Inflationary policies hit the poor hardest – Orange County Register

Consumer prices rose 7.5% year-on-year, with staples – electricity, gasoline, used cars, many food items – rising at a staggering rate. Rents rose by the highest percentage in 10 years – and vacancy rates across Southern California are so low that it’s nearly impossible to find a vacant unit, according to the news release.

This inflation – the highest since the end of the Jimmy Carter administration – is ravaging people and especially poor families. Radical politicians have called for more government bailouts and periodic direct payments to Americans, but they fail to recognize the direct link between excessive federal spending and inflation.

Supply chain issues have contributed to the problem, but that’s by no means an exhaustive explanation. The Congressional Joint Economic Commission warned that “increasing government spending” provides “consumers too much money (subsidy and wire transfers, or easy access to credit through cost savings). low borrowing) makes demand grow too fast for production to keep up.

A January report from the Public Policy Institute of California found that low-income families have experienced higher costs of living than high-income families over the past two years, which is not surprising. However, as they depend more on rental housing. . Of course, new home prices have risen at record levels, but most homeowners are staying.

A follow-up PPIC report explains that Californians’ wages have increased by 5% since December 2020 due to a tight labor market, but after accounting for inflation “average wages have actually fallen by 2 % during that period”.

It found that an increase in the federal Child Tax Credit and the golden state Stimulus package helped low-income residents pick up the pace — but that was only true for those who took advantage of the programs. . “However, those gains could be wiped out if wage growth stalls or government spending slows due to fears of high inflation, which could limit economic growth,” it observed.

We obviously disagree that government spending drives economic growth, but that conclusion highlights a political conundrum. If the Biden and Newsom administrations ramped up spending to help those in need, that would drag on inflation and wipe out everyone’s income. At best, direct payments only help a small fraction of Californians.

Yet we keep hearing the nonsense arguments that inflation really isn’t that bad. “(I)inflation could actually be a good thing for many working-class Americans, especially those with fixed-rate debt like a 30-year mortgage,” wrote CNN’s Allison Morrow. “That’s because wages are rising, which not only empowers workers, but gives them more money to pay off debt.”