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County Hall Corner: Election Year and Inflation Fear

Polls greatly impact politics, and polls are supposedly evidence of what voters think about and care about.

Politicians must walk a tightrope of matching up their focuses and concerns with those that they want to vote for them. For example, according to the most recent YouGov poll, inflation was the top issue for voters among fifteen categories. Twenty-two percent named inflation as their top issue, with 76 percent of that shared calling it “very important.” This was almost twice what the second issue, immigration, scored on importance.

It is no mystery why voters are stuck on this, as it seriously impacts our lives. This is rather difficult for politicians to deal with today because it has long been off their radar. Since the mid-1980s, inflation seemed to be extinct. It averaged just around three percent per year for decades, and after the recession of 2007-2009, it even lowered to two percent.

All this changed when COVID came along. By 2022, inflation had risen to levels not seen in 40 years. Understanding why this happened is rather heavy lifting as the geeks explain inflation from standard economic theory that easing fiscal and monetary policy can increase inflation if labor markets overheat and output exceeds the economy’s potential. That certainly clears it up, doesn’t it?

In simpler terms, what has happened is that the COVID restrictions so damaged our economy that there were shortages that resulted in significant price increases. Logic would have led to putting all the effort into getting the economy back to where it was before COVID by focusing on the needs of businesses and industries. But, no, this is not the Washington Way of Doing Things. What they thought was really needed was a boatload of “stimulus” money given to local government entities to get the economy going again. It would be quicker and easier, and (best of all for them) the politicians could take credit for getting the nation back on its feet again, which comes in very handy at the next election cycle.

Not surprisingly, the trillions (not a misprint), trillions of dollars coming from Washington, D.C. to jumpstart our country back into prosperity, did not exactly have the result they were counting on.

At its worst, the money got stolen, such as Minnesota’s Feed the Future (FOF) Program. This popped up in September of 2022 and is only coming to court this month.

Under the supervision of Minnesota’s Department of Education, FOF distributed that money to a network of Minnesota nonprofits that were to deliver meals to children. Instead, the money mostly went toward luxury purchases, fancy cars, overseas vacations, gold and jewels, and new houses — to the tune of $250 million! It would not have been that much embezzlement except when the Department of Education became suspicious and tried to cut off the gravy train. This was rejected by a Minnesota state court judge who ordered the Department to resume funding. It turned out to be one of the biggest frauds on record.

So, rather than boosting the economy with the grit of the men and women of America who would clear away the rubble of the COVID conundrum with rolled-up sleeves and hard work, what came instead was sprinkled money from a Santa Claus government combined with more and more restrictions coming from Washington, D.C. and from liberal state governments, like California’s 2022 “Inflation Reduction Act” that received super high praise from the media but resulted in 482,700 Californians losing their jobs that year in the tech area alone. Governor Newsom himself is cutting off 10,000 state positions.

But back to inflation.

What happened in the mid-1980s to stop inflation? It had been a thorn for some time before that, even to the point that President Gerald Ford tried in 1974 to create a national initiative known as WIN, Whip Inflation Now. (He didn’t win on that one).

No, inflation did not cease to be a national burden until President Ronald Reagan came along in 1981. His policies of balancing the federal budget while increasing defense spending, slowing the growth of government spending, reducing the federal income tax and capital gains tax, reducing government regulation, and tightening the money supply all resulted in stabilizing the economy and reducing inflation.

Yet this did not happen immediately, and President Reagan was mocked for these actions, which became known as “Reaganomics.” Milton Friedman, Nobel Prize laureate and considered one of the greatest economists of the 20th century, highlighted the term and marveled at its core principles—lower marginal tax rates, less regulation, restrained government spending, and noninflationary monetary policy. Friedman saw this as the formula for a vibrant economy.

According to the White House, “Bidenomics” is a rejection of “Reaganomics.” Its pillars are making public investments, empowering and educating workers to grow the middle class, and promoting competition to lower costs and help entrepreneurs and small businesses to thrive. As President Reagan once said, the scariest thing you will ever hear is, “Hello, I am from the government, and I am here to help you.”