Republicans Have No Inflation Plan

cigaretteman

HR King
May 29, 2001
73,054
52,723
113
By Paul Krugman
Opinion Columnist
Sign up for the Opinion Today newsletter Get expert analysis of the news and a guide to the big ideas shaping the world every weekday morning. Get it sent to your inbox.
Few things I’ve written in recent years have generated as much hate mail as a relatively low-key, somewhat nerdy newsletter I put out just before the release of data on gross domestic product for the second quarter of 2022. In that newsletter I explained why, despite a lot of misinformation in the news media, a recession is not defined as two quarters of declining G.D.P. and the first half of 2022 was unlikely to meet the actual, multidimensional criteria used by the committee that determines (after the fact) whether a recession has started.
The reason for the hate mail was, of course, that Republicans were eager to declare a “Biden recession” and falsely accused the administration of a double standard when it said that we were not, in fact, in a recession.
Well, Thursday’s advance G.D.P. report for the third quarter of 2022 showed why a recession call based on two quarters of somewhat bizarre data would have been all wrong. Economic growth has rebounded, back up to 2.6 percent at an annual rate — putting G.D.P. back in line with strong employment growth, which has continued throughout the year. Do you really want to say that we were in a recession from January through June but have miraculously recovered?
I’ll write more about the quirkiness of recent economic numbers, including the strange disconnect between jobs and G.D.P., soon. For now, suffice it to say, we weren’t in a recession earlier this year and aren’t in a recession now, although we could find ourselves in one in the future as delayed effects of rising interest rates kick in.
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Politically, however, it may not matter much, because Republicans have largely given up on the recession story. Instead, their economic attacks, in both debates and campaign ads, have been focused overwhelmingly on inflation, especially gas prices.
It therefore seems worth pointing out that the G.O.P. doesn’t have a plan to fight inflation. Actually, it doesn’t have any coherent economic plan at all. But to the extent that Republicans have laid out what they will try to do if they win the midterms, their policies would make inflation worse, not better.
When pressed about how, exactly, they would reduce inflation, Republicans often fall back on some version of “Gas was only $2 a gallon when Trump left office!” So let’s talk about that comparison.
First, it’s remarkable how the right has reimagined January 2021 as a golden moment for America. At the time, about 20,000 Americans were dying from Covid every week; there were still nine million fewer jobs than there had been before the pandemic. Indeed, the still-depressed state of major economies, including that of the United States, was the main reason world oil prices were unusually low, which in turn was the main reason gas was cheap.
A better comparison would be with 2019, the year before the pandemic, when gas averaged $2.60 a gallon. Bear in mind that average wages have risen about 15 percent over the past three years, so gas would be as affordable now as it was in 2019 if its current average price were $2.99. As of Wednesday, it was $3.75. So yes, gas has become less affordable, but not by nearly as much as Republicans claim.



And despite G.O.P. rhetoric, Biden administration policies have had little impact on gas prices, which have been driven by events affecting world markets — notably Russia’s invasion of Ukraine — and to some extent by bottlenecks in refining, which grew worse for several weeks starting in mid-September but have eased again.


So what is the Republican plan to bring gas prices down? There isn’t one.
What about inflation more generally? You can make the case that large deficit spending early in the Biden presidency fed inflation (although it had little effect on the most politically salient prices, for energy and food, which have soared around the world).
If you’re worried about the inflationary impact of budget deficits, however, you should know that almost the only concrete economic policy idea we’re hearing from Republicans is that they want to extend the Trump tax cuts, which would … substantially increase the deficit.
It’s true that many Republicans adhere to an economic ideology that doesn’t see deficits caused by tax cuts as a problem, either because they believe — in the teeth of all the evidence — that tax cuts somehow pay for themselves, or because they believe that government spending, not deficits per se, is what causes problems.
But if you believe that cutting taxes without any plausible plan for offsetting spending cuts isn’t a problem even in a time of inflation, markets beg to disagree. Look at what happened to the pound and British interest rates after Liz Truss, the quickly deposed prime minister, announced an economic plan that, broadly speaking, looks a lot like what Republicans are proposing here. (There’s more to it than that, but still.)
The bottom line is that while the G.O.P.’s election strategy is all about blaming the Biden administration for inflation, the Republican Party doesn’t actually have any plan to reduce inflation. To the extent it has an economic plan at all, it would make inflation worse.

