Economists say current inflation has little to do with President Joe Biden's policies and will moderate in 2022.
After halting the passage of President Joe Biden's plan to combat inflation and create millions of jobs, congressional Republicans are now blaming him for last year's inflation.
But economic experts say Biden's policies had little to do with the problem and that it is likely to improve in 2022 regardless.
The Labor Department released 2021 consumer price data on Wednesday, showing a 7% spike in inflation over the past year as the nation dealt with the COVID-19 pandemic.
"Welcome 2 Pres Biden's America where inflation is soaring at 7% highest in 40 yrs incl grocery prices are up 6.5% over 12 months which means hard working families are paying more to feed their families," complained Iowa Sen. Chuck Grassley. "What more do Dems need to know to stop their reckless spending???"
"Inflation just reached a 40-year high at 7%," tweeted Florida Rep. Kat Cammack. "Democrats' one-party rule has contributed to economic devastation for American families."
But Biden and Democrats in Congress proposed a $1.75 trillion climate and caregiving infrastructure package last year that economists say would have actually reduced long-term inflation. Every House Republican opposed the Build Back Better plan in November. With every Senate Republican against it and conservative Democratic Sen. Joe Manchin (WV) unhappy with the House version, the bill stalled in the Senate in December.
While GOP lawmakers have been trying for months to popularize the term "Bidenflation," economic experts say the president's policies are not necessarily to blame and likely had little to do with higher prices.
Investment manager John Micklitsch told Forbes last summer that the inflation the economy was seeing resulted from "a perfect storm of supply chain disruption from COVID, government spending to fill the economic void, and a synchronized global recovery driven by vaccine rollout and economies re-opening" following more than "a decade of underinvestment in the global commodity supply chain."
And a group of Nobel Prize-winning economists told the Washington Post in November that the package would reduce prices in the long term.
Christopher Sims, a Princeton University professor of economics, said Build Back Better, if passed, would "reduce 'longer-term inflationary pressures'" because of its "supply-side effects."
Peter Diamond of the Massachusetts Institute of Technology Department of Economics predicted that, with the law, "inflation would be lower than otherwise."
Rep. Don Beyer (D-VA), chair of the U.S. Congress Joint Economic Committee, said in a press release on Wednesday that Build Back Better "presents the best tool at Congress's disposal to reduce inflationary pressure long term, build economic resilience and promote economic growth that is stronger, stable and more broadly shared."
Senate Majority Leader Chuck Schumer still hopes to pass some form of the Build Back Better agenda in 2022. But, as White House spokesperson Mike Gwin pointed out on Wednesday, the Blue Chip Economic Indicators' 2022 forecast shows top outside analysts "expect inflation to substantially moderate over the course of 2022 and beyond" regardless.
Published with permission of The American Independent Foundation.