On this week’s episode, Kristin Tate joins to help us examine the number one problem facing Americans — inflation. We cover the specifics of how we got here, but most importantly what we need to know moving forward. Will the so-called “Inflation Reduction Act” really lower inflation? Will the Federal Reserve continue to raise interest rates? Should we brace ourselves for even harder economic times? What are the right policy steps to lower inflation?
Kristin Tate is a visiting fellow at Independent Women’s Forum. She writes a weekly column for The Hill newspaper and is the author of three books — The Liberal Invasion of Red State America, How Do I Tax Thee?, and Government Gone Wild. She also provides communication strategy to political campaigns, and has worked on statewide races in Texas. Red Alert Politics and Newsmax Magazine each named Kristin one of the 30 most influential right-of-center leaders under the age of 30 in 2016 and 2017, respectively.
TRANSCRIPT
Beverly Hallberg:
Welcome to She Thinks, a podcast where you’re allowed to think for yourself. I’m your host, Beverly Hallberg. On today’s episode, we look at the number one problem facing Americans, inflation. We’re going to get into the specifics of how we got here, but most importantly, what we need to know. For example, will the so-called Inflation Reduction Act really lower inflation? Will the Federal Reserve continue to raise interest rates? Should we brace ourselves for an even harder economic time? And what are the right policy steps to lower inflation?
Well, we have a wonderful guest to talk about all of that. Kristin Tate is joining us. Kristin Tate is a visiting fellow at Independent Women’s Forum. She writes a weekly column for The Hill newspaper and is the author of three books, “The Liberal Invasion of Red State America,” “How Do I Tax Thee?,” and “Government Gone Wild.” She also provides communication strategy to political campaigns and has worked on statewide races in Texas. It’s a pleasure to have her today.
Kristin, thank you so much for joining She Thinks.
Kristin Tate:
Thank you so much for having me, Beverly.
Beverly Hallberg:
I think we should start by defining the word inflation. That seems to have been a very difficult thing for many Democrats to do in the past few weeks. What is the definition of inflation? What is the definition of whether or not we are in a recession? Do you think that when we think about defining recession, as well, that we currently are in one?
Kristin Tate:
Yeah. I actually don’t think it even matters if you call it a recession or not. They can change the definition of recession. The point is, Americans are feeling really pinched, economically speaking. Their dollars are going less far than they used to, and Americans are struggling to buy all of the things that they were able to comfortably buy just a few years ago.
What inflation means is that there are too many dollars out there chasing too few goods, so you have a ton of supply and not enough demand. Then if you go a step further than that and get into an even worse situation, you can have stagflation, which means that you just have no economic growth at all and prices still continue to go up while productivity goes down. That’s what I’m worried we may be entering into, is a period of stagflation. Right now, we’re certainly seeing inflation. I just wrote a report before we went on air that families are spending an average of almost $500 more per month just on-
Beverly Hallberg:
That’s crazy.
Kristin Tate:
… the necessary goods that they need to buy every month. We’re talking about food and gas for their cars. Americans are really feeling this in a very substantial way.
Beverly Hallberg:
What’s been interesting is to hear Democrats talk about inflation. I mentioned earlier about just how they’re defining inflation. We’ve heard everything from “inflation doesn’t exist” to “it’s transitory” to “it’s good” to “it’s not a big deal.” We’ve heard a lot of different things in describing inflation in this country. But one of the things that I think the Biden administration has finally come to is realizing, first of all, it’s bad, because poll numbers were showing how bad this really was for his administration, but he has talked about this as inflation is because of Putin, the war between Ukraine-
Kristin Tate:
Putin’s price hikes.
Beverly Hallberg:
… and Russia. How is that being sold? Do you think they’re selling that well to the American people, or do the American people look at that and say, “Look, that’s not the whole story, if it even causes it at all”?
Kristin Tate:
Yeah, I think that there’s a percentage of the Democrats’ base that will believe almost anything this administration tells them, and maybe they’re buying into that, but the vast majority of American families can see right through that. That is not the case, because inflation was already on the rise well before Putin invaded Ukraine. We already were seeing significant price hikes across the board, and this was something that was being talked about a lot on cable news shows and in the pages of various newspapers.
