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President Biden insisted on Monday that his massive spending plans were not causing price hikes on everything from bacon and bread to gas and electricity, saying inflation is “temporary” and “expected “after the COVID-19 pandemic.
Biden argued that about 60% of the price increases are caused by “transient effects” linked to COVID-19, such as lumber and semiconductor shortages, and are not a sign of substantial long-term inflation linked to deficit spending.
“Our experts believe and the data shows that most of the price increases we have seen were expected and should be temporary. The reality is, you can’t turn the light on the global economy and expect it to happen, ”Biden said.
Biden also claims that a pair of massive bills he hopes to pass Congress this year – costing a total of $ 4.7 trillion – would actually reduce inflation. At least in theory, the bills would be offset by tax hikes and other new sources of income, although the details remain in motion.
“If your main concern right now is inflation, you should be even more excited about this plan,” Biden said in remarks from the White House State Dining Room. “These measures will improve our productivity, increase wages without raising prices and will not increase inflation. This will take the pressure off of inflation.
According to data from the Bureau of Labor Statistics, there has been a dramatic annual increase in the prices of food and other everyday consumer goods.
In the past 12 months, the price of gasoline increased 45.1%, the cost of energy increased by 24.5%, the cost of bacon increased by 8.4%, whole milk increased by 7.5% and the cost of fresh fruit increased by 7.3%.
In June, major household appliances cost 13.7% more than last year, furniture 8.6% more, shoes were up 6.5% and plane tickets were up 24, 6%.
Even some Democratic economists, including former Treasury Secretary Larry Summers, warn that inflation may not be fleeting, jeopardizing the post-pandemic economic rebound as well as Biden’s ambitious legislative agenda, including a draft $ 1.2 trillion bipartisan infrastructure law and an additional $ 3.5 trillion budget reconciliation. bill Democrats hope to pass without Republican support.
But Biden insisted his new legislation would actually help reduce inflation.
“If we make prudent, multi-year investments in better roads, bridges, transit systems, high-speed internet, and a modern, resilient electricity grid, this is what will happen: It will remove bottlenecks in our economy; goods reach consumers faster and at lower cost; small businesses create and innovate in a much more transparent way, ”Biden argued on Monday.
“New companies will come into the game, competing for free with these giant companies to raise prices because they haven’t had real competition. “
The pending spending bills would follow a spending spree in Washington during the pandemic designed to avoid economic devastation through deficit spending.
A $ 1.9 trillion COVID-19 stimulus bill that passed Congress in March without a single Republican vote has been widely criticized by Republicans for fueling inflation with checks for $ 1,400 for most Americans, $ 350 billion for state and local governments, and a weekly unemployment supplement of $ 300 for the unemployed, reduce the number of low-wage workers who have returned to work.
This year’s stimulus bill followed generous bipartisan stimulus legislation that also included direct controls and a federal unemployment supplement earlier in the pandemic, which was also not offset by income increases. .
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