I hope everyone had a wonderful Thanksgiving. By the way, how do you know you ate a lot during the holiday? You have to take out your bathrobe.
The somewhat slashed Rebuild Better bill, the Human Infrastructure Bill, and the Reconciliation Act, call it whatever you like, are still in the news constantly. Am I the only one wishing Congress would just pass it or drop it, so we wouldn’t have to keep hearing the same old things, without real new information or analysis to allow us to critically assess it, including its potential impact on inflation, a topic we’ll touch on shortly?
As I write this column, we’re still waiting for the Congressional Budget Office to register the bill and tell us if it’s “paid,” whatever that means. However, as we’ve 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 stipulated programs are now ending earlier than first suggested, with the hope that they will be extended once in place.
By now, I think we’ve all learned that one of the principles by which politicians and policymakers advocate for a new taxpayer-funded program is that it’s hard to take something away from people just by giving them that, especially if they’re not the ones paying for it.
So there is this open question to pay for it if the bill is passed. We’ve talked before about whether higher corporate taxes will cause those corporations to pass some or all of those increases on to us in the form of higher prices for their goods or services. Then I finally saw a piece addressing the other questions I’ve been asking about “pay for it”, which is, how will all these billionaires react to the various increased taxes proposed to be imposed on them, which are some of the constitutional proposals even? Will some of them move outside the United States, leaving other taxpayers with some slack? Anyway, is there anyone left who does not believe, directly or indirectly, that we will all 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 talk about the interaction between 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 at NPR say “You don’t answer my question.”
So, we all suffer from inflation, some more than others. A lot of that is clearly due to supply chain issues, caused in part by increased demand, driven in large part by many Americans who have found themselves with a large amount of extra money to spend, due to government payment packages and forgiveness programs, such as a moratorium on loan debt repayments. Students, during pandemic lockdowns. Also, for some, they increased savings, because they didn’t lose a job or income, but didn’t have a lot of things they could spend those savings on during pandemic lockdowns, like going out to eat, to shows, or on vacations. Also, for some Americans, rising stock market values have provided them with extra money, and others have paid off some or all of their consumer debt, such as credit card debt, causing them to get more money at the end of the month, because they’re making less interest payments. Then there are some Americans who have been able to get a better-paying job, because of their growing influence, because of a huge labor shortage.
I know I’ve seen increases in everything I buy, from cat food to wine (the kind I buy at 20%), to meat, not to mention gasoline, which is still much cheaper at Walmart, BJ’s, and Costco in Henrietta, so expect long lines.
I don’t know when, or if prices will drop, but if it does, it will take longer than many “experts” predicted just a few months ago, some even now saying 2023. I say “if,” because will retailers lower their prices Really when supply chains are revived, especially if labor costs in many of them are increasing?
For me, the keys to moving forward are two things. What are people doing during this period of inflation, and what will they continue to do once we get past it? During this time of high inflation, despite pent-up demand, will they cut back some of their spending in order to keep their budgets in balance? Also, will they finally do those frugal things, like discount store shopping, store brand buying, use of coupons, unit price and comparison shopping? Additionally, will they pay off debt and stay away from consumer debt, such as credit card debt, in order to avoid those interest costs, so that they don’t pay more for everything they do and buy? Then will they continue these behaviors in times of low inflation? I certainly hope so!
Finally, I promised in a previous column that I would occasionally include some “financial jokes”, to balance out what seems to be ongoing bad economic and financial news, so here are some of them.
No matter how long or how hard you shop for an item, after you buy it, it will be on sale at a cheaper price somewhere. Why did the football coach go to the bank? to get his quarterback. What kind of cat should you not trust with your money? Cheetah. What happened to the man who didn’t pay the exorcist? has been restored.
John Ninfo is a retired bankruptcy judge and founder of the CARE National Financial Literacy Program. Find his previous weekly columns at http://www.mpnnow.com/search?text=Ninfo.