 
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binsfeldcyhawk2

HR Legend
Gold Member
Oct 13, 2006
27,676
37,362
113
Sad how our politics has turned into one team hoping and counting on the other team to fail in order to win elections and the country and the people in it are just acceptable casualties of the war for power and control.
It’d be the same exact scenario if Republicans were in control. Been that way for a long time…it is what it is.
 

83Hawk

HR Legend
Sep 17, 2002
21,956
17,435
113
Then again, the democrats don't have a plan either, other than making it worse.
 
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DooBi

HR Heisman
Sep 18, 2006
7,640
8,263
113
Why would they need a plan when the democrats' plan is working so well? Oh wait....
 

luvmyhawks

HR Legend
Mar 22, 2005
21,076
18,304
113
Then again, the democrats don't have a plan either, other than making it worse.

This seems to be impossibe for dems to figure out. The plan is to stop dems from making it worse. Apparently that isn’t discussed when the daily “Talking points for democrats today” email goes out.
 

tumorboy

HR Legend
Gold Member
Sep 24, 2002
26,991
31,799
113
This seems to be impossibe for dems to figure out. The plan is to stop dems from making it worse. Apparently that isn’t discussed when the daily “Talking points for democrats today” email goes out.
The Republicans will make it worse. With more tax cuts. Followed with no significant spending cuts. Tax cuts the way Republicans do them are essentially spending programs anymore. No same fiscal policy behind them.
 

Huey Grey

HR King
Jan 15, 2013
50,596
74,161
113
This seems to be impossibe for dems to figure out. The plan is to stop dems from making it worse. Apparently that isn’t discussed when the daily “Talking points for democrats today” email goes out.
This isn't true at all. First, Rs gleefully passed trillions in their own stimulus plans. Then they gleefully took federal money from the other stimulus plans. Then some Rs, like Reynolds, hoarded this money, and boasted about what a swell job she did accumulating such a massive surplus (which all came from inflationary federal funds which makes her claims that she is so fiscally responsible full of shit). Then after the Dems passed infrastructure, and a host of other spending bills, Rs took this money, as well, and had the gall to take credit for it afterwards.

Rs are completely full of shit with their complaints here. If government spending was weed, not only would Rs would be taking a hit everytime the joint was being passed to them, they would be talking about how awesome getting this high was.
 

luvmyhawks

HR Legend
Mar 22, 2005
21,076
18,304
113
This isn't true at all. First, Rs gleefully passed trillions in their own stimulus plans. Then they gleefully took federal money from the other stimulus plans. Then some Rs, like Reynolds, hoarded this money, and boasted about what a swell job she did accumulating such a massive surplus (which all came from inflationary federal funds). Then after the Dems passed infrastructure, and a host of other spending bills, Rs took this money, as well, and had the gall to take credit for it afterwards.

Rs are completely full of shit with their complaints here. If government spending was weed, not only would Rs would be taking a hit everytime the joint was being passed to them, they would be talking about how awesome getting this high was.

Great story. Here’s to hoping gridlock will stop the ridiculous spending from both sides.

I am no fan of republicans. I just don’t care for what democrats are doing either. There are virtually zero candidates I share the same ideologies with. Until there are, I want gridlock.
 
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luvmyhawks

HR Legend
Mar 22, 2005
21,076
18,304
113
The Republicans will make it worse. With more tax cuts. Followed with no significant spending cuts. Tax cuts the way Republicans do them are essentially spending programs anymore. No same fiscal policy behind them.

Can republicans pass tax cuts without the presidents signature?
 

tumorboy

HR Legend
Gold Member
Sep 24, 2002
26,991
31,799
113
Can republicans pass tax cuts without the presidents signature?
Give it two years. And they will. Probably make the last ones look like child's play. Got to keep the donors happy to embrace the crazy coming.
 

Huey Grey

HR King
Jan 15, 2013
50,596
74,161
113
Give it two years. And they will. Probably make the last ones look like child's play. Got to keep the donors happy to embrace the crazy coming.
Most R governors can pass tax cuts all by themselves. Reynolds has been talking about doing away with the Iowa income tax entirely.
 

