Blowout spending, massive liquidity, and ‘green energy’ priorities drive 40-year highs in inflation
Radical Green New Deal policies have resulted in reduced domestic U.S. energy production and higher prices.
President Biden said that rising prices in the United States have “nothing to do” with his administration’s policies. Russian President Vladimir Putin and the COVID-19 pandemic are to blame for record-high inflation. He added: "Make no mistake, the current spike in gas prices is largely the fault of Vladimir Putin—it has nothing to do with the American Rescue Plan."
Biden blames oil companies, meat producers, and Putin for inflation—but his administration’s anti-energy policies are the primary culprit for soaring energy prices. Inflation hit a fresh 40-year high in February. The consumer price index climbed 7.9% on an annual basis, according to data released by the Bureau of Labor Statistics. Gas jumped 6.6% in February and accounted for almost a third of price hikes. Producer prices in February soared 10% year-on-year, guaranteeing even higher consumer prices in months to come.
Biden’s radical Green New Deal policies have resulted in reduced domestic U.S. energy production and higher prices, which began well before the war in Ukraine. His actions and policies have made it harder and more expensive to take advantage of our country's abundant energy resources, driving up costs for hard-working families. Biden's ‘green energy’ agenda is not just about banning Russian oil. He wants to ban all oil.
The soaring price of oil is causing historic pain not just at the pump but also for people trying to heat their homes and for businesses shipping goods around the country. It's contributing to historic inflation in almost every product and service. Low-income earners and people of color have been hit especially hard with higher food, housing, and energy costs.
The 40-year high in consumer inflation and producer inflation is a result of an overly accommodative monetary policy and blowout spending by the government that started with the pandemic two years ago. The Federal Reserve never tapered after people got back to work and reopened the economy in the fall of 2020. The Federal Reserve kept buying $120 billion in treasuries and mortgage-backed securities a month—$1.44 trillion annually. During 2020-2021, the Federal Reserve’s balance sheet ballooned by almost $5 trillion while at the same time Government spending was 27% of GDP. Real interest rates were negative, which contributed to inflating housing and stock market values to bubble price levels.
Yes, pandemic and supply chain issues contributed to inflation, however, the supply problems are the product of an overstimulated economy.
Biden’s misguided fiscal policies contributed to inflation, which was about how much-borrowed money can the government spend without any consideration for unintended consequences. In other words, there was no cost-benefit analysis. Congress approved some $4.5 trillion in total aid spending in the CARES Act in 2020. See chart below. Federal agencies have used about $4 trillion of that, and have made $3.5 trillion in actual payments to date, leaving a trillion dollars unspent. Then Joe Biden spent $2 trillion more in the American rescue plan, $2 trillion in infrastructure, and proposes to spend 5 trillion more!
Sanctions that hold Putin accountable will hurt only Americans and further enrich Putin if they are not coupled with a significant expansion of energy production in this country. Unfortunately, this administration is moving full steam ahead with Biden’s ‘green energy’ agenda and continues with actions to regulate conventional energy out of existence.
The Biden administration can provide relief to Americans struggling from historic inflation and high prices administration by immediately holding lease sales on federal lands—including in ANWR—and waters for new oil and gas exploration, suspending the Jones Act, and providing regulatory relief under the Renewable Fuels Standard. If Biden doesn’t act soon, we will know that he cares more about destroying our country’s oil industry than Americans suffering from historically high inflation.