by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Editors at Issues and Insights document one major impact of today’s alarming inflation.
When he signed the “American Rescue Plan” into law in March 2021, President Joe Biden bragged about how it would put “$1,400 checks into the pockets of millions of Americans; help to keep folks in their homes; help to put food on the table.” A family of four was in line to get $5,600, he said.
What he didn’t tell the public was that the rampant inflation his “rescue” plan would unleash would cost Americans more than the $1,400 Biden was handing out. Much more.
Biden’s $2 trillion “rescue” came after the Trump administration had already rushed through two massive COVID relief bills and at a time when the economy was already roaring back from the COVID lockdowns. Which is why many economists, including liberal economists like Larry Summers, warned that Biden’s “rescue” would spark runaway inflation.
And, despite repeated promises from the White House that such a thing would never happen, the Consumer Price Index shot up 8.3% in the first half of this year. (Going back to 1986, the average inflation rate for the first half of the year is 2.6%.) June’s reading had year-over-year inflation at 9.1%.
Under Biden, prices have been climbing much faster than wages, which means that Americans started losing ground almost the moment Biden signed his “rescue” plan into law.
The Bureau of Labor Statistics finds that real average hourly earnings plunged 3.6% from June 2021 to June 2022. There’s also been a 0.9% drop in the average work week, meaning workers have seen their real income drop 4.4%.
The combination means the average worker has now lost $3,400, according to Heritage research fellow EJ Antoni. The combined total of all the COVID stimulus checks passed under Donald Trump and Biden was $3,200.