GOP report shows inflation hurts low-income Americans the most, blames Democrats for price jumps

  • Republicans on the Joint Economic Committee on Monday warned that inflation is having an outsized effect on low-income Americans.
  • Sen. Mike Lee, Republican of Utah and ranking member of the committee, blamed Democrats for the widespread jump in prices.
  • The GOP report represents the latest attempt by the party to highlight rising prices less than one year before the 2022 midterm elections.
  • Democrats argue that pent-up demand and overwhelmed supply chains after the worst of the Covid-19 pandemic are to blame.

Republicans on the Joint Economic Committee on Monday warned that inflation is having an outsized effect on Americans in the lowest income brackets given acceleration in the price of housing, gasoline and food.

The GOP cited two studies from the Federal Reserve that find that inflation reduces poorer Americans' lifetime consumption more than it does wealthier Americans, and that gas prices are the main reason inflation has historically had greater impact on low-income Americans.

The report from the committee's Republicans represents the latest attempt by the party to highlight the risks of rising prices less than one year before the key 2022 midterm elections. With 34 seats in the Senate and all 435 seats in the House contested, the GOP hopes it can retake at least one chamber as a check to Democrats' current monopoly over Congress and the White House.

Sen. Mike Lee, Republican of Utah and ranking member of the committee, blamed Democrats for the widespread jump in prices and a decline in Americans' real wages.

"Democrats' reckless spending has driven inflation to a three decade high, and it's making life harder for poor and middle class Americans," he said in a statement. "Inflation is eating into the livelihoods of American families. It's causing them to fall further behind. The reckless spending must stop."

The Joint Economic Committee, chaired by Rep. Don Beyer, D-Va., is composed of both Senate and House members who advise the broader Congress on how to improve economic policy.

Senior Economist Jackie Benson, who works for the committee's Republicans and conducted the analysis, wrote that that current prices increases have an outsized impact on low-income Americans because those with more modest incomes tend to spend a greater proportion of their earnings on groceries and fuel.

Those two categories saw some of steepest accelerations in the Labor Department's October consumer inflation report.

The Bureau of Labor Statistics reported last week that its consumer price index increased in October by 6.2% from a year ago, the fastest 12-month pace since 1990. The same report showed grocery prices rose 1% last month, while gasoline prices rose 50% from the same month one year ago.

While inflation has returned under Democratic control of Congress and the White House, its cause and remedy are up for debate.

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Democrats argue that pent-up demand and overwhelmed supply chains after the worst of the Covid-19 pandemic are to blame and that inflation – to an extent – was inevitable. After a year of reduced spending, wide swaths of the economy closed and ruined travel plans, Democrats say it's no surprise to see prices rise as Americans demand a return to normal en masse.

"When we shut down the economy in 3/2020, it was inevitable that we'd have some inflation as things restarted," Jesse Rothstein, a professor at the University of California, Berkeley and a former Labor Department chief economist during the Obama administration, wrote on Wednesday.

"Overall, the cycle has been milder than we had any right to expect — no mass starvation, no depression," he added on Twitter. "What is the story in which it could have gone better than this?"

Progressives add that the combination of a $1 trillion infrastructure package and a $1.75 trillion bill to tackle climate change and improved access to child care will keep price increases in check and encourage more Americans to return to the labor force.

The White House Supply Chain Disruptions Task Force, President Joe Biden's team working to ease logistics problems across the U.S., said on Nov. 3 that the current shipping headaches underscore the importance of the legislation.

"For too long, our country has underinvested in the roads, railways, ports and projects that propel goods movement," the White House team wrote. "With the Infrastructure Investment and Jobs Act, we can make the fundamental changes that are long overdue for our ports, rail and roads. This is how we build back better, with government bringing workers and businesses together to leverage American ingenuity to tackle the challenges brought on by a global pandemic."

Still, Republicans feel that playing up inflation is a winning strategy for 2022 and plan to underscore the harmful effects of rising prices over the next year. The party already credits that strategy for Republican Glenn Youngkin's victory over Democratic former Governor Terry McAuliffe in Virginia's gubernatorial election earlier this month.

"We must continue to focus on the failures of the Biden economy," Rep. Jim Banks, Republican of Indiana and chair of the Republican Study Committee, wrote in a memo following the Virginia election results. "Our early focus on runaway inflation and the growing supply chain crisis is hitting home with voters. We need to keep hammering away and work on bringing solutions to the table to address their concerns."

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