Validating Senator Rick Scott’s Comments Blaming Inflation on Government Spending

This week, on CNN’s “The New Day,” Republican Senator Rick Scott proposed an infrastructure bill Passed successfully Friday was an example of what he said was the kind of wasteful government spending that drove up prices.

Scott said voters express their concerns when they see legislation, such as the infrastructure bill, “involving incredibly expensive spending,” despite the fact “we’ve raised gas prices by more than 50%, and food prices are high, all because squandering government expenditures.”

When asked to clarify his observations, Scott’s office sent CNN a press release Doubling down on the senator’s claims that “reckless spending” under the Biden administration fueled this “inflation crisis.”

The facts first: Blaming high gas and food prices exclusively on government spending is wrong. Supply chains are in shambles, not only in the United States. Global production of oil and many other commodities fell last year when demand waned as a result of the pandemic. But while demand has increased since then, production has remained below pre-pandemic levels, driving up prices.

Government spending has increased during the pandemic, while bypassing multiple stimulus packages designed to boost the US economy No Trump And Biden administrations. However, economists broadly agree that the country’s economic downturn during the pandemic could have been more severe without these aid packages. Moreover, it is inaccurate to suggest, as Scott did, that government spending was the primary driver of price increases across the board.
In fact, a July report from Moody’s Analytics have found The infrastructure bill and Biden’s proposal to build back better are unlikely to fuel inflation and could have the opposite effect by adding supply and increasing productivity.

food prices

One big indicator that US government spending is not solely responsible for the sharp rise in prices? The cost of food has gone up everywhere, not just in the United States.

Last week, a index Published by the Food and Agriculture Organization of the United Nations that tracks monthly changes across a range of food commodities around the world, it reached its highest level in nearly a decade.
According to the Food and Agriculture Organization, this increase is calendar Rising global demand for a range of products including poultry, vegetable oils and barley, along with lower yields from major exporters, disruption to supply chains, labor shortages and rising production costs.

gas prices

Gasoline price hikes are also caused by a similar chaos caused by a pandemic in the supply chain. While demand is back in force, production is still catching up to pre-pandemic levels.

According to the US Energy Information Administration, crude oil production in 2020 witnessed its largest annual decline registered, In the wake of the “sudden drop in oil demand” caused by the coronavirus pandemic.
US crude oil Produce By the end of October it was at 11.5 million barrels per day, up from 9.7 million barrels per day in August 2020 and February 2021, but still shy of peak levels in February and March 2020, when field production was around 13.1 million barrels per day.
Use the filter ratesWhich fell to 56% in February 2021, recently recovered, reaching 86.3% by the end of October. But that’s still lower than it was before the pandemic, when they were always above 90 percent.

Regarding rising gas prices in particular, Patrick de Haan, head of petroleum analysis at GasBuddy, a website that tracks gas price, told CNN on Oct. 20, “I attribute today’s higher energy prices to conditions no president would have part. The biggest change has to do with Covid.”

When De Haan was asked about the rise in gas prices last June She saidThis is not a political issue. It is more of a Covid-19 challenge simply because of how the Covid-19 virus decimated fuel demand last year. While prices are much higher this year than last year, it is because of the recovery and economic recovery that more of Americans, demand for gasoline rose from last year.”

The Biden administration has already called on OPEC and its allies to do more to combat rising energy prices, but so far they have refused to dramatically increase production.

Mark Zandi, chief economist at Moody’s Analytics, told CNN that gas prices are high in part because the energy industry is still operating below pre-pandemic levels, even though it has the potential to produce more oil and natural gas.

“The problem is that energy producers have been slow to increase their use of this energy with the increased demand caused by the pandemic,” Zandi said.

Asked about Scott’s comments on CNN on Monday, Zandi said, “Scott misdiagnosed the causes of high gasoline prices, acceleration in food prices, etc. this year.”

“The rise in prices and inflation is due to the epidemic, especially the delta wave,” Zandi said. “With the delta wave over, supply chain and labor market problems will be addressed, and inflation will subside.”

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