OPINION:
To hear President Biden tell it, the latest inflation data is proof that “Bidenomics” is working, the economy is humming along, and the middle class is doing well.
No part of that narrative is supported by the facts. The administration’s own data show the average American worker’s wages were effectively reduced over $4.50 an hour last month via the hidden tax of inflation.
The consumer price index for June showed prices rose 3% over the last year. Core inflation, which excludes volatile food and energy prices, was 4.8%.
The Biden administration was quick to tout the 3% annual inflation rate as some kind of achievement. But that is damning with faint praise, since Mr. Biden previously ran inflation up to 40-year highs.
To put that in context, prices rose 1.4% over the entire year before Mr. Biden took office. Eighteen months later, prices were rising about that fast in a single month. Inflation remains more than twice what it was when Mr. Biden became president, and prices have already risen 16% during his term. This is devastating for the average American worker.
The White House says workers are better off because of Bidenomics, but the data tell a different story. In June, average hourly earnings were $33.58, a healthy 12.2% higher than 2½ years ago. But during that same time, prices have risen even faster, so that the average hourly wage today can buy only what cost $29.03 when Mr. Biden took office.
The difference between this inflation-adjusted wage and the nominal wage is a whopping $4.55 an hour.
That means the average American worker last month paid an inflation tax of 13.5%, like paying a second income tax. And unlike the federal income tax, which has deductions, tax credits, and other ways to shield your income, there is no safe harbor in the stormy waters of inflation. Every dollar everywhere loses purchasing power as the government devalues the currency to pay for its profligate spending.
We don’t often think of inflation as a tax, but that’s what it is. Inflation transfers wealth from you to the government, and it’s hard to come up with a better definition of a tax than that.
Inflation enables unelected bureaucrats to finance trillions of dollars of spending without a single public hearing or vote from Congress.
For the average American worker, it’s about $9,100 a year in added taxes that most people don’t understand they’re paying. It doesn’t show up on your pay stub, and you won’t find any law that Congress passed or the president signed that levied this tax.
Inflation is more subtle, but just as harmful as any other tax.
Considering that average hourly earnings equate to about $67,000 in annual income, inflation has been a direct, albeit secretive, violation of Mr. Biden’s pledge not to raise taxes on those earning less than $400,000 a year, as it has effectively doubled income taxes on the average American worker.
Yet the White House considers this news good enough to take a victory lap. Either Mr. Biden doesn’t understand his own government’s statistics, or he’s knowingly gaslighting Americans, who are being forced to eat the rotten fruit from the tree of government overspending. If today’s bloated federal budget is the new normal, then so is the current 3% annual increase in prices that helps pay for all that spending.
Mr. Biden can’t spend a dime without taking it from you first, even if he does it secretly. That’s worth remembering the next time you hear how well Bidenomics is working for the middle class.
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E.J. Antoni is a public finance economist at The Heritage Foundation and a senior fellow at the Committee to Unleash Prosperity.
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