A Whitewash of Biden’s Record on Inflation

The only defense of the president’s reckless budget policy is that the Fed pursued an even more irresponsible monetary policy.

Letter to WSJ.

"Alan Blinder is right that multiple factors contributed to inflation’s recent surge (“Biden Isn’t to Blame for Inflation,” June 29). But his suggestion that the American Rescue Plan added only 0.1% to today’s inflation rate stretches credulity. The $1.9 trillion stimulus package in March 2021 was preceded by almost $3 trillion in stimulus the previous year. The U.S. economy received over 20% of gross domestic product in increased public spending. That dwarfed early 2021’s output gap of around 4% of GDP.

The only defense of President Biden’s reckless budget policy is that Jerome Powell’s Federal Reserve pursued an even more irresponsible monetary policy by keeping interest rates at their zero bound and by allowing the broad money supply to increase by some 40% over a two-year period.

One didn’t need an economics Ph.D. to foresee that massive budget stimulus and prolonged ultraeasy monetary policy would lead to overheating and an acceleration in inflation.

Desmond Lachman

American Enterprise Institute

Washington"