SHEFFIELD: Fed Scrambles To Get A Grip On Inflation While Manchin Hands Schumer A Green Spending Spree
Carrie Sheffield on July 27, 2022
The Federal Reserve hiking interest rates by three-quarters of a percentage point on Wednesday is more evidence the Fed was asleep at the wheel on inflation and is whiplashing America into a deep recession.
Adding insult to inflation injury, Sen. Joe Manchin today also whiplashed America, reportedly caving to Senate Majority Leader Chuck Schumer in a deal to hike corporate taxes and create a Green New Deal slush fund. Manchin had earlier this month vowed to stand up to his party and protect America’s job creators and suppliers from tax hikes.
Politico reported the bill “includes roughly $370 billion in energy and climate spending, $300 billion in deficit reduction, three years of subsidies for Affordable Care Act premiums, prescription drug reform and significant tax changes,” including “legislation by imposing a 15 percent corporate minimum tax.”
That’s Beltwayspeak for Democrats’ desire to hobble job creators and goods/services suppliers just at the moment when they need relief most. We have a supply problem fueling inflation. Increasing taxes on suppliers will make inflation worse.
Sadly, Federal Reserve Chairman Jerome Powell — unlike his predecessors who waded into fiscal matters because they directly impact the Fed’s mission to preserve stable prices and strong employment — will not stand up to this Democratic fiscal madness. Last month during a congressional hearing, Powell refused to offer support for fiscal policies that will cut inflation, boost productivity and supply.
“We’re very focused on sticking to our knitting and carrying out the task that we’ve been assigned,” Powell said at the hearing. “I swore off getting involved in these fiscal debates … it’s really not our job … I don’t think it’s appropriate for the Fed or for me to be reaching out into areas of policy that are not assigned to us.”
By ignoring the inflation warning signs for more than a year, the Federal Reserve is now overcorrecting, and it will have painful effects and throw many people into unemployment. Even liberal Sen. Elizabeth Warren (D-Mass.) understands the risks of this hike, writing in The Wall Street Journal:
“The likelihood that overzealous rate hikes trigger a recession is growing. Goldman Sachs cautioned that the Fed’s policy is more aggressive than necessary and doubled its forecast of the likelihood that the economy falls into a recession over the next year,” Warren wrote. “Nobel Prize-winning economist Peter Diamond has warned about the substantial risk of a crash landing from the Fed’s aggressive approach. Mr. Powell has even conceded that the Fed’s actions may lead to a downturn, saying recession ‘is not our intended outcome at all, but it’s certainly a possibility.’”
While Warren is right on the Fed, there’s no doubt she’ll join Manchin and Schumer in a vote to make inflation worse through failed fiscal policies.
Carrie Sheffield is a senior policy analyst at Independent Women’s Voice.
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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