MADISON — While Gov. Tony Evers and President Joe Biden spend your tax dollars like drunken sailors on leave, consumers are taking it in the shorts.
Evers and liberal lawmakers are salivating over how to spend billions of dollars in projected surpluses even as the governor burns through billions more in federal COVID relief.
But Senate President Chris Kapenga (R-Delafield) is warning of dark clouds on the horizon — thanks in large part to all that “free” federal money that Evers has been so free to spend.
“When trillions of printed government dollars are pumped into the economy, there will no doubt be a short-term economic jump. Do not be fooled,” Kapenga warned. “First, all of this money will need to be paid back. Second, I believe we are on the verge of significant inflation, which will decrease the value of each dollar.”
He’s not alone.
Deutsche Bank on Monday issued a dire warning that the trillions of dollars handed out in stimulus payments while shrugging off inflation could prove disastrous in the next couple of years. Inflation is already pushing up prices on everything from cartons of milk to gallons of gas to GMC trucks.
As CNBC reports, Deutsche Bank’s analysis takes aim at the Federal Reserve and its acceptance of higher inflation “for the sake of a full and inclusive recovery.”
“The consequence of delay will be greater disruption of economic and financial activity than would be otherwise be the case when the Fed does finally act,” Deutsche’s chief economist, David Folkerts-Landau, and others wrote. “In turn, this could create a significant recession and set off a chain of financial distress around the world, particularly in emerging markets.”
Meanwhile, indicators such as the consumer price and personal consumption expenditures price indices are well above the Fed’s 2 percent inflation goal, CNBC reports.
Globally, prices are quickly rising, with inflation in countries that belong to the Organization for Economic Cooperation and Development surging in April to the highest rate since 2008, CNN Business International reports.
In the U.S., the Consumer Price Index for All Urban Consumers increased 0.8 percent in April on a seasonally adjusted basis after rising 0.6 percent in March, the federal Bureau of Labor Statistics reports. Over the year, consumer prices have climbed 4.2 percent, the largest 12-month increase since September 2008, when the U.S. economy was in recession.
What’s it all mean for the consumer — a 10 percent spike for used cars and trucks, the largest one-month increase since the measurement began in 1953.
U.S. food prices rose 0.4 percent in April. Global food prices are up nearly 40 percent over the year, according to the United Nations’ food price index. Prices in May saw the sharpest monthly spike in over a decade.
Memorial Day gas prices were at their highest level in seven years.
The high prices are adding up, and they could take a painful toll on the economy. Big spenders in state and federal government will surely exacerbate matters, fiscal conservatives say.
“This is a temporary jump in tax revenue,” Kapenga said of the state budget’s projected $2.6 billion balance to close out the current budget. “(S)ound financial planning would require this money is not spent on more government programs but returned to the taxpayer. There is no magic money tree, folks.”