Leading economists are warning that a deal by California Gov. Gavin Newsom (D) and Democrats in the state legislature to send checks to residents to help deal with the high cost of fuel and other high prices could make inflation even worse.
As Breitbart News reported, the deal, which was struck Sunday, would send up to $1,050 in rebates to residents in the state whose average gas price is the highest in the nation. It is the third such stimulus payment by California in the past two years.
As the Sacramento Bee reported, however, sending more money to consumers could simply make the inflation far worse:
The “inflation relief” package championed by Gov. Gavin Newsom and Democratic legislative leaders could have the opposite effect, pushing inflation — now at its higher level in 40 years — even higher, top economists say.
“One-off tax holidays or rebates which put more money in people’s pockets without doing anything to boost supply are inflationary,” said Jared Walczak, vice president of state projects at the Tax Foundation, a Washington-based research group.
The Bee contacted economists familiar with California. All but one saw the plan as having the possibility of adding to inflation.
Newsom’s office dismissed such concerns as “academic,” according to the Bee.
Democrats rejected earlier efforts by Newsom to postpone a rise in California’s gas tax. President Joe Biden is proposing a federal gas tax holiday, which some economists say could also be inflationary, and which Biden’s running made in 2008, then-Sen. Barack Obama (D-IL), dismissed as a “gimmick.”
Joel B. Pollak is Senior Editor-at-Large at Breitbart News and the host of Breitbart News Sunday on Sirius XM Patriot on Sunday evenings from 7 p.m. to 10 p.m. ET (4 p.m. to 7 p.m. PT). He is the author of the recent e-book, Neither Free nor Fair: The 2020 U.S. Presidential Election. His recent book, RED NOVEMBER, tells the story of the 2020 Democratic presidential primary from a conservative perspective. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter at @joelpollak.