The Economy

Floor Speech

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Mr. GRASSLEY. Madam President, like my colleague from Iowa who has just spoken, I travel Iowa as well, and in holding my county meetings and visiting with employers and employees--not just these last 2 weeks that we have been in recess, but all year--I have been hearing all of what Senator Ernst has referred to, that people are afraid of inflation and a lot of people are old enough to remember the 12- to 15-percent inflation we had during the mid-1970s to the early 1980s. We don't want to repeat that.

Traveling Iowa, it is always refreshing to hear directly from my constituents because, as I often say, Washington is an island surrounded by reality. The Midwest seems to be the real America compared to what we know here in Washington, DC, where everything that dominates the economy is affected by government--and very Big Government.

There is no better example of this than how the Biden administration and Washington elites talk about inflation and rising prices. To them, inflation is transitory or the result of base effects, and those words ``transitory'' and ``base effects'' are used to justify this inflation. Really something not to worry about, I think, is the impression they want to leave us with.

To the Iowans I spoke with, inflation is real and persistent, as Senator Ernst has so colorfully shown. I heard concerns from my constituents about inflation wherever I went. And why? Because it is affecting people's lives right now.

I heard about how inflation was cutting into families' budgets, making it hard to make ends meet. I heard how prices in grocery staples, such as milk, meat, fruit, vegetables, are on the rise, along with all manner of household goods.

Yet the President and his top economic advisers say inflation is nothing to worry about, or as the President's Treasury Secretary put it, ``I don't think there's going to be an inflationary problem. But if there is, the Fed will be counted on to address it.'' They shouldn't be so nonchalant about it. As we know from the 1970s, once inflation takes off, getting it back under control can require very painful measures.

They should take the advice of former Clinton Treasury Secretary Summers. He recently stated, ``The Fed has had almost no success gently bringing down inflation once an economy has started to overheat.''

Notice that word ``gently'' because everybody thinks this is going to just occur very easily, getting it under control, but we remember the results of the 1970s, early eighties. It took Paul Volcker to take a sledgehammer through the policies of the Federal Reserve to bring down interest rates.

And a lot of farmers in Iowa lost their farms when they were borrowing on that inflation, trusting the government that there was no problem, and then we have just farmers going out of business because Volcker used a sledgehammer, and he probably had to use it because there wasn't a gentle way of doing it. Unfortunately, instead of taking inflation seriously, the current administration appears intent on stoking its flames, pouring gasoline on the inflation fire.

In his budget, the President proposes government spending and debt at levels previously only seen temporarily during war or economic recession. The nonpartisan Congressional Budget Office and economists surveyed by the Wall Street Journal both recently raised their inflation expectations. CBO raised its inflation projections because ``output now exceeds its potential level sooner and by a larger amount than previously anticipated.''

Output exceeding its potential is economic speak for the economy is starting to overheat. Consumer price data released yesterday shows inflation heating up. In June, prices climbed 5.4 percent over the prior year compared to 5 percent in May. Moreover, core inflation, which omits volatile food and energy goods, rose at the highest rate in 29 years

The trillions of dollars in new spending proposed by the President could set inflation ablaze. If that occurs, it is not going to be the wealthy and the Wall Street elites that pay the price. The average hard-working American living paycheck to paycheck, and particularly tough on the retiree on fixed incomes, those are the people that are going to pay more and get less for paying more. The President would be well served to listen more to everyday Americans about how rising prices are affecting their lives today.

President Biden might then realize pursuing another multitrillion- dollar spending spree isn't worth the risk. It could fan the flames of inflation and devastate the livelihoods of average Americans.

It is incumbent upon the President and the Congress to avert catastrophe by pursuing responsible fiscal policies. We can't just expect the Federal Reserve to clean up our mess if we act irresponsibly by spending another $4 trillion. By that time, it could already be too late, waiting on the Fed.

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