Huey Grey

HR King
Jan 15, 2013
50,596
74,161
113
The Kansas plan. Yeah that worked well.
No joke, Iowa will be in serious budgetary trouble in a few years. After that federal money runs out, and after more taxes are cut, we will be facing some pretty stark funding shortfalls. It'll be painful what will get the axe to make ends meet.
 
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luvmyhawks

HR Legend
Mar 22, 2005
21,076
18,304
113
Give it two years. And they will. Probably make the last ones look like child's play. Got to keep the donors happy to embrace the crazy coming.

Then, here is too hoping that in 2 years, we get some actual candidates that are more concerned about the future of our country than lining the pockets of their buddies. For now, I will take gridlock.
 
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luvmyhawks

HR Legend
Mar 22, 2005
21,076
18,304
113
No joke, Iowa will be in serious budgetary trouble in a few years. After that federal money runs out, and after more taxes are cut, we will be facing some pretty stark funding shortfalls. It'll be painful what will get the axe to make ends meet.

Federal government should have pulled back all of its federal funds from the states, IMO. Put it back towards the debt. Would have helped with inflation immensely.
 

DogBoyRy

HR Legend
Jul 28, 2006
10,834
7,536
113
The Republicans will make it worse. With more tax cuts. Followed with no significant spending cuts. Tax cuts the way Republicans do them are essentially spending programs anymore. No same fiscal policy behind them.
Tax receipts are at record highs.
It’s a spending problem.
 

Huey Grey

HR King
Jan 15, 2013
50,596
74,161
113
Federal government should have pulled back all of its federal funds from the states, IMO. Put it back towards the debt. Would have helped with inflation immensely.
We already all know what will happen. Reynolds will pass even more tax cuts buffered by the money she got from the federal government, Iowa won't be able to support itself after that money dries up, and we really will become another Mississippi sinking into poverty. Big companies will probably move from Iowa, too. Nobody wants to be part of a sinking ship where the younger workforce moves to another state and all you're left with is an aging population.
 

DogBoyRy

HR Legend
Jul 28, 2006
10,834
7,536
113
No joke, Iowa will be in serious budgetary trouble in a few years. After that federal money runs out, and after more taxes are cut, we will be facing some pretty stark funding shortfalls. It'll be painful what will get the axe to make ends meet.
Wrong. Budget will be fine with gambling, lottery, etc.
Eliminating retirement income was a great move to keep the state competitive.
 

DogBoyRy

HR Legend
Jul 28, 2006
10,834
7,536
113
By Paul Krugman
Opinion Columnist
Sign up for the Opinion Today newsletter Get expert analysis of the news and a guide to the big ideas shaping the world every weekday morning. Get it sent to your inbox.
Few things I’ve written in recent years have generated as much hate mail as a relatively low-key, somewhat nerdy newsletter I put out just before the release of data on gross domestic product for the second quarter of 2022. In that newsletter I explained why, despite a lot of misinformation in the news media, a recession is not defined as two quarters of declining G.D.P. and the first half of 2022 was unlikely to meet the actual, multidimensional criteria used by the committee that determines (after the fact) whether a recession has started.
The reason for the hate mail was, of course, that Republicans were eager to declare a “Biden recession” and falsely accused the administration of a double standard when it said that we were not, in fact, in a recession.
Well, Thursday’s advance G.D.P. report for the third quarter of 2022 showed why a recession call based on two quarters of somewhat bizarre data would have been all wrong. Economic growth has rebounded, back up to 2.6 percent at an annual rate — putting G.D.P. back in line with strong employment growth, which has continued throughout the year. Do you really want to say that we were in a recession from January through June but have miraculously recovered?
I’ll write more about the quirkiness of recent economic numbers, including the strange disconnect between jobs and G.D.P., soon. For now, suffice it to say, we weren’t in a recession earlier this year and aren’t in a recession now, although we could find ourselves in one in the future as delayed effects of rising interest rates kick in.
Advertisement
Continue reading the main story


