Americans are not buying the White House spin on the state of the economy.
As the markets plummeted nearly 4% on Tuesday — with the Dow down nearly 1300 points — a drop not seen since the 2020 COVID lockdowns, President Joe Biden and his economic advisers partied on the White House lawn, issuing a stunningly tone deaf the statement:
“Today’s data show more progress in bringing global inflation down in the US economy. [This] is welcome news for American families… my economic plan is showing that, as we bring prices down, we are creating good paying jobs…”
President Biden followed that up with a tweet, “Exactly four weeks ago, I signed the Inflation Reduction Act into law. So today, we’re celebrating.”
Moments later, James Taylor serenaded Washington’s elite on the South Lawn, calling it a “hopeful moment.”
This came within hours of a Bureau of Labor Statistics (BLS) report showing the Consumer Price Index (CPI), a key measure of inflation, increased by 8.3% in August compared to the same time last year and was worse than the 8.1%.
Inflation is far outpacing wages, which means hardworking Americans are taking a pay cut every month. Under President Biden, the average American worker has lost more than $3,000 in annual wages.
At the supermarket, Americans are really feeling the squeeze. The price of groceries surged 13.5% in August compared to the previous year, the steepest increase since March 1979.
By the end of the day Tuesday, the Dow Jones Industrial Average was down 1276 points, or 3.94%, while the S&P 500 fell 4.32% and the Nasdaq sank 5.2%, marking the worst day of 2022 for all three indexes. For the Dow and S&P, it was the worst day since June 2020; for the Nasdaq, the worst since March 2020.
Instead of celebrating, the White House should move towards free market policies that will actually allow us to escape from the twin threats of inflation and a loss of economic growth.
First, President Biden should work with Congress to cut wasteful government spending. Our national debt recently surpassed a previously unthinkable $30 trillion while the federal government is collecting more in taxes than any time in our nation’s history. Washington’s tax-and-spend habit has helped to create inflation levels not seen in four decades.
Next, simplify federal tax code. With the Inflation Reduction Act giving the IRS $80 billion to expand its workforce by 87,000, a massive number of individuals and small businesses will be targeted. We should simplify the tax code and shrink the IRS rather than expand it.
Federal leaders should also permanently extend former President Donald Trump’s signature tax reform bill, the Tax Cuts and Jobs Act (TCJA) of 2017, which cut taxes for more than 100 million taxpayers – especially middle and working class Americans. If Congress does nothing, the TCJA’s reduction in personal income tax rates will expire at the end of 2025.
Finally, Washington should look to the States for leadership. So far this year, five states (Iowa, Arizona, Mississippi, Georgia, and most recently, Idaho, have simplified their tax personal income taxes by adopting a flat-tax and joining the 2022 State Flat Tax Revolution. Forty-nine states have balanced budget requirements and others like Colorado and Michigan have real spending limits like the Taxpayers Bill of Rights (TABOR) which automatically puts a check on over taxing and overspending
President Biden and Congress need a course correction. Instead, they are doubling down on all the failed big government ideas that created this inflation crisis to begin with.
The markets have spoken loudly, and the latest BLS numbers are very bad news for every American. Every American who has money in a retirement account,401ks and IRAs for private sector workers, or pension plans for police officers and firefighters, is poorer this week than they were last week. The markets are signaling a loss of confidence in the policies coming from Washington.
President Biden should recalibrate and look to the plethora of positive and taxpayer focused reforms that are working at the state level, not celebrate continued policy failures at the federal level
Jonathan Williams is Executive Vice President of Policy and Chief Economist at the American Legislative Exchange Council (ALEC). Follow him on Twitter @TaxEconomist
Lee Schalk is Vice President of Policy at ALEC.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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