I hope that everyone had a wonderful Thanksgiving. By the way, how do you know when you have eaten too much over the Holiday? You have to take out your bathrobe.
The somewhat scaled back Build Back Better Act, Human Infrastructure Bill, Reconciliation Bill, call it what you will, is still constantly in the news. Am I the only one who wishes that Congress would just pass it or drop it, so we wouldn’t have to keep hearing the same old things, with no real new information or analysis to allow us to critically evaluate it, including its possible impact on inflation, a subject we will soon address?
As I am writing this column, we are still waiting for the Congressional Budget Office to score the Bill and tell us whether it is “paid for,” whatever that means. However, as we have discussed in this column, other “non-partisan” organizations have pointed out a number of things that will make the overall Bill much more expensive in the long run for taxpayers. These include that many of the programs provided for are now ending earlier than first proposed, with the hopes that once put in place they will be extended.
By now, I think that we have all learned that one of the principles that politicians and policy makers advocating for a new taxpayer-funded program operate under is that it’s hard to take something away from people once they have been given it, especially if they are not the ones paying for it.
So there is that open question of paying for it if the Bill passes. We have talked before about whether a higher tax on corporations will result in those corporations passing on some or all of those increases to us in the form of higher prices for their goods or services. Then I finally saw a piece addressing the other questions that I have been asking about “paying for it,” which are, how are all of those billionaires going to react to the various increased taxes proposed to be levied upon them, and are some of the proposals even constitutional? Will some of them perhaps move outside of the United States, leaving other taxpayers to pick up some of the slack? At any rate, is there anyone left who doesn’t think that, directly or indirectly, we are all going to pay something for this spending in the future?
Another issue that is constantly in the news these days, as it should be, is inflation. By the way, when they are addressing the interplay between the proposed new federal spending and inflation with government representatives, you have to wonder when even journalists like Chuck Todd on “Meet the Press” and others on NPR keep saying “You are not answering my question.”
So, we are all experiencing inflation, some of us more than others. Much of it is clearly because of supply chain issues, brought on in part by increased demand, driven in large part by many Americans who have found themselves with a significant amount of extra money to spend, due to combinations of government payments and forgiveness programs, like the moratorium on student loan debt payments, during the pandemic shutdowns. Also, for some, they have increased savings, because they did not lose a job or income, but they didn’t have as many things that they could spend those savings on during the pandemic shutdowns, like going out to eat, to performances, or on vacations. Also, for some Americans, the increasing stock market values have provided them with additional monies, and some others have paid down some or all of their consumer debt, like credit card debt, leaving them with more money at the end of the month, because they are paying less in interest payments. Then there are some Americans who have been able to obtain a better paying job, because of the increased leverage they have, due to the many labor shortages.
I know that I have seen the increases in everything that I buy, from cat food to wine (the kind I buy is up 20%), to meats, let alone gasoline, which is still significantly cheaper at Walmart, BJ’s and Costco in Henrietta, so expect long lines.
I don’t know when, or if, prices will go back down, but if they do, it will take longer than many “experts” predicted just a few months ago, some now even saying 2023. I say “if,” because are the retailers really going to lower their prices when the supply chains are revived, especially if for many of them, their labor costs are increasing?
For me, the keys going forward are two things. What are people doing during this period of inflation, and what will they continue to do once we get through it? During this time of high inflation, despite their pent-up demand, will they cut back on some of their spending in order to keep their budgets in balance? Also, will they finally do those frugal things, like shopping at discount stores, buying store brands, using coupons, and unit price and comparative shopping? In addition, will they pay off and stay out of consumer debt, like credit card debt, in order to avoid those interest costs, so that they are not paying even more for everything they do and buy? Then will they continue those behaviors in times of lower inflation? I certainly hope so!
Finally, in a prior column I promised that I would occasionally include a few “money jokes”, to balance off what seems to be so much continuing bad economic and financial news, so here are a few.
No matter how long or hard you shop for an item, after you have purchased it, somewhere it will be on sale for cheaper. Why did the football coach go to the bank? To get his quarterback. What kind of cat should you never trust with your money? A cheetah. What happened to the guy who didn’t pay his exorcist? He got repossessed.
John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program. Find his previous weekly columns at http://www.mpnnow.com/search?text=Ninfo.