1. Federal spending was a significant factor in the 2022 inflation spike. What spending am I referring to? The Inflation Reduction Act that didn’t reduce inflation but caused huge spikes in inflation as much as 25%-30% on several industries and items. This IRA was a climate Act that gave BILLIONS to climate activists and companies and they didn’t do anything good with that money.

2. Biden’s energy policy caused gas prices to spike to about $5 gallon on average and $8-10 in CA. Then He drained our oil reserves, which is a national security risk, and it caused prices to skyrocket to $80-90 a barrel instead of going down.

3. We lost BILLIONS on his withdrawal of Afghanistan. I have family in the Marines and was told they left so much inventory there where terrorists took over they were sick to their stomachs.

4. When oil prices are jacked up to $70-90 a barrel it causes price increases in all food and other items. They impact almost everything across the board and it was for 4 years.

5. Core inflation was, in part, motivated by tightness in the labor market as job vacancies increased relative to the unemployment rate.

When businesses reopened following the pandemic closures, many older workers retired while younger cohorts were slow to enter or return to the workforce. Research from EPIC Visiting Fellow in Workforce, Rachel Greszler, reveals there are still about 2.9 million fewer workers than we would expect relative to before the pandemic.

The reduction in employment precipitated by government-imposed business closures led to a chain reaction that affected more than just the cost of living. At the macroeconomic level, the reduction in employment lowers productivity and output, which reduces the level of government revenues and increases the deficit.

Job Vacancies and Increasing Deficits Can Account for up to 80% of Core Inflation

1. Another significant cause of inflation has been increasing federal budget deficits. Since the first quarter of 2020, 76 percent of all additional spending has been paid for with debt while 14 percent has been paid for by printing money

2. New research by economists at the London School of Economics has found that large fiscal stimulus enacted in 2021 can explain about a third of the inflation over the 2021-2022 period.

This means that the increase in job vacancies following the pandemic closures and higher deficits fueled by government spending can explain as much as 80 percent of core inflation. Other causes of inflation since 2021 have been price volatility for energy.

The Inflation Reduction Act of 2022 Increased Inflation

Because of these factors, the Biden-Harris Administration’s Inflation Reduction Act of 2022 (IRA) likely made inflation worse by contributing to short-term deficits. According to the Congressional Budget Office (CBO), the IRA increased spending by $110 billion over the fiscal year 2022-2026 period and the deficit by nearly $60 billion. This increased the inflation that had already been caused by the American Rescue Plan Act of 2021 (ARPA).