WASHINGTON, D.C. — The issue of inflation is front and center in politics, and elected officials are providing different views on the causes of inflation and the best ways to respond.
Economists say although inflation has started to slow down overall, we’ll continue to see higher than normal rates of inflation for several more months.
If you ask politicians what’s causing inflation, you’ll often hear two different answers. Many Republicans blame government spending.
“Roughly $2 trillion was spent, despite many of us telling the administration and Democratic leaders it was unwise,” said Sen. Todd Young (R-Indiana).
Many Democrats point to the war in Ukraine and energy supply issues.
“It’s not caused by one person,” said Mayor Tom McDermott (D-Hammond), Young’s reelection opponent. “It’s a worldwide problem right now, I’d like to point that out. It’s not just an American problem.”
Economists say it’s actually a combination of several factors causing prices to rise more quickly than normal.
“Even before the war in the Ukraine, oil prices were increasing so again, now they picked up that pace,” said Andrew Butters, an assistant professor at the IU Kelley School of Business.
The pandemic played a role as well, Butters said.
“The other part of the story is that demand has really rebounded quite strongly since the height of the pandemic,” he explained. “Consumers are kind of flush with cash.”
In terms of how the federal government should respond, Sen. Young argues Congress should stop some of its spendings.
“We should also make sure that we’re not erecting new barriers to producing all kinds of things, and that can be done through regulatory action,” Young added.
McDermott said he also believes Congress should be doing more to combat inflation but offered some different ideas.
“We could also suspend federal and state gas taxes,” McDermott said. “We pay about 75 cents on every gallon right now of gas that we’re pumping.”
Last month, President Biden announced a plan of his own to address inflation. That includes releasing one million barrels of oil per day from the strategic petroleum reserve for the next six months. It also includes provisions to help farmers boost food production and a call on Congress to fund the construction of more homes.