Finance

Republicans say inflation hurting low-income Americans the most

The U.S. Capitol is seen from the Washington Monument in Washington, D.C., on Friday, September 24, 2021.
Greg Nash

Congressional Republicans warn that inflation is having a disproportionate effect on low-income Americans, as they continue to sound the alarm about rising prices as Democrats look to pass a social spending package along party lines.

GOP lawmakers on the Joint Economic Committee released an analysis on Monday to illustrate that inflation is “especially harmful for poor and middle-class Americans.”

The analysis cited global polling from World Bank and International Monetary Fund researchers, which found that individuals who label themselves as very poor have a 10.5 percent higher chance of pointing to inflation as a top national concern, compared to individuals who consider themselves to be rich.

The analysis also cited research from the Federal Reserve Bank of St. Louis, which says that inflation decreases lifetime consumption opportunities for poor individuals at a higher rate than wealthier people.

Additionally, the Republicans pointed to research from the Federal Reserve Bank of New York, which pointed to gas prices as the main driver behind why rich and poor individuals feel the effects of inflation differently.

“Inflation reduces poor Americans’ quality of life, and rising gas prices specifically increase the cost of living for poor Americans living in rural areas much more than for richer Americans,” wrote Jackie Benson, a senior economist who works for the GOP members on the committee. 

The GOP-led analysis comes after the Labor Department released new data last week showing annual inflation at a 30-year high. The numbers sent alarm bells throughout the country, as Americans continue to grapple with spending more at gas pumps and in grocery stores.

But lawmakers disagree over where to place the blame for the spiking inflation numbers.

Democrats say the bottlenecks in the country’s supply chains due to COVID-19 are causing the rising prices, in addition to the rapid recovery following a reduction in spending amid the pandemic. Republicans believe it is a result of the increase in government spending spearheaded by the White House.

Benson wrote in the GOP analysis that while “inflation is a defining piece of the post-COVID economic recovery,” it has an outsized effect on poor Americans.

“While some argue that there should be no concern over today’s rising prices because they are simply the consequence of a strong economic rebound, the evidence suggests that inflation is depressing economic growth and harming poor Americans the most,” she added.

Tags Government spending Inflation

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