People aren’t really buying that. I think he can sell a little bit of the case that the invasion didn’t help inflation; it’s made it worse. That’s true to a certain extent, particularly when you look at gas and oil. But I think most people are smart enough to understand that’s not responsible for the bulk of the inflated prices we’re seeing.
Beverly Hallberg:
Let’s get into the reasons why we are seeing this increase in prices across the board. What is it due to?
Kristin Tate:
It’s a huge perfect storm of factors. I think, really, most of this started when COVID hit, and we really shut down the whole economy. This is not all the fault of the Joe Biden administration. The Trump administration went along with these shutdowns, even encouraged them at the beginning. Productivity absolutely plummeted in this country. We saw huge disruptions to our supply chain. That was the first problem. And everyone was sitting at home collecting stimulus checks that were being sent to them from the government. This was money that was, in part, being printed, in part being borrowed from China. Then, of course, we have to pay interest on that.
Americans were at home. Productivity was going down. They were receiving stimulus checks. They were flush with cash. As a result, they were buying lots of things, especially online. We saw demand just go through the roof for consumer items while supply was going way down. That’s what started all of this.
Then, of course, once we figured out COVID was not really a significant threat to young, healthy people, instead of reversing policy, opening the whole country back up, especially the cities, encouraging people to get back to work, getting our supply chains back in working order, the Biden administration comes in and continues with policies that just poured gasoline onto the fire. They did another round of stimulus checks. They passed these massive trillion-dollar spending bills. Oh, and I didn’t even mention the PPP loans. Those didn’t help inflation either, where we were just giving out these huge checks to employers, and many of them were fraudulent.
All this printed and borrowed money is just being pumped into the economy at a very quick clip, and that has continued on now for two and a half years. You have, particularly, the Democrats who just want to keep spending and spending and spending money that we do not have. Again, this money is mostly being borrowed at high interest rates. It’s being printed. The money doesn’t exist. They’re telling the public that we’re going to fund all of this spending with tax hikes on the rich and corporations, which just is not true. Every single study shows that even if you significantly increase taxes on every billionaire in this country, it couldn’t come close to covering the spending in these bills.
I just don’t see this situation getting any better anytime soon, unless you have a bunch of Republicans come in after the midterms and really push for change. Unfortunately, Republicans haven’t been that great on spending either. I can really count on two hands the number of Republicans in D.C. who are serious about spending cuts. Spending cuts are like a root canal. Nobody really wants them, and they’re not popular politically, but that’s really what needs to happen to get this under control.
Beverly Hallberg:
Yeah, it does seem like governments’ posture, whenever there is pain felt by people, they say, “Well, we’re just going to give you something.” The most recent gift is what is called the Inflation Reduction Act. Many people are mocking this name because it doesn’t seem like it’s going to lower inflation at all. It’s actually more of the Green New Deal 2.0 that is really passed. Tell me about what you think about the name of the bill and what this will actually do to inflation.
Kristin Tate:
It’s so despicable the way Washington slaps these misleading labels on bills that often represent the exact opposite of what the bills actually do. This would actually significantly increase inflation, especially in the short term. I was just reading a report by the Heritage Foundation that broke down exactly what this would do to the economy. It’s just another big boondoggle spending bill, especially on green energy. This bill took a lot of parts of the so-called New Green Deal, incorporated it. It’s just a massive giveaway to the green energy sector, and then also to manufacturers.
The Biden administration is trying to say, “Oh, we’re going to give all this money to manufacturers, and it’s going to drive down prices.” That’s not the case at all. All this is going to do is just create more currency floating around that’s going to even further devalue the dollar and people’s spending power.
Beverly Hallberg:
What do you say to those individuals who think that we have to spend our way out of it and say, “Look, the Biden administration, as well, has already made some progress. We’re seeing gas prices go down, food prices go down. This shows that we’re headed in the right direction and that these types of measures are working”? What do you say in response to that? Gas prices have gone down.
