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A trip to the grocery store, gas station or just about anywhere else is guaranteed to give you a bad case of sticker shock these days. Prices just keep going up, and there’s no end in sight to this inflationary wave. If a household’s budget was tight at the start of the year, it is now very likely underwater, and families are drowning under higher prices, the detritus of the hidden tax — inflation.
Prices in September were 5.4% higher than the year before, according to the Consumer Price Index.
To add insult to injury, these price increases did not have to happen; they are the result of misguided policy, largely at the federal level. And who bears the brunt of those injudicious decisions? We all do, but the poorest among us tend to be hit the hardest.
It is little comfort that the Federal Reserve (Fed) has been telling the country that inflation is transitory. Not only does that adjective seem inappropriate, it also makes light of the financial pain of families facing higher prices everywhere they turn. A quick look at the prices of a few items shows just how much pressure inflation is putting on people.
Energy is 25% more expensive than a year ago. That is not something those with low incomes can avoid. Everyone needs to heat and cool their homes, power their refrigerators, and keep the lights on. It does not matter if you are wealthy or poor, your gasoline is still 43% more expensive than a year ago.
Beef prices are up 18% and bacon has increased 19%. Other food items, like eggs, which are purchased disproportionately by lower-income households, are also rising faster than other prices, climbing 13% in just a year.
Similarly, while new vehicle prices have risen 9%, the prices for used cars and trucks is up 24%. Once again, those with low and fixed incomes are more likely to buy used vehicles, not new ones. And if you need a clothes washer and dryer, be prepared to spend 19% more than you would have last year.
Conversely, those with high incomes are more likely to have assets (like a house) whose prices also rise, so they are slightly better able to weather the storm of inflation, although even they are hit by this nefarious tax.
At this rate, the country can expect prices in December to be more than 6% higher than at the beginning of the year. That means the federal government will have successfully confiscated 6% of the value of every dollar held by every citizen in the country in just a year. Without a single vote in Congress, the Fed will have quietly accomplished levying a heavy tax on the entire country, and most people will be none the wiser.
Since the Fed alone causes inflation, it alone can put the brakes on this hidden tax. The Fed must stop purchasing bonds, because that is the chief method by which the Fed has been adding liquidity to the financial system. This additional liquidity dilutes the purchasing power of existing dollars, functioning as a hidden tax. While the process is largely accomplished electronically in this digital age, it is the equivalent of running a printing press and churning out excess dollars. That needs to end — immediately.
However, if the Modern Monetary Theorists get their way, the printing presses will just roll on, and “transitory” inflation will last forever.
E.J. Antoni, Ph.D., is an economist at Texas Public Policy Foundation and a Visiting Fellow at Committee to Unleash Prosperity.
News Source: dailycaller.com
at the federal
in just a year
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Unsolved mystery: What does Kyrsten Sinema want?
(CNN)Give Arizona Sen. Kyrsten Sinema some credit. She has the courage to stand up for her convictions in the face of overwhelming pressure.
But send us an email if you can figure out what her convictions are. Nobody else can figure it out and she's not telling. This could scuttle President Joe Biden's entire legislative agenda.He'll be asked how to get things done in a 50-50 Senate when he can't marshal his own party during a CNN town hall Thursday night.
What does Sinema NOT want to happen? There's a long list that's seeped out into the ether: Don't tax the wealthy.
She doesn't want to increase the marginal income tax rate on the wealthiest individuals or roll back President Trump's permanent tax cuts for corporations -- two Democratic priorities that share wide public appeal. Read MoreThat means Democrats don't have enough money to fund their promises for a more generous society. They're scrambling to find new options to pay for their plans.RELATED: Liberal backlash against Sinema grows on Capitol Hill as potential Arizona challenger emergesDon't end the filibuster.
She opposes ending the filibuster, but Republicans refuse to work on Biden's priorities, which means the Democratic agenda is stuck unless she comes around.Don't necessarily expand the social safety net.
