While Washington works overtime to churn out a massive $3.5 trillion social spending package with tax increases during a pandemic with inflation running at or above 5%, Americans prefer cutting government spending to control inflation.
Americans are also near-unanimous that current inflation is not transitory.
These are the key findings from an I&I/TIPP poll of 1,300 Americans completed in early October.
The poll asked if inflation is a long-term problem or a short-term problem that will soon disappear. The charts below show the results.
Regardless of party affiliation or ideology, Americans agree that inflation is a long-term issue.
The U.S. economy is in a tough spot.
Businesses are struggling to stay afloat, and the last thing they want to see is a tax increase. Inflation is running rampant. Personal Consumption Expenditure (PCE) stands at 4.2% higher than a year ago, with PCE excluding food and energy up 3.6%. Inflation acts as a form of indirect tax on American households.
Federal Reserve Chairman Jerome Powell told lawmakers on Thursday that the Fed still expects the high inflation to end, but it is difficult to predict when that will happen. “We have an expectation that high inflation will abate because we think the factors that are causing it are temporary and tied to the pandemic and the reopening of the economy,” Powell said. “These aren’t things that we can control.”
Last week, the Fed announced that half of the 18 policymakers see a 2022 rate hike, vs. 7 at the prior meeting in June. Several members forecast greater inflation next year than they did in June, and nearly all foresee further rate hikes in 2023.
Chairman Powell said last week the Fed was ready to start winding down its massive stimulus programs in November with asset purchases falling to zero by mid-2022, and the Fed’s rate-setting committee said it could raise rates next year if inflation stays higher than expected.
Washington is deliberating on a $1.5 trillion infrastructure package and a $3.5 trillion social spending package.
The pandemic’s trajectory is unknown. While monthly deaths had steadily decreased from 97,395 in January 2021 to 8,699 in July 2021, it suddenly spiked in August of this year with 26,000 deaths due to the Delta variant.
How To Tame Inflation?
The poll presented six strategies and asked respondents to pick strategies they favor. Each respondent could select multiple methods to control inflation. Here’s the tally of the responses.
- 51% cut government spending
- 32% impose price controls
- 30% reverse recent regulations, especially on energy companies
- 29% reduce tax rates on businesses
- 26% Federal Reserve should print less money
- 7% Nothing can be done. Let it run its course
- 14% Not sure
Cutting government spending (51%) is the only strategy that has majority support.
While most Republicans (65%) and independents (56%) favor cutting government spending, only one-third of Democrats (36%) agree. By ideology, conservatives (68%) and moderates (50%) favor cutting government spending. Only 30% of liberals favor it.
Imposing price controls is the most popular method for liberals, favored by 43%. Republicans (45%) favor reversing recent regulations, especially on energy companies.
The data conveys a strong message to Washington. Now is not the time to engage in social engineering.
Washington is simply out of touch to even contemplate, let alone pass, such massive spending bills.
Businesses and families in the country are hurting and afraid of inflation, and they believe that big government spending is unwise.
Be warned: politicians who ignore will pay dearly for their actions in the midterm elections next year.