Kristin Tate:
Right. Well, the gas prices going down is largely the result of him releasing our strategic reserves. I think they’re releasing about a million barrels per day, which is crazy. This is the same administration that said they want to get rid of fossil fuels and fracking and all of this. Now we’re depleting our strategic reserves. Hilariously, but also depressingly, their release of the reserves will end right after the midterms. How convenient, right before winter, when we really need lower gas prices. I think that mostly explains the lower gas prices, so that’ll mostly be temporary, until after the midterms.
The notion that we need to somehow spend our way out of this is absolutely crazy. Spending is what got us here in the first place. But you’re right when you said earlier that this administration, their answer to everything is to just give goodies out to various voter coalitions to keep them happy and keep them thinking that the spending is working.
They’re talking now about even more student loan forgiveness. Of course, the student loans have been on pause for two and a half years, student loan repayments. The stimulus checks, we saw various rounds of that. Now after all of this, we still have a productivity problem because people are still slow to get back to work.
The fact that we have low productivity is also causing prices to rise, because we don’t have enough truck drivers. We’re short tens of thousands of truck drivers. We don’t have enough people working in the grocery store stocking the shelves. We don’t have enough people to do all of these very important jobs that are critical to our economy. The best way to get people back to work and lower these prices and get productivity back up and get the dollar to retain some of its value is just to not spend all this money and just let the economy fix itself, but that is not the direction that we’re heading in.
Beverly Hallberg:
One of the numbers we continue to hear the Biden administration tout as their proof that the economy is doing well and that Joe Biden has done what needs to be done is they talk about the unemployment rate and talk about how low it is. Tell me why looking at that does not give the full picture.
Like you just said, all you have to do is go to your local fast food restaurant and see that the lines are longer. They don’t have as much staff. I know a lot of fast food places even have to close earlier because they don’t have enough people working. We see the Help Wanted signs everywhere.
Is it that they’re making comparisons to during COVID, when people were forced not to work? Of course, unemployment is going to look much better now than it did then.
Kristin Tate:
Right. Yeah, it’s a wonder. You shut down the economy and tell everyone they can’t go to work, and then when you reopen most of the country and some people go back to work, wow, the unemployment rate goes down. Who would’ve thought?
There are other pieces to the puzzle as well. Some people have just left the workforce. They’re not looking for work, so they’re not even counted in the unemployment numbers at all. A lot of mothers, in particular, during COVID, they decided they liked being at home with their kids, and they’re not going back into the workforce. There’s actually something really great about that, but it does impact the numbers we’re looking at.
Additionally, many employers, because of their decreasing profit margins, are simply not able to hire as many workers as they had before the pandemic. I have a stepmother in Boston, Massachusetts, who owns three restaurants, and her staff, just the number of people she’s able to afford, has declined by about 30% because her cost of materials has gone up so much. All the food that she buys for this restaurant has gone up so significantly that she just can’t afford to hire the same number of people that she had prior to the pandemic.
I think there are a lot of different reasons why these unemployment numbers look like they have lowered, but of course, the primary being that during COVID the numbers were just so horrible that, obviously, they’re good now in comparison.
Beverly Hallberg:
Well, I want to take a brief moment to ask you, our listeners, a question. Are you a conservative woman? Do you feel problematic just for existing in today’s political landscape? Well, I have some info to share with you.
Every Thursday morning on Problematic Women, Lauren Evans and Virginia Allen sort through the news to bring stories and interviews that are of particular interest to you, a problematic woman, that is, a woman whose opinions are often excluded or even mocked by those on the so-called pro-woman left. Lauren and Virginia break down the news you care about in an upbeat and sharp-witted way. Search for Problematic Women wherever you get your podcasts.
Kristin, I want to turn to the topic of the Federal Reserve. We have seen interest rates go up. This has been hard for the housing market as well as other sectors. There is talk about even more of an interest rate hike leading up to this September Federal Reserve meeting. What do you make of what the Fed is doing? Do they have to do this because inflation is what it is?
Kristin Tate:
Yeah, I think the Federal Reserve has gotten far too powerful. Basically, the Biden administration has given over the reins of the economy to the Fed. However, I do think we need these rate hikes right now. It is a way we can slow the inflation, but it’s really the only thing that’s being done right now. What we need is slight hikes in the interest rates, but then we also need to stop the spending. If you only increase the interest rates, that’s going to just hurt people trying to buy houses while they’re also struggling to buy all these other things like groceries because of the out-of-control federal spending.