Democrats' dreams of universal pre-K, subsidized community college, a poverty-erasing child tax credit and a climate change-fighting requirement for electricity providers now rest on her shoulders. She's said she won't vote for anything until a smaller, bipartisan infrastructure
bill passes, too. It's stuck in the House, where leaders say they won't allow a vote on the smaller bill until the large one passes the Senate.Sinema's list of dislikes, without a constructive and public list of alternatives, is turning even some supporters off. Advisers resign in protest.
When veterans who had been voluntarily advising her wrote a scathing letter accusing her of obstruction, she thanked them for their service, but didn't answer their gripe.Liberal turned moderate.
The Arizona Democrat -- a former Green Party anti-war activist turned stubborn moderate -- has now been all over the American political map.In the 50-50 Senate, she holds incredible power.It's "living under the tyranny of Senator Sinema," according to Rep. Ritchie Torres, a progressive from New York. "She's all over the place and I'm not sure she knows what she wants," said Rep. Jimmy Gomez, a California Democrat, during an appearance on CNN Thursday."Nobody knows what she is thinking because she doesn't tell anybody anything. It's very sad to think that someone who you worked for that hard to get elected is not even willing to listen," Sylvia González Andersh, one of the veterans who resigned in protest as Sinema's adviser, told The New York Times.Joe Manchin's desires.
I've written more about Manchin in this space in part because he has been quite public about his desires.Manchin told Democrats to pick one of their social programs rather than push through three. He's opposed the climate change portion of their spending plan because he represents the coal state of West Virginia. He'd like a work requirement for the big child tax credit that's meant to erase child poverty."Don't you think, if we're going to help the children, that the people should make some effort?" he said in a September appearance on CNN's "State of the Union."RELATED: Joe Manchin wants to add a work requirement to the child tax credit. Here's what that would do.
People can debate the merits of that position because they know what Manchin's position is.What could get Sinema's support for lower drug prices?
A good example of the shroud around Sinema's thinking is the issue of prescription drug prices. Both parties want to lower them. Democrats want to do it by giving Medicare the power to negotiate with pharmaceutical
companies.Big Pharma says taking less money from Medicare would stifle innovation. Manchin is, improbably but incredibly, aligned with Vermont Sen. Bernie Sanders on the issue. But Sinema backs the pharmaceutical industry on this one. Why? It's not entirely clear.Rep. Scott Peters, the California Democrat, has become something of a champion of the pharmaceutical industry in opposing the Democrats' proposal. He argues that the government paying pharmaceutical companies less for drugs could stifle innovation at those companies. And he's up front that there are large numbers of pharmaceutical jobs in his San Diego area district. He also has a middle ground proposal to limit the number of drugs that could be negotiated and the amount prices
could be dropped.Sinema, to my knowledge, hasn't made any arguments at all to justify her opposition, and in fact, she's argued in the past that she'd work to lower drug prices. Her office told Politico she's "carefully reviewing various proposals."She has taken hundreds of thousands of dollars in campaign contributions from PACs and individuals tied to the pharmaceutical industry. That sounds like a lot, but it's less than many Democrats ready to vote for the plan.The other reason to lower prescription drug prices and raise taxes.
Lowering the cost of prescription drugs is an important campaign promise by Democrats (Republicans have also failed to deliver on it), but it's also a key piece of their effort to enact new social programs. They need to save the government hundreds of billions in Medicare drug costs if they want to spend hundreds of billions on universal pre-K.Making matters worse for Democrats is that in addition to her opposition to giving Medicare the ability to negotiate drug prices, she also opposes raising corporate tax rates that were permanently slashed by the Trump administration. Will Sinema back Democrats' voting bill?
Democrats are also pushing a plan to protect voting rights by setting a baseline for state election laws.
Manchin, who also opposes ending the filibuster, was instrumental in writing the voting rights proposal. His party hopes the obstruction by Republicans this week will convince him to make a filibuster exception in this one case.