Silver State Times

A Nevada policy analyst says excessive spending will only lead to further inflationary woes.

Nevada Policy Research Institute vice president and policy director Robert Fellner said President Joe Biden and congressional Democrats are taking the country down the wrong road.

“Nevada Policy opposes excessive government spending because of the harm it causes to ordinary, hard-working citizens,” Fellner told Silver State Times. “The bulk of government spending is always paid for by the working class, either directly through taxes and fees, or, more insidiously, through the indirect tax of inflation.”

Robert Feller of the Nevada Policy Research Institute.

Meanwhile, as Democrats in Washington continue to debate the contents of Biden’s massive social welfare spending package, infighting could complicate a looming Oct. 31 deadline to pass the bill, according to the Washington Examiner.

Sen. Joe Manchin (D-W.Va.) has criticized the massive spending bill.

“To be clear, again, Congress should proceed with caution on any additional spending and I will not vote for a reckless expansion of government programs," Manchin said, according to the New York Post. "No op-ed from a self-declared Independent socialist is going to change that."

The latter statement was in clear reference to recent criticism from Sen. Bernie Sanders (I-Vt.). 

“Millions of jobs are open, supply chains are strained and unavoidable inflation taxes are draining workers’ hard-earned wages as the price of gasoline and groceries continues to climb,” Manchin said.

According to an Oct. 13 report from the U.S. Bureau of Labor Statistics, The consumer price index rose 5.4% over the last 12 months ending in September 2021.

The consequence is increased costs of living for most Americans. The Bureau of Labor Statistics reported notable upticks over the past 12 months on items particularly important to average American households such as  food (up 4.6%) and energy ( p 24.8%).

In what they deem the “inflation tax” the Wall Street Journal editorial board said that “workers are paying the price” for increased costs since “real hourly earnings are down 1.9% since January.”

Jason Furman, who served as chairman of the Council of Economic Advisers during Barack Obama's administration and is currently a Harvard economist, said inflation has eaten up all of the wage gains for Americans going back to Donald Trump's administration.

Biden has called this current period of inflation and price spikes “temporary” according to Reuters. Others disagree.

The Wall Street Journal recently reported that officials at the Federal Reserve see “‘transitory’ inflation lasting quite a while.”

Fellner said it’s time to face the reality of the very real damage caused by such inflationary policies. People will feel the pain, he said.

“Politicians, of course, prefer to pay for their wasteful programs via printing money and the inflation that causes, because doing so makes it harder to hold them personally accountable in the way voters could if they were required to vote on a specific piece of tax legislation,” Fellner said. “Unfortunately, devaluing the dollar to pay for runaway government spending leads to higher prices for working families, making it harder for them to meet their basic needs like food, housing and other essentials.”

Some close advisors to Biden have indicated they do not think rising prices and inflation impact the average citizen. As reported by Fox News and others, Ronald Klain, Biden’s chief of staff, shared a Twitter post with the comment “This” and two downward-pointing emojis that called inflation a “high-class problem.”

Republican National Committee Rapid Response Director Tommy Pigott replied, "Struggling to pay for food, fuel, and housing because of rising prices is not a ‘high class problem. Biden is making everyone worse off, but instead of stopping the damage, their strategy is to try to gaslight Americans,” according to Fox News.

Economic commentators and analysts are concerned about the impact increased, sizable government spending could have on the economy. A recent study published in the Cato Journal by the Cato Institute concluded that reckless spending through increasing American debts contributes to inflation considerably and will cause numerous economic issues in the months and years to come if nothing is done about it.

During a recent Fox Business segment, financial commentator and former Trump Administration official, Larry Kudlow explained how he believes increased government spending, like the one currently proposed, will negatively impact the economy. 

“First, government spending brings government regulation,” Kudlow claimed. “This regulatory avalanche will choke off business activity of all kinds,” creating what he calls a “supply side obstacle.” 

Kudlow also claims that increased entitlements will dampen productivity and reduce the incentive to work.

A recent economic white-paper by the Niskanen Center, a non-partisan think tank working to promote an open society, echoes concerns that increased government spending on entitlements and subsidies can lead to increased prices and what they call “cost disease socialism.”

Steven M. Teles, Samuel Hammond, and Daniel Takash authored the September 2021 paper wherein they acknowledge that while “(s)oaring costs have blown a hole in the budgets of the working and the middle classes, offsetting the full benefits of a growing economy” some of the solutions proposed by progressive politicians such as “simply socializing the costs and blowing an equally large hole in the federal debt is not a sustainable alternative.”

Teles, Hammond and Takash find that “the root cause of escalating costs is overwhelmingly regulatory, rather than budgetary,” and that “shifting costs onto the public would not only fail to fix the underlying problem; it could also make cost disease substantially worse” resulting in a “vicious cycle in which subsidies for supply-constrained goods or services merely push up prices, necessitating greater subsidies, which then push up prices, ad infinitum.”

The Nevada Policy Research Institute's Fellner said the practice of playing politics with the economy and harming the American people must come to a halt.

“Americans deserve a system of sound money,” he said. “Until that happens, however, politicians have a moral obligation to be responsible stewards of the tax dollars entrusted to them.”