Countering GOP Inflation Misinformation

by Kindler

It is very likely that the 2022 midterms will be decided by middle-of-the-road voters concerned about the economy – as elections so often are. This is understandable and Democrats have an excellent economic story to tell.

And yet…almost all we ever hear from the media is about inflation – and about how the issue “favors” Republicans in the election.  Rarely does anyone ever lift a finger to fact check and deflate the false GOP claims that somehow the state of inflation is the fault of Biden and the Democrats – or that Republicans have anything remotely resembling a solution.

I recognize the difficulty of challenging a narrative driven by the force of right wing media and millionaire-funded SuperPACs that is passively, endlessly recycled by the MSM and social media. But if we don’t do anything to shift this narrative, we could lose the House, Senate and U.S. democracy. The situation is absolutely that serious.

So let’s set the facts straight.

First, it’s kind of hard to credibly blame any US politician for the issue once you realize that the current bout of inflation is a worldwide phenomenon.  Inflation statistics show over 100 countries with higher inflation than the US. How the hell could allegedly “out of control spending” by Biden and Congress be responsible for high inflation from Poland to Chile to Botswana?

The global reality points to the inflation causes most commonly cited by economists:

• “The pandemic shifted consumer demand away from services toward goods, which left producers unable to keep up with demand.
• “Factory closures from early in the pandemic reduced supply just as demand was rising, which sent prices up even further.
• “Russia’s invasion of Ukraine caused a spike in oil prices, which increased the cost of both manufacturing and shipping, while also forcing up the price of wheat and other commodities.”

In other words, two highly unusual events – a once in a century pandemic and an equally rare major war in Europe – caused a shock to the global economy from which we have yet to recover. Inflation is the phenomenon of consumer demand exceeding the capacity of the market to keep up with supply. Suppliers raise prices either because they have to as their own costs increase, or simply because they can, knowing that consumer demand is high enough to let them get away with charging more without losing business.

Russia’s war on Ukraine is critically important both due its impact on oil and gas prices, as we quite rightly boycott the imperialist bully that is the world’s third-largest oil producer – and due to its impact on food prices, as two of the world’s major exporters of food suffer war-related economic setbacks and blockades. Ukraine and Russia combined account for about a third of global wheat exports and the rising cost of oil impacts fertilizer prices too.

Another factor often raised is the continuing labor shortage driving up the salaries that businesses need to pay. Surveys of the workers who haven’t returned to their jobs indicate a variety of reasons why they have not returned to the workforce, with a third of women indicating a need to stay home for childcare – an issue for which only Democrats are offering workable policy solutions. Others are using savings accumulated during pandemic lockdowns to hold out while they wait for the job or salary level they really want, or to launch new businesses of their own. Again, the GOP has no fresh answers to any of this.

An issue closely related to the labor shortage is immigration – yes, the issue that Republicans most love to demagogue while way too many Democrats and reporters run for cover rather than setting the facts straight. As even the resolutely Republican US Chamber of Commerce admits, net migration to the US right now, rather than an out-of-control “invasion”, is actually at its lowest point in decades. As the Chamber concludes, “Fewer immigrants coming to the U.S. means that critical sources of talent for American businesses are drying up, contributing to the significant workforce problems companies are currently facing.”

So once again, the right wing “solution” to our broken immigration system – to prevent more people from entering the US from other countries – would make inflation worse, while Democratic proposals to create a clear path to citizenship would allow immigrants to help us to stabilize our labor market.

And then there is the elephant in the room that most on the right refuse to even acknowledge exists – the climate crisis. As the head of the European Central Bank put it, “If more and more climate disasters, droughts and famines occur throughout the world, there will be repercussions on prices, on insurance premiums and on the financial sector.” I mean, when climate and weather extremes cause crops to fail, infrastructure to be destroyed, or workers to have to stay home, the hit to the economy should be obvious, often leading to price spikes when goods cannot be harvested, manufactured or delivered.

So while the Inflation Reduction Act’s immediate impacts may be limited, the longer-term impacts of its clean energy investments will be profound, as we divorce ourselves from the roller-coaster fossil fuel commodity markets and create resilient new systems combining renewables & other clean sources with batteries and smart grids more efficiently delivering power and regulating use.

Finally, ever-increasing corporate consolidation gives these massive multinationals more and more power to set prices regardless of what consumers or their governments want.  Like the oil companies that made record profits as gas prices soared – they could’ve kept prices and profits more stable, but they preferred to pocket more of our cash.

So the overriding reasons for inflation mostly have been factors well beyond the US government’s control. Republicans claims that the large amount of stimulus pumped into the economy by the CARES Act (signed by donald, whoops!) and American Rescue Plan caused the current inflation are wildly overblown. Stimulus in the form of checks, grants and tax cuts may have been minor influences in that they increased consumer demand and helped people build some savings in a time of lockdown. It is hard to know exactly how big to make a rescue plan in such a challenging time as that of the COVID-19 pandemic, and it is a good thing that the US government prevented a recession and widespread poverty and hunger.

And as business-friendly Forbes magazine noted, not all government spending is equal, e.g., legislation like the Infrastructure Act “instead of flooding the economy with capital via stimulus checks or tax cuts…invest[s] in new technologies and jobs” – which is not inflationary.

On just about every issue, Democrats have answers that get to the heart of the problems that cause inflation, including on issues I haven’t discussed, like health care and housing. Meanwhile, all Repubs have to offer is their “solutions” to every problem on earth – tax cuts for the rich and corporate America, and fewer government regulations (except on vaginas, of course).

So let us not accept the narrative that the topic of inflation favors Republicans – it does not, and I just provided a list of arguments for why Democrats should neither shy away from discussing inflation nor surrender to the right-wing framing of the issue. Progressive policies done right build a better, cleaner, more affordable future for the middle and lower classes, not allowing the fat cat class to squeeze us with higher prices to cover their superyacht payments. Fight back!