I do think some moderate hikes in the interest rates are sensible. The housing market was way out of control. It’s going to cool the market a little bit, which we need to get the inflation under control. But it’s really only one piece of what needs to happen. The bigger piece, which is the federal spending, is going in the wrong direction. These Fed interest rate hikes really aren’t going to do too much, in my opinion, to stop the inflation unless these other things happen as well.
Beverly Hallberg:
Let’s talk about how people should brace themselves for whatever is coming next. You already mentioned the potential food shortages in what we may see this winter, and the cost of gas, especially as people use energy more to heat their homes. I guess the question is, should we brace ourselves for a hard fall and winter?
Kristin Tate:
I think so. Yes. I talk all the time about savings. I come from a very thrifty family up in New Hampshire that put a big emphasis on creating savings and having a cushion in case times get hard.
Right now, I think the majority of millennials, I read this a couple weeks ago, are literally living paycheck to paycheck. Of course, their pay is lower than their parents’ was when adjusted for inflation when their parents were their age, but a lot of that is also because many people, many young people particularly, live above their means. They’re going out to eat. They’re buying expensive cars and living on these crazy payment plans and credit cards. I think people would be wise to rein that in a little bit as we get closer to the winter and really focus on, “What is necessary for my household? What foods do I need? How much gas do I need in my car?”
The spending habits people adopted during COVID were a little bit troubling in certain ways. We saw all kinds of goods really exploding in popularity that are not necessary to run a household. I think that’s wonderful during good economic times, but when you’re entering bad economic times, it is really important to have that savings cushion, because we can’t rely on the government to just come in and give unending stimulus checks every time we enter an economic slump. People would be wise to prepare for what’s coming, try to save money, and focus on what your household really needs and creating a budget.
Beverly Hallberg:
I think preparation is important, and I think the other part is people are looking to our elected officials to see what they can do. We do have midterms coming up. We’ll see what happens as far as who is elected to the House and the Senate, and what happens with the balance of power. Let’s just say you have Republicans do take over, who typically do not want to spend as much, even though they have a bad track record. Other than stopping stimulus, is there anything else to put the cat back in the bag?
Kristin Tate:
Yeah, I think just reining in federal spending in general. It bothers me so much when these Republicans brag about slowing the growth of the federal budget every year. Well, it’s still growing. You’ve just slowed the rate of growth. I think everything needs to be reined in, and they would be wise to just let the market work. But again, it’s just not a very politically popular thing to do. There’s no constituency for that.
The best I think we can hope for is for the Republicans to come in and just stop the crazy, really, really harmful spending the Democrats are doing and get us back to what we had before COVID, which was still growing government, growing spending, just at a slower rate. That would really help. I think that’s the best that we can hope for. In my perfect world, I would love to see drastic cuts to the bureaucracy, drastic cuts to federal spending, drastic cuts to all kinds of programs that are riddled with fraud and get people dependent on government, but that’s a fantasy.
Beverly Hallberg:
Well, we can always hope and work towards that, but some really good information, also some good advice on the importance of saving. I think we all need to look at that, as we do not know what to expect from the economy moving forward, even though it’s likely that we will be headed towards harder times. Kristin Tate, visiting fellow with Independent Women’s Forum, thanks for joining She Thinks today.
Kristin Tate:
Thank you so much for having me, Beverly.
Beverly Hallberg:
And thank you for joining us. Before you go, Independent Women’s Forum does want you to know that we rely on the generosity of supporters like you. An investment in IWF fuels our efforts to enhance freedom, opportunity, and well-being for all Americans, so please consider making a small donation to IWF by visiting iwf.org/donate. That is iwf.org/donate.
Last, if you enjoyed this episode of She Thinks, do leave us a rating or a review. It does help. And we’d love it if you shared this episode, so your friends can know where they can find more She Thinks.
From all of us here at Independent Women’s Forum, thanks for watching.
