending, and printing less money, we have less inflation.”
Biden’s statement took credit for “our progress creating jobs while lowering costs for families.” But Antoni argued that the two years of inflation Biden oversaw actually hurt families. “Inflation is a hidden tax,” he said. “It is the mechanism by which the government transfers wealth from you to itself in order to pay for its profligate spending. I can’t think of a better definition of a tax than that, a transfer of wealth from you to the government.”
Antoni granted that nominal wages — “the size of your paycheck” — had “risen dramatically” under Biden, with workers “getting on average 12% more per hour. But the problem is that prices have risen so much faster … that [the] bigger paycheck actually buys you less.”
How much less? “For the month of June that we just finished up, the latest data shows us that the average American worker this is astonishing paid a $4.55-an-hour tax through inflation,” said Antoni. “Inflation has effectively doubled the income tax rate for the average American worker.”
“They’re defrauding the American people,” Perkins summarized. “The Bible speaks to this, about just weights and measures. And when you’re inflating dollars, you are devaluing those dollars. And so you’re literally robbing from the people who work for that money.”
The Lord instructed the people of Israel through Moses, “You shall do no wrong in judgment, in measures of length or weight or quantity. You shall have just balances, just weights, a just ephah, and a just hin” (Leviticus 19:35-36). Proverbs 11:1 provides further insight, “A false balance is an abomination to the Lord, but a just weight is his delight.”
Antoni compared inflation to usury, the injustice of extorting excessive interest from the powerless. “In the case of inflation, the government is essentially getting a kind of interest on dollars that you have. So, the government is literally siphoning off a percentage of all the dollars you have. The latest rate is 3% a year,” he said.
Asked whether President Biden used the lower inflation number to justify additional spending, Antoni replied that would “most likely” be the case. “This president has shown a proclivity to use any excuse at all to justify higher levels of government spending.”
But there are concerning signs that not all the inflation has been wrung out of the economy. “What’s particularly scary about that 3% is that there’s no sign it’s going any lower,” said Antoni. “In other words, if you look at the change we’ve seen from month to month over the last year, it has been surprisingly steady, and it is not going below that 2% annualized rate.”
Additionally, core inflation, which many believe to be a more reliable indicator of the true state of inflation, remains higher than overall inflation. Economists derive core inflation by omitting the categories of food and energy, which are more volatile and subject to non-monetary price shocks. And while overall inflation has declined from over 9% down to 3%, core inflation has only fallen from around 6% to 4.8%, according to the BLS report.
Consequently, the U.S. Federal Reserve is likely to raise interest rates at least twice more this year, after it held steady them steady at its June meeting after 10 straight increases. Some Fed officials wanted to raise rates in June, although they were in the minority. However, 12 out of 18 members of the rate-setting committee predict two more interest rate hikes this year. The editors of National Review noted that these interest rate hikes have raised mortgage rates from around 3% to almost 7%, led to several bank failures (three of the four largest in U.S. history) and pose a major unresolved problem for the federal budget. And Treasury Secretary Janet Yellen warned Sunday that a recession is not “off the table.”
“Inflation is falling while our economy remains strong,” Biden claimed in his statement. But Americans aren’t convinced; just 34% approve of Biden’s handling of the economy, according to an Associated Press-NORC Center for Public Affairs poll. Sure, there are plenty of jobs, with persistently low unemployment and rising labor force participation. But those work are finding their paycheck doesn’t stretch as far as it used to — even if they technically earn more dollars, and even if prices aren’t rising as fast as they were last year. As a matter of fact, since Biden took office, the proportion of workers’ earnings transferred to the government as income tax has been “effectively doubled,” as Antoni put it, through the unseen effects of inflation.
Joshua Arnold is a senior writer at The Washington Stand.
