Weekly Opinion Editorial
INFLATION FORM OF TAXATION
By Steve Fair
Virginia, and
four other states, hold big general elections in odd years. Their elections for statewide offices are in
years when there is no presidential or congressional election. The rationale behind it is it lessens the
authority and influence of the federal government in their local affairs. The results of those off election year races often
give an indication of what voters are thinking about the occupant of the White
House-or they simply reflect a better funded or executed campaign by the
winner. Historically the odd year
elections have a lower percentage turnout than the even year elections.
The Virginia governor’s race is being viewed
as a test balloon on President’s Biden’s job performance. Incumbent Governor Terry McAuliffe is facing
challenger Glenn Youngkin, a former Rice University basketball player, and
private equity manager(banker).
According to RealClear Politics, the race was too close to call at press
time. Democrats should be worried if Youngkin
wins because it could be a sign of things to come in the 2022 mid-terms. What are the factors that are swaying voters?
First, the U.S.
economy is slowing. Inflation is likely
to linger well into next year. Millions
are still unemployed, even while virtually every business has a ‘Help Wanted’
sign in their window. Food prices are up
by 4.4% over last year. One reason is we
are putting corn into our gas tanks (Ethanol) instead of our belly. The
price of gasoline is up by 37% because the Biden administration has pushed to
phase out fossil fuels as an energy source to reduce greenhouse gas emissions. Biden and the Democrats can’t blame Trump for
the economy any longer. This is on
them.
Second, most
voters think the government is spending too much money. The federal budget is $6 trillion for fiscal
year 2022, but the fed expects to only take in $4,1 trillion. How many households can survive spending 50%
than they take in? But the federal
government borrows and adds to the national debt, which is now approaching $30
trillion. In the past 50 years, the federal
government has only spent less than they took in five time. As a people, we allow it by electing people-
on both sides of the aisle- that spend money we don’t have on programs we don’t
need.
It appears Democrats
are going to get the blame for overspending and causing the current inflation
Americans are facing. In a recent Axios poll,
the number of Americans who have confidence in President Biden’s ability to get
the economy back on track dropped from 52% in January to 44% in October.
Third, the supply
chain is disrupted. That simply means there
is a breakdown in the manufacturing and shipping of goods to the consumer. The White House formed a task force to study
the supply chain issues in June. They concluded the disruptions are ‘transitory
(not permanent)’, but many in the private sector disagree. They believe this is
the new normal. Bottlenecks, labor
shortages, and government interference in the supply chain have made getting
goods to the consumer challenging.
Empty shelves and higher prices at the shelf and the pump will influence voters and that doesn’t bode well for incumbents. The last thing America needs is for sustained inflation to trigger a disastrous stock market or a debt crisis. Milton Friedman was a Nobel prize winning economist. He consistently argued for the removal of government intervention in currency markets. Friedman said, “Inflation is the one form of taxation that can be imposed without legislation.”
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