Politically, however, it may not matter much, because Republicans have largely given up on the recession story. Instead, their economic attacks, in both debates and campaign ads, have been focused overwhelmingly on inflation, especially gas prices.
It therefore seems worth pointing out that the G.O.P. doesn’t have a plan to fight inflation. Actually, it doesn’t have any coherent economic plan at all. But to the extent that Republicans have laid out what they will try to do if they win the midterms, their policies would make inflation worse, not better.
When pressed about how, exactly, they would reduce inflation, Republicans often fall back on some version of “Gas was only $2 a gallon when Trump left office!” So let’s talk about that comparison.
First, it’s remarkable how the right has reimagined January 2021 as a golden moment for America. At the time, about 20,000 Americans were dying from Covid every week; there were still nine million fewer jobs than there had been before the pandemic. Indeed, the still-depressed state of major economies, including that of the United States, was the main reason world oil prices were unusually low, which in turn was the main reason gas was cheap.
A better comparison would be with 2019, the year before the pandemic, when gas averaged $2.60 a gallon. Bear in mind that average wages have risen about 15 percent over the past three years, so gas would be as affordable now as it was in 2019 if its current average price were $2.99. As of Wednesday, it was $3.75. So yes, gas has become less affordable, but not by nearly as much as Republicans claim.



And despite G.O.P. rhetoric, Biden administration policies have had little impact on gas prices, which have been driven by events affecting world markets — notably Russia’s invasion of Ukraine — and to some extent by bottlenecks in refining, which grew worse for several weeks starting in mid-September but have eased again.


So what is the Republican plan to bring gas prices down? There isn’t one.
What about inflation more generally? You can make the case that large deficit spending early in the Biden presidency fed inflation (although it had little effect on the most politically salient prices, for energy and food, which have soared around the world).
If you’re worried about the inflationary impact of budget deficits, however, you should know that almost the only concrete economic policy idea we’re hearing from Republicans is that they want to extend the Trump tax cuts, which would … substantially increase the deficit.
It’s true that many Republicans adhere to an economic ideology that doesn’t see deficits caused by tax cuts as a problem, either because they believe — in the teeth of all the evidence — that tax cuts somehow pay for themselves, or because they believe that government spending, not deficits per se, is what causes problems.
But if you believe that cutting taxes without any plausible plan for offsetting spending cuts isn’t a problem even in a time of inflation, markets beg to disagree. Look at what happened to the pound and British interest rates after Liz Truss, the quickly deposed prime minister, announced an economic plan that, broadly speaking, looks a lot like what Republicans are proposing here. (There’s more to it than that, but still.)
The bottom line is that while the G.O.P.’s election strategy is all about blaming the Biden administration for inflation, the Republican Party doesn’t actually have any plan to reduce inflation. To the extent it has an economic plan at all, it would make inflation worse.

We don’t have time to explain our plan.
Busy working the airline seat crisis.
 

Huey Grey

HR King
Jan 15, 2013
50,596
74,161
113
Tax receipts are at record highs.
It’s a spending problem.
True, but the experts say that this is due from rapidly rising wages, more employment, and record spending (which are all inflationary measures).

We've already maxed out most, if not all, of these measures. Wages probably aren't going to go up anymore, employment rates can't get any higher, and spending is already dropping.
 

LuteHawk

HR Legend
Nov 30, 2011
28,391
19,056
113
We should be honest, neither the Democrats or GOP
have any effective plans to curb inflation. The geriatric
majority of the U.S. Senate does not really care to tackle
inflation. Instead, they want to collect their paycheck
and get the perks that come with being a U.S. Senator.
 

BanjoSaysWoof

HR MVP
Dec 2, 2017
1,629
3,238
113
The lowest hanging fruit….

make it illegal to purchase more than $10k of futures/derivatives on commodities if you can’t accept delivery.

a few algorithms run by computers on park ave for 20 firms basically control the global markets. They can’t take delivery of 5 barrels of oil let alone 50000, let’s get them out of the game.
 

Titanhawk2

HR Legend
Jul 14, 2011
12,540
5,717
113
Why is stopping the Dems from doing what they're doing, not a plan? Anything done, one way or the other, to try and control the economy never works out well
 
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