There is a tendency for all of us to look back on the year that is ending and think about what we have done and what we could have done better.

Usually, as we think of the year coming to an end, we take a look at our lives, and if we are lucky, we can take some satisfaction in that we solved certain problems and made some considerable progress towards the solution of various other problems that have given us much concern and worry. Those who are involved in making policies to help us manage various problems are always anxious to apply what they think will be reasonable solutions to those problems.

Two topics on my mind are inflation and the $1 trillion infrastructure bill.

Various individuals working for the government and private industry are now undoubtedly spending much time trying to implement policies that will bring down inflation. It is one thing to endorse policies that those in government think will reduce the rate of price increases, it is quite another to have these policies actually do that.

President Biden is aware that appointing an individual to be Chief of the Federal Reserve is a very crucial decision. That person will have to forge policies that will, among other things, effectively bring down the rate of inflation. In this instance, Biden decided to appoint Jerome Powell for another four years to ensure continuity in Federal Reserve policy. In promoting Vice Chair Lael Brainard, an experienced economist who has served on the Federal Reserve board since 2014, Biden has further bolstered continuity as a cornerstone of Fed policy.

While continuity is important, even more important are the specific policies enacted by the administration to bring down the rate of inflation. Fundamental decisions about interest rates and the money supply will have to be made. Various individuals who have led the Federal Reserve have attested to the difficulties in finding policies that will be sanctioned by congressional politicians.

Those difficulties have surfaced in the debates and discussions that have accompanied the passage of the $1 trillion infrastructure bill. This bill includes tens of billions of dollars in appropriations for initiatives such as rail maintenance and modernization, continued heavy investment in broadband services, and improvements for airports, waterways, roads and bridges. This spending will be paid for by various revenue sources, such as the estimated $60 billion to come from economic growth triggered by the increased spending. Still, this bill would increase the federal budget deficit by $256 billion over 10 years. Budget deficits are both common and large, and they will deter Congress from this increased spending though Congress knows that this spending is needed to increase economic growth.

It is also known that Biden has plans for various programs that will increase government spending in other areas, such as the provision for free pre-kindergarten classes and increased funding for home and community-based care for seniors. If there is anything that is certain, it is that government revenues will not be as large as government spending.

More ominously, all this spending will occur in the midst of a pandemic that shows no signs of slowing down. Biden’s response to this worrisome news about the pandemic is to tighten testing for those travelers who are going to enter the U.S. Also, travelers will have to wear masks on planes, buses and trains through the middle of March. It is obvious that Biden is worried about the Omicron variant. Economic planners are also worried; they know that increased activity by the latest deadly variant can only mean more problems for an American economy already struggling with inflation. The Biden administration well knows that more problems with these deadly variants will mean more problems for the economy.

Author and educator Dave Kaplan writes from his home in Santa Barbara. Calif.

(15) comments

David Collins

First , there is no 1 trillion dollar bill . It is a 3 or more trillion dollar bill disguised as a 1 trillion dollar bill . Democrats never cut giveaway programs , just add to them . To believe what they say is pure fantasy/lies .

Nothing that the Bungles administration will do will get inflation under control or reduce it . Higher prices lead to higher sales/consumption taxes on goods and services . A secret tax on those making under 400K/year . Haven’t you figured that out yet ? Makes me wonder if all this is by design . All smoke and mirrors . All about the same old tax and spend foolishly we have seen forever .

Perhaps brought about by climate change ? That hoax is toting the blame for most everything unpleasant to these days , why not this as well ?

mpjeep

You hit the nail on the head, David. In the last significant inflation of the 70s, it took a recession to bring it under control. But all of this was planned and thought out and didn’t just surprisingly spring upon us. Sad!

mpjeep

The next financial crisis will be here soon enough.

Global stocks and real estate are overvalued. China is already falling apart economically.

There is no way around not raising the interest rate to get inflation down. It will probably take a year or so before it’s done, so we have to live with high inflation until then. Economists worth their salt, our government, and central banks know it.

Of course, we have no choice but to raise the debt ceiling.

David Collins

Hope the bungles bidenettes are happy paying more that you ever should for everything . Sort of like Venezuela . From prosperity to poverty with one bad election choice , which led to another worse choice but who is watching .

Bungles has kept two election promises . He has raised your taxes and is far from finished on that one and diversity . Yes , diversity over ability and intelligence works well every time . Afghanistan , our dealings with Russia and China and the state of our union shows how his diversity works . Plus , the best is yet to come . Y’all watch now .

drewski

LOl yes the inflation is planned by biden and harris, the covid was cooked up in fauchi's basement, if its even real. The dems plot and scheme to ruin america, while the godly republican's fight to save truth, justice, and the american way.

The only smoke and mirrors is both parties politicians getting rich while they keep you distracted fighting about manufactured issues.

David Collins

While what you say is true to a point you also have let sarcasm rule . Fauci has no basement and the Covid is real . Inflation is no accident now or under Carter . Ruin America , well , if you give it the duck test it would seem that way . Crime , poverty , failing schools , big increase in disfunction with government/defense/infrastructure and on and on . Add in a disoriented president , totally inept don’t care but diverse and silly vice president and a slew of inept advisers unleashed and going willy nilly all about , we have a perfect storm of failure a brewing . But again , who is watching !

Manufactured issues , yup , they manufacture them and more pretty much daily to distract from the bungles from up on high , like the good soldiers they are . Would make for a great soap opera . But who is watching .

drewski

And yet bungles biden got infastructure done, a feat his predessor somehow couldn't manage. You continue to lay all the ills at the feet of the dems, ignoring easily verifiable facts like 60% of the crippling national debt is from gop administration's. An objective observer can see both credits and flaws on both sides.

Some folks can only see what they want to beleive it seems.

mpjeep

Nothing to brag about here....infrastructure.

mpjeep

Are you kidding me or just jerking my chain? Build Back Better with more and more spending will drive inflation even higher.

mpjeep

Yes, the Biden Admin knew inflation was coming because of their actions. I must give Biden a pass due to his Dementia. And Harris doesn’t have a clue about Micro Econ much less Macro Econ.

The fact is Biden’s Admin overheated the economy causing inflation to rise due to his massive spending spree and low-interest rates to big time investors.

When you add billions of dollars to an economy, people will go out and buy things. If supply doesn’t ramp up at a commensurate pace, increased demand will lead to higher prices.

Simply put, our government (Biden & Harris) has fueled today’s inflation, and they knew all along this would happen. And they knew the middle-class would end up shouldering the majority of the costs for their actions.

drewski

So sad with the rote blam the dems responses.

People buying things how dare they!

Let's give more wealth to the wealthy and overheat the stock market, then claim " best economy ever"

mpjeep

According to a recent CNN poll, 70 percent of Americans feel they cannot trust Biden and feel he has made the economy worse with his policies.

Looks like some Dems believe that honesty is the best policy.

“Some folks can only see what they want to beleive it seems.” Right!

David Collins

Really ? Just what infrastructure has bungles gotten done ? Can not wait for this answer .

mpjeep

The Wharton School of Business at the University of Pennsylvania ran the numbers to analyze what American households will have to spend due to inflation in 2021 to maintain the same living standard from 2020: $3,500. There go those stimulus checks.

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