Republicans’ skepticism of Biden’s $4 trillion spending plans is bolstered by the rise in inflation.

Business Politics

On Wednesday, President Biden’s $4 trillion tax credit and budget plans ran into a new political stumbling block: the possibility of rising inflation, following the largest surge in consumer prices in decades in April.

According to the Labor Department, consumer prices in the United States increased 0.8 percent in April, the highest monthly rise in more than a decade and the fastest year-over-year increase since 2008. Excluding volatile food and energy results, core inflation increased by 0.9 percent in April and by 3 percent over the previous year.

“There is so much liquidity in the economy that demand is strong, and it is outpacing supply, and it is beginning to drive prices up,” Sen. John Thune, R-S.D., told Bloomberg on Wednesday. “We need to be more careful and restrained.”

Republican lawmakers have used rapidly growing inflation and sluggish job growth in the last month to contend that further federal spending would only harm the economy as it rebounds from the coronavirus global epidemic.

“With this morning’s Consumer Price Index (CPI) release, it is clear that inflation is here,” Sen. Pat Toomey, R-Pa., tweeted. “The Federal Reserve can no longer pretend this is a distant problem. It is time for the Fed to revisit its accommodative policy stance.”

After the pandemic started a little more than a year ago, Congress has funded almost $6 trillion in government funding to keep the country’s economy stable, including Democrats’ $1.9 trillion American Rescue Package in March. The exorbitant amount of spending increased the national debt to a record $3.1 trillion for the 2020 fiscal year and a peak of $1.7 trillion for the first time in history.

“There is so much liquidity in the economy that demand is strong, and it is outpacing supply, and it is beginning to drive prices up,” Sen. John Thune, R-S.D., told Bloomberg on Wednesday. “We need to be more careful and restrained.”

The consumer price index increased 0.8 percent from the previous month and 4.2 percent from April 2020, according to a study released on Wednesday, which could offer fresh fodder for Republicans and some Democrats who have warned about the possibility of inflation.

“Larry Summers was right,” tweeted Sen. John Cornyn, R-Texas, referring to a top economic official in both the Clinton and Obama administrations who said that Biden’s sprawling spending plans could set off inflationary pressures “of a kind we have not seen in a generation.”

Since March 2020, the Federal Reserve, headed by Chairman Jerome Powell, has held interest rates near zero and has consistently stated that it will do so until “labor market conditions have hit levels associated with the Committee’s expectations of full jobs and inflation has risen to 2 percent and is on track to gradually surpass 2 percent for some time.”

Biden inflation spending

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