Vulnerable Connecticut Rep. Jahana Hayes claimed that “Democrats single-handedly saved the economy,” during a portion of her remarks at a virtual black caucus town hall uploaded to YouTube in March.
The Connecticut Democratic Party’s Black Caucus hosted the event with Rep. Hayes via Zoom on March 16.
Hayes claim that “Democrats single-handedly saved the economy” is a wild assertion considering many economists have linked the American Rescue Plan and other behemoth Democrat spending bills to runaway inflation.
Hayes, along with the other Democrats, happily promoted and voted for the Democrats’ $1.2 trillion, 2,702-page so-called infrastructure bill and the $1.9 trillion American Rescue Plan last year, all of which helped fuel inflation.
Over the last year, prominent economists, such as Olivier Blanchard and Larry Summers, have called out Democrats about their policies’ effects on inflation, which has hit a 40-year high. In January consumer prices were up 7.5 percent compared with a year ago, which is the largest jump in nearly four decades, and prices have continued to rise. As a result, inflation is sapping the savings accounts of American families, pushing up the prices of everything from groceries to cars, and causing real wages to fall. In March, inflation put pressure on the Federal Reserve to hike the interest rates.
Asset manager Steve Rattner, who served as counselor to the Treasury Secretary in the Obama administration, wrote last November in an opinion piece at the New York Times that Biden’s American Rescue Plan was the “original sin” that caused inflation.
“The bill — almost completely unfunded — sought to counter the effects of the Covid pandemic by focusing on demand-side stimulus rather than on investment. That has contributed materially to today’s inflation levels,” Rattner wrote.
Summers — the Treasury Secretary under Bill Clinton, director of the National Economic Council under Barack Obama, former president of Harvard University, and chief economist of the World Bank — warned the American people in many interviews over the last year about the increase in government spending.
During an interview with CNN, Summers argued that Biden’s American Rescue Plan pumped up demand too much without taking steps to increase supply, which resulted in inflation. “I do think that, unfortunately, some of the predictions that I made about the consequences of stimulus do seem to have come true,” he told CNN.
“People underestimated how much demand was going to be created by all the fiscal stimulus in the Recovery Act and all the expansionary monetary policy, and at the same time, they overestimated the economy’s supply potential,” Summers additionally said during an interview with the PBS NewsHour. “Because they didn’t recognize the damage that was going to be done over the medium term by COVID.”
In February, Breitbart News’s Economics Editor John Carney wrote:
Although many economists and anti-Trump journalists claimed President Donald Trump’s tariffs would raise prices, consumer prices remained low throughout his administration. Trump’s tariffs turned out not to be taxes on consumers. Instead, they were absorbed by Chinese producers and exporters and the profit margins of most large U.S. companies.
Inflation only began to accelerate last March after years of coming in below the Fed’s two percent target. The Fed had decided to keep interest rates low although the economy was recovering at a faster than expected rate. What’s more, the Biden administration pushed through billions of dollars of deficit spending in the American Rescue Plan. These combined to fuel demand for goods and services faster than supplies could expand, pushing up prices. [Emphasis added]
Federal Reserve chief Jerome Powell, following the advice of many of the economists on the central bank’s staff, initially claimed that inflation was due to transitory factors. Fed officials forecast that inflation would fall in the latter half of 2021, predicting that supply chains would swiftly unsnarl and a rebalancing of consumer demand from goods to services would relieve pricing pressure. The Biden administration, under the tutelage of former Fed chair and now Treasury Secretary Janet Yellen, largely followed suit and continued to press for even more spending.
“The inflation in the price of durable goods has been even more jarring to consumers because it follows a quarter of a century in which prices consistently fell year after year,” Carney further explained.
Jacob Bliss is a reporter for Breitbart News. You can follow him on Twitter.
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