After the highest inflation in 44-years under President Biden, specious Democrats are championing affordability. They are blasting President Trump for the lofty prices of housing, groceries, child care and insurance. Democrats are apoplectic that Trump hasn't lowered prices during his 11 months in office.
Democrats have a case of convenient amnesia. During the period 2021-2024, prices ballooned a cumulative 19.5%, the worst runaway inflation since the 48.6% sticker shock during Jimmy Carter's term from 1977-1980.
Democrats remained indifferent about mushrooming prices while they were in power. Now the party has experienced an epiphany. Flip went flop and now they are concerned about the impact of galloping inflation on the financial health of Americans.
Cheeky Democrat political strategists thumped their chests and proclaimed elections in New Jersey, Virginia and New York City birthed a winning issue: "affordability," guaranteed to rouse voter anger and stoke turnout. However, New Jersey and Virginia were centered on other issues.
Affordability was only front-and-center in New York, where the cost of living is more than double the national average. Socialist Zohran Mamdani swept the Big Apple's mayoral race, promising to lower costs and make life easier for New Yorkers.That hardly suggests a Democrat midterm tsunami.
However, there's no question Americans are weary of bearing the brunt of a never-ending march of higher prices. You can't blame them. Inflation was 1.4% when Trump left office at the end of 2020. In Biden's first year in 2021, prices rocketed 7% higher, the largest one-year inflation rate since 1981.
Here is a sample of the cumulative cost increases as measured by the Consumer Price Index (CPI) during the chaotic Biden years:
- Transportation saw the largest increase, hiking 34.4%. Gasoline prices were a key driver.
- Housing leapt by 23%. Prices for rent soared 31%.
- Food and beverage prices rose 23.6%. Groceries skyrocketed 26%.
- Fuels and utilities catapulted 28.5%.
- Since 2017, childcare costs have spiked 40% for a family with two children.
While acknowledging COVID impacted inflation, the federal government spent a whopping $27.4 trillion in the fiscal years 2021 through 2024 as Democrats embarked on a spending spree unseen in modern times.The pump-priming flooded the economy with too much money chasing scare goods.
The rampant spending included infrastructure projects and cash payments as part of the $1.9 trillion American Rescue Plan. All that money sloshing around in the economy created jobs, but the numbers were inflated by the addition of 1.07 million government jobs in the Biden years.
The reckless spending helped fuel a wage-price spiral that poured gasoline on services and goods igniting combustible inflation.
The Federal Reserve was forced to act to hose down inflation, ratcheting up interest rates from near zero in 2020 to 5.5% in January, 2024. Rising rates hit consumer's in digital wallets, as interest surged on credit cards, cars and housing mortgages. Americans hemorrhaged cash to make interest payments.
The interest rate bomb and exploding prices left about two-thirds of American households living paycheck-to-paycheck.
The latest survey conducted by the University of Michigan underscores the economic migraine. The index plummeted to 50.3%, documenting flagging consumer sentiment. A reading below 75 suggests consumer pessimism about the economy and personal finances. Consumers are gasping for hope.
All the hyper-political rhetoric will do nothing to return prices to 2019 levels. Prices will continue to rise, but are showing signs of increasing at a slower rate. In the aftermath of the worst inflation under President Carter, prices stabilized but there was no retreat to pre-1977 levels.
Some economic models show when inflation exceeds 8% it can take an average of 16 years to return to the Fed's official 2% target. Other economists hedge, saying it can take a few years or up to a decade. That explains why Democrats are pivoting to "affordability" as the midterm slogan de jour.
Consumers are unlikely to care about past economic policy, which is the reason Republicans need to be laser-focused on the economy. Renewing current tax cuts approved during Trump's first term, while representing progress, doesn't put more money today in the pockets of consumers.
Other Trump tax cuts--the no tax on tips and no taxes on overtime for some workers--will not be felt by consumers until 2026 when they file taxes for 2025. Americans will have more dollars to spend as a result of these policy changes.
However, most consumers gauge affordability by how much they shell out when they buy groceries, dine out, put gas in their vehicles, pay for rent, housing and utilities. Since Trump assumed office, prices have declined for gasoline, fresh fruits, eggs and communications services.
Yet other prices--for example, those for electricity, health insurance, beef and rent--have marched higher than 2%. In recognition of consumers' economic pain, the Trump Administration announced this month it will eliminate tariffs on coffee, beef, bananas, other fruits and vegetables.
While it's a positive development, Republicans need to level with Americans about inflation. Prices aren't going to fall as fast as costs surged. Trump should be laster focused on growing the economy and jobs, while reminding Americans that it was Democrats who drove the inflation bus off the cliff.
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