With a vote on President Biden’s Build Back Better plan looming ahead in the Senate, centrist and right-wing politicians are yet again wringing their hands over the prospect of inflation. Some Senators, most notably West Virginia Senator Joe Manchin, have cited inflation as a potential reason to delay the passage of the Build Back Better Act.
While it’s true that inflation is on the rise, there is no reason to hold up this vitally important legislation. This week we’re taking a closer look at inflation – the current state of affairs, how inflation may actually not be a bad thing for most Americans, and how delaying the passage of the Build Back Better on account of inflation is inexcusable.
While it’s true that prices have risen over the last year, there’s little evidence that the levels of inflation that we are seeing now are going to be a long-term problem. Most credible economists, including those at the Federal Reserve and the White House, think that, with some time for the economy to return to normal, inflation will fall. While inflation is certainly a concern, politicians are making too big of a deal out of a very manageable increase in the prices of everyday items. Their concern is misdirected, and if they continue to fall victim to the myth that the Build Back Better Act would exacerbate our current situation, they may end up doing more harm than good.
There’s absolutely no reason to delay the Build Back Better Act – new social spending on traditional infrastructure, housing, education, and jobs would not cripple or collapse the American economy, as some political pundits might have you believe. This problem won’t be solved through inaction. On the contrary, it’ll be solved by increasing the economy’s productive capacity and removing money from the system (by taxing the rich, for example). Much of the new social spending in the Build Back Better Act is intended to grow the economy’s ability to produce goods and services, which would slow the rise of inflation.
Even if long-term inflation was something that was likely (and it’s not), there is very little reason for everyday Americans to be afraid of moderate levels of inflation. In actuality, a large portion of the population with significant debt stands to benefit from higher than normal levels of inflation. If you owe a significant amount of debt on a mortgage or student loans, for example, the real value of your debt will decrease.
The size of your debt won’t change, but with inflation the amount of money you’re earning likely will, which puts you in a better position financially. To put this in more concrete terms, the average American has about $65,000 in debt and inflation has already lowered the real value of that debt by roughly $4,000.In the end, the people who truly stand to lose from inflation are wealthy creditors, who are going to be just fine no matter what.
This isn’t to say that all levels of inflation are good. A relatively consistent dollar value is an essential part of the American economy’s stability. But there’s no reason for us to cripple our economy just to avoid a few percentage points of inflation that may actually benefit a significant number of Americans.
We can’t let Congress fall victim to inflation panic. The steps that are being proposed to avoid inflation, i.e. delaying the passage of the Build Back Better Act or the Federal Reserve raising interest rates (an often misunderstood decision that would only reduce inflation by slowing economic growth and making it harder for everyday people to afford things), are more destructive to everyday working people than inflation itself.
We can’t let the threat of inflation stop us from passing invaluable infrastructure and social reforms that would help millions, and building an economy that finally works for all Americans. We have to look at the big picture and prioritize the American people as a whole, not just the wealthy.