Inflation: The insidious hidden tax
In my May 8-9 column I asked, “How much will the next 100 days cost us?” It has been only about 80 days since that column, and we are feeling the results of Democratic President Biden’s economic policies.
The results are not from tax increases which would be transparent as they work their way through the House and the Senate.
The increases are from the insidious hidden tax called inflation. That hidden tax affects every person in our country, no matter what tax bracket we are in.
President Biden is trying to sweep that hidden tax under the rug.
I remember from my college economics class that government simply printing money will lead to inflation. As more cash is put into the monetary system, prices of goods and services will rise.
In January 2021, Democratic Congresswoman Alexandria Ocasio-Cortez publicly embraced Modern Monetary Theory. This theory calls for printing more money and disregarding resulting debts and deficits. I laughed when I heard her say that on TV. My thought was that no sane administration would actually just print money.
I was so wrong.
Printing money is exactly what the Biden administration is doing, a policy which fuels inflation.
Each month the government determines the average cost of goods and services for that month. The result is the Consumer Price Index (CPI). The higher the CPI, the more the cost of living.
In 2020, the CPI rose 1.4%. Since President Biden’s inauguration, the hidden tax has caused the CPI to increase by 3.3%. As Biden continued to print money, the June rise of 0.9% reached the highest monthly increase since 2008.
In a July 22 CNN town hall meeting, President Biden said: “The cost of an automobile bill, it’s kind of back to what it was before the pandemic.” Even CNN acknowledged that what Biden said is not true. CNN reported that “The price of new automobiles in July 2021 was 20% higher than in January 2020 …”
The U.S. Department of Agriculture reports that food is 2.4% higher in June 2021 than in June 2020. Meat of any sort is predicted to rise between 3% and 4%; seafood by 2% to 3%. Since this time last year, milk is up 7.5%. Overall, since February, food prices have increased 1.9%.
In a recent poll, 70% said food prices are “a substantial financial hardship.” Thirty percent said it was a serious hardship.
New single-family houses cost an average of $35,872 more since June 2020. The cost of an existing house has jumped 23.4% from July 2020.
Gasoline prices are at a seven-year high and are expected to rise 10 to 20 cents by the end of August.
The Agriculture Department states that inflation this year is almost 50% higher than the average rate for the past 20 years. It goes on to say that “Above-average inflation is expected to continue through 2022.”
The New York Times wrote that “inflation is becoming a defining risk of the era.”
The chairman of the Federal Reserve has said many times that inflation will be “transitory.” However, in a speech on July 14, he no longer used that term. He warned that inflation could be “higher and more persistent than we expect” and could continue at least through the end of the year.
Even President Obama’s secretary of the treasury is warning that Biden’s $3.5 trillion spending plans could create an inflation spike this year.
Democrats are now pushing for a $6 trillion budget that will increase our national debt of $28 trillion and will increase the inflation tax on all of us.
Candidate Biden promised that he would not raise taxes on the “middle class,” but will have the wealthy pay their “fair share” – a term left undefined. When will today’s middle class be absorbed by the Democrats into the wealthy class to finance their spending orgy?
Reckless spending resulting in a higher inflation tax can lead only to hardships for the middle and lower classes.
The 2020 Democratic platform used a form of the word “investment” 134 times. In Democrat speak, investment equals spending. Every Democrat knew that massive spending was coming. As Democrats are not stupid, they also knew that the hidden tax of inflation would follow. They didn’t care.
Rich Kiper is a Leavenworth Times columnist.