Inflation

Floor Speech

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Mr. GRASSLEY. Madam President, when I was first elected to Congress in the 1970s, I ran as ``Grassley, the inflation fighter.'' Inflation was about 12 or 13 percent at that time. When I ran for the Senate, it was 12 or 13 percent again, and it hasn't been a major problem since then.

Those who remember that time of high inflation know that it is a time period when inflation was a real problem. It kneecaps middle-class prosperity and causes severe hardships for those already struggling. Inflation is nothing short of a regressive tax, as it hurts Americans more the less money that they have.

It is a stealth tax. With the income tax, you can see how much the government is taking out of your paycheck. With a sales tax, you can see on your receipt what the government took for its cut. With inflation, the value of the dollar in your pocket is reduced without even leaving your billfold.

When Americans suddenly notice that it costs more to buy the same groceries, it can be hard to know whom to blame. Did the store just decide to raise prices or is inflation caused by mysterious economic forces beyond anyone's control?

In reality, the Federal Government can directly cause inflation by printing too much money to feed its spending habits. Politicians like to promise freebies that someone else will pay for--maybe ``the rich'' will pay.

Who is ``the rich,'' you might ask. ``Don't worry; it is not you,'' the big spenders assure us.

Well, don't be so sure. President Biden suggested that if rich people pay their fair share of taxes, we can afford to spend another $4 to $6 trillion. Now, in reality, if the government confiscated all the wealth of all the U.S. billionaires, it wouldn't cover that bill. Just asking them to pay a little bit more, as the President suggests, will barely make a dent.

So who is going to pay the bill? Don't be fooled. Each American is going to pay that bill. Hard-working Americans will be shouldering the costs of Biden's spending plans in the form of lower wages or higher prices at the gas pump or the checkout lines at Hy-Vee in Cedar Falls, IA.

Remember, prior to the pandemic, tax reform and a more predictable regulatory environment contributed to the best economy America had seen in decades. Yes, prior to the pandemic, as a result of the policies of regulatory reform and of the tax bill of 2017, we did end up with the best economy America had seen in 50 years. Unemployment reached a 50- year low. Family incomes and workers' wages experienced robust gains. In fact, wage growth was strongest for low-wage workers. As a result, income inequality actually declined.

My colleagues across the aisle like to repeat the falsehood that tax reform was just ``tax cuts for the rich''--not true. We eliminated loopholes that allowed some favored corporations to avoid millions in taxes. By having more corporations paying their fair share, we were able to lower the overall corporate rate to be more in line with other countries, like Sweden or Denmark.

Tax reform meant more investments in America, creating good-paying jobs for hard-working Americans.

The prepandemic thriving economy is poised now to come roaring back if the government just gets out of the way. Raising tax rates while adding new giveaways for Democrats' favored corporations that sign onto the Green New Deal will kill the goose that laid the golden egg.

While President Biden talks a good game about everyone paying their fair share, he is proposing an unprecedented spending binge. This will only fuel inflation. The burden will fall hard on the middle class and be devastating to low-income Americans.

There are already signs that inflation is starting to kick in. Have you ordered a hamburger at a restaurant lately? I heard from an Iowan in Sioux City that at one furniture store, a particular recliner that sold for $199 last year now sells for $249. A leather reclining sofa that sold for $1,899 last year, today costs $2,599. Price increases of 25 percent to 37 percent for furniture are impacting the lifestyle of Iowa families and doing it right now.

Many homebuilding supplies have doubled or even tripled in price. This is partly due to the shortage of lumber. I have called on the administration to take action to address this, but the price increases are not limited just to wood products.

President Biden's economic advisers assure us that this inflation Iowans are seeing with their own eyes is just temporary and really nothing to worry about, but it is real and it is happening.

Economists from across the political spectrum are starting to raise alarms. Larry Summers--whom you know as the former president of Harvard, former outstanding economic professor at Harvard, President Obama's chief economist, and also Secretary of Treasury under President Clinton--warned that the $2 trillion Biden stimulus that was rammed through Congress on a partisan basis was way too big.

Larry Summers is quoted as saying:

I think this is the least responsible macroeconomic policy we've had in the last 40 years.

More recently, in a Time Magazine interview conducted after the release of the President's budget, he expressed concerns this way: ``that we are injecting more demand into the economy than the potential supply . . . and that will generate overheating.''

When a longtime Democratic economist of the stature of Larry Summers sounds the inflation alarm, the President would be well advised to listen to that alarm. The President's spending plans would dump fuel on an inflation fire that the Fed has ignored in favor of easy money policies geared toward propping up Wall Street.

In the end, the poor and the middle class will pay. Income inequality will rise. For all of their lip service about taking from the rich and giving to the poor, the Democrats' big spending policies may stimulate stock prices for the wealthiest Americans, while everyone else pays more for less.

I suggested in a speech about excess unemployment benefits that politicians should emulate doctors, and you know what doctors are taught: ``First, do no harm.'' That applies to big spending plans when there are signs of inflation. Once inflation starts to run away, it is difficult to stamp out. Remember the decade of the seventies. The Fed would have no choice but to aggressively hike interest rates, which could trigger a recession.

In coming out of a pandemic that has caused so many hardships for American families, the last thing they need is more economic hardship caused by either inflation or a recession. That should give Congress pause.

First, do no harm.

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