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In These Times - November 16, 2021

fter years of hypocrisy and bungled forecasts of doom, the budget deficit no longer provokes panic. The elites need a new bogeyman, otherwise Congress might actually spend us into happiness. Now, the new monster in the closet is Inflation. The great prognosticators Sen. Joe Manchin (D‑W.V.) and CNN’s Wolf Blitzer have weighed in, and we are officially advised to be afwaid, vewy afwaid.

Since 2010, median housing rents have gone up by 36 percent. The cost of family health insurance has risen 47 percent. From the academic year 2009 – 2010 to 2018 – 2019, average costs of college went up 39 percent. And the median hourly wage rose by just 11 percent, so rent, healthcare and college — among other things — are all less affordable now than they were ten years ago.

To varying degrees, each of these problems is addressed in the Democrats’ budget reconciliation bill, dubbed the Build Back Better (BBB) plan. That legislation includes added support for housing, increased premium subsidies under the Affordable Care Act, and expanded Pell Grants for college students. There is compensation for the inadequate growth of wages, including tax credits for families with children, subsidized childcare, pre‑K for three- and four-year olds, and an expanded Earned Income Tax Credit for workers without children. Of course, each of these items is scaled down from what was originally proposed by Joe Biden and Bernie Sanders. More should be done.

Now comes Manchin, leading the charge by calling the budget bill ​“inflationary.” It’s like criticizing a fire company for using water instead of gasoline. The bad faith here is stunning. There wasn’t a peep about inflation in the case of the bipartisan infrastructure bill, supported by Manchin and signed by Biden on Monday, much less about former President Trump’s tax cuts or defense spending increases.

The spur for this new campaign is a handful of cherry-picked, transitory changes in particular prices. On the most basic level, there is a widespread misunderstanding of what ​“inflation” really is. Inflation is a continuous increase in prices, more or less across the board. As my reactionary graduate macro economics professor taught me, a spike in the price of, say, oil is not ​“inflation” unless it ends up feeding into a sustained increase in other prices. ...
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