Is The Stimulus To Blame For Inflation?

Dayana Sabatin

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Republicans are blaming the Biden administration for the fastest inflation within four decades, saying that the $1.9 trillion American Rescue Plan has been one of the most massive drivers.

This September, inflation went upwards of 8.2 percent compared to a year ago, according to a Consumer Price Index report that was published on Thursday.

Jason Smith, who is the top Republican on the House Budget Committee, said that it was the American Rescue Plan that has been causing Americans “to feel the shock of rising prices every time they visit the grocery store or the gas station.”

Additionally, the Republican National Committee tweeted: “Every Democrat who voted for Biden’s ‘stimulus’ needs to answer at the ballot box for sending prices surging and making American families poorer.”

The American Rescue Plan was intended to stimulate the economy from the effects of the pandemic, and it was a massive spending package that passed in March 2021.

The legislation also included $1,400 checks for individuals, as well as expansions to unemployment insurance and child tax credit benefits, and on top of that, hundreds of billions in aid to state and local governments.

Economists have been debating the American Rescue Plan’s impact on inflation. Many economists agree that the stimulus law did make inflation significantly worse by giving people more money to spend.

Inflation started to shoot up in early 2021 after the package was passed, and it has remained extremely high ever since. However, even without the stimulus, inflation would have increased due to the coronavirus leading to all of the factory shutdowns around the world, shipping backlogs, and labor shortages, all of which caused massive strain to supply chains and pushed prices to go higher.

The disagreement now is basically boiling down to economists’ views on how pandemic-related factors, independent of the stimulus, are contributing to inflation.

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