Inflation is still too high for poor Americans
Plus: Assessing Bidenomics; Kamala Harris on health care, poverty, and welfare; and a new look at FREOPP.org
Inflation inequality rises while inflation declines: When the Bureau of Labor Statistics’ August report pegged inflation at 2.9 percent, pundits and politicians celebrated, with many calling on the Federal Reserve to begin cutting interest rates. But FREOPP Visiting Fellow Jackson Mejia warns that this response may be premature. FREOPP has long argued that policymakers need to pay attention to inflation inequality metrics across both income levels and regions, and while the inflation rate for the top decile has declined to three percent, for Americans at the bottom of the income distribution it is closer to 3.75 percent—a number that would be unacceptable to policymakers if it applied to everyone. The Fed should proceed with caution or risk harming low-income households even more.
The failure of Bidenomics: As America enters the final stretch of the 2024 presidential campaign, FREOPP Visiting Fellow Jon Hartley took to National Review to consider the economic legacy of our outgoing president. Unfortunately, the most noteworthy outcomes of President Biden’s policies left poor Americans worse off. He presided over an inflationary surge that approached 1980s peaks, as well as a decline in average hourly earnings. His student loan forgiveness schemes were regressive, fiscally irresponsible, and arguably unconstitutional. The country accumulated a mountain of debt, and the government intervened in the productive economy to an unprecedented degree via programs like the Green New Deal and the Inflation Reduction Act. For those below the median wealth and income, Bidenomics earns a failing grade.
If you like your health care plan, will Kamala Harris let you keep it? Rising health care costs are arguably the single greatest threat to Americans’ living standards, and health care spending is the second-largest driver of growth in the federal debt. That makes understanding the health care proposals of the major presidential candidates an urgent priority for all Americans. As a senator and past presidential candidate, Kamala Harris called for abolishing employer-sponsored health insurance and, at times, private health care insurance altogether. In Forbes last month, FREOPP President Avik Roy reviewed these proposals, noting that they would increase federal spending by more than $30 trillion over ten years—the most radical plan ever proposed by a major party nominee. A health care system that provides universal and fiscally sustainable care is possible for America, but we won’t get there through Medicare for All.
→ Watch Avik discuss his Forbes article and Harris’ health care policy history on Fox News.
Kamala Harris on poverty and welfare: Meanwhile, Kamala Harris has also consistently supported expanding welfare, aligning with progressives like Bernie Sanders and Elizabeth Warren in opposing work requirements and advocating for increased funding. FREOPP Senior Fellow Michael Tanner describes her ambitious welfare proposals, including a $16 trillion near-universal basic income plan to provide $2,000 monthly payments to individuals and families, as well as large tax credits for low-income households. If elected, she will likely continue Biden’s policies of expanding the social safety net and unconditional wealth transfers—perpetuating a failed status quo that may make poverty slightly less miserable but does little to help low-income Americans escape poverty and become self-sufficient.
FREOPP.org gets a facelift: If you check out any of our stories this week, you will notice that our website has a new look! We recently improved the design and functionality of FREOPP.org to elevate the user experience and facilitate access to FREOPP’s research. From our interactive return-on-investment analysis to our Inflation Inequality Indices, it is now easier than ever to engage with our scholars’ data and assess our policy recommendations. Come visit us online!
Thanks for keeping up with FREOPP, and have a great weekend.
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