(You can listen to this column, read by the author, here).
Joe Biden’s speechwriters are grasping at straws to give him something positive to say about the economy, hoping he doesn’t go off script and fumble it too badly. When the April Consumer Price Index (CPI) came out in May, he bragged that year-to-year inflation had increased a mere 3.4%.
But prices are still increasing, they’re not coming down. Since he took office in January 2021, the CPI has increased 7% in 2021, 6.5% in 2022, 3.3% in 2023; and will likely be up around 3.5% in 2024. But CPI growth is like compound interest. Each year’s increase is piled on that of prior years. From 2021 to 2024, a moderate monthly grocery budget of $1200 for a family of four will have increased to $1450.
Public officials, politicians, the media, and even some economists refer to the CPI as the measure of inflation. That’s only partially true. The CPI is more like a measure of the “cost of living,” reporting price changes in a market basket of goods and services. As the eminent economist Milton Friedman taught us, inflation is a strictly monetary phenomenon. It’s a decline in the purchasing power of the dollar caused by an increase in the supply of money and credit that exceeds the growth in goods and services. In simpler terms, it’s said to be too many dollars chasing too few goods, the result of federal government spending that exceeds receipts producing habitual budget deficits which the federal reserve monetizes.
Inflation, defined as decline in what a dollar buys, is baked-in for every item in the CPI market basket. But that accounts for only part of the CPI. The price of some items go up a lot, some a little, some even go down. And that’s based on supply and demand, the cost of fuel (which affects virtually everything), productivity, technology, the cost of raw materials, commodities, ever-expanding government regulation, taxes, etc.
A sampling of CPI price increases in the Biden era from January 2021 to April 2024, includes airline fares up 38%; motor vehicle maintenance and repair, 30%; and rent, 21%. Food in general, 16%. Food away from home, 22%, compounded by government mandated increases 
in the minimum wage for restaurant workers. (Supermarkets have replaced human checkers with automated checkout to avoid those minimum wage increases.)
Motor vehicle insurance is up 52% driven by the surge in auto thefts as progressive district attorneys in Democrat strongholds refuse to prosecute auto thieves or release them without bail so they can keep stealing cars.
The price of gasoline has increased 55%. World crude oil prices are a big factor but, domestically, Biden’s and congressional Democrats’ fingerprints are all over this, too. Rather than expanding development and production in the U.S. to increase supply and bring down prices, Biden singlehandedly killed the Keystone XL pipeline from Canada and curtailed drilling on federal lands including Alaska. Progressive Colorado Democrats with an iron grip on state government are restricting oil and natural gas production and some are trying to kill the industry entirely — a mainstay of our state’s economy — in the name of more costly and impractical green energy.
The root of the inflation surge was the COVID pandemic which hit during Trump’s presidency. With much of the population sequestered due to government-mandated lockdowns and the economy retracting, annual federal spending increased by almost 50% to $6.5 trillion with a deficit of more than $3 trillion in 2020. Much of this was unavoidable.
Very much avoidable, however, was the federal spending binge that followed when Biden took office in 2021 with Democrats in control of Congress. They radically expanded government and showered states with unspent COVID money that no longer had to be spent. In blatant defiance of the Supreme Court, Biden’s canceling of student debt was nothing short of bribery. Consequently, more deficit spending spiked the already simmering inflation.
In Biden’s latest budget submission, covering FY 2025-2034, uninterrupted annual deficits average $1.6 trillion. Federal spending that averaged 20% of GDP over the previous 60 years, is now fixed at 24% of GDP. Social Security, Medicare, Medicaid, a cornucopia of welfare programs, and interest on the national debt now consumes three-quarters of all federal spending and is rising. National Defense, the most essential government responsibility, gets only 12%.
Biden falsely claims to have created millions of jobs. Nonsense. That had nothing to do with his policies, people just returned to work after COVID. But you can blame Biden for the increase in government jobs.
Longtime KOA radio talk host and columnist for the Denver Post and Rocky Mountain News Mike Rosen now writes for CompleteColorado.com.
