Biden says COVID stimulus checks fueled the rise in inflation

President Biden admitted this on Wednesday inflation is three decades high because “people have more money now” as a result of his $ 1.9 trillion COVID-19 stimulation legislationrecognizing a central point from people arguing against a successor of nearly $ 2 trillion.

Biden unexpectedly supported the position of its critics, who have said the US dollar is losing its purchasing power as a result of the government printing money to cover COVID-19 aid.

The president said stimulus funds, which he signed into law, are partly to blame for demand exceeding supply of goods, causing a backlog in major U.S. ports and the highest annual inflation since 1990.

“The irony is that people have more money now because of the first big law I passed. You all got checks for $ 1,400. You have checks for a wide variety of things,” Biden said during a speech in Baltimore.

“If you are a mother and you have children under the age of 7, you get $ 300 a month, and if it’s over 7 to 17, you get $ 360 a month,” he said, failing the second amount, which is $ 250. . per month.

“It changes people’s lives. But what happens if there is nothing to buy and you have more money to compete to get [goods]? That creates a real problem, “Biden said.

“On the one hand, we are facing new disruptions in our supplies. At the same time, we are also experiencing greater demand for goods because wages have risen and people have money in the bank. And because of the strength of our economic recovery, American families have been able to buy more products. “

But the president said he believes inflation will slow down, claiming many people are temporarily sitting at home ordering goods online instead of blowing their money at restaurants and bars.

“[People] does not go out for dinner and lunch and goes to local bars because of COVID. So what are they doing? They stay home and order online and they buy products, “said Biden.

“Well, with more people with money buying products and fewer products to buy, what happens then? The supply chain is the reason, the answer is you, I’ll get to that in a moment. But what happens? Prices go up.”

Biden said that “more products are being delivered than ever before – it’s because people have a little more respite than they had last year. And that’s a good thing. But it also means we have a greater demand for goods, at the same time. “We are facing disruptions in the supply of these products. This is a recipe for delays and higher prices.”

Biden acknowledged public frustration.

“People feel it – they feel it,” Biden said. “Did you ever think you would pay that much for a gallon of gasoline? In some parts of California, they pay $ 4.50 a gallon. That’s why it’s so important that we do everything in our power to stabilize. supply chain. ”

Earlier Wednesday, Biden called on Congress to tackle the highest annual inflation rate since 1990 by approving a bill with nearly $ 2 trillion in new social and environmental spending. These expenses would probably be paid for by tougher and broader IRS enforcement and new taxes on companies and the rich.

Biden is preparing to sign another big piece of legislation – one $ 1.2 trillion two-part infrastructure bill who passed Congress last Friday. That’s what the Congressional Budget Office said $ 256 billion of the bill is not paid, potentially exacerbating inflation.

The infrastructure bill includes $ 17 billion for port infrastructure and $ 25 billion to improve airports, which Biden said will alleviate the supply chain.

The pending Social Expenditure Act, meanwhile, includes new childcare, home care, housing, education and paid leave subsidies and will extend the improved tax deduction for children, which was previously $ 2,000 per child. child before it was bumped to $ 3,000 or $ 3,600 for children up to 6 years old.

Skeptics including centrists Democratic Senator Joe Manchin from West Virginia, whose vote is needed for the big bill to be passed in the equally divided Senate, says they are concerned that more public spending will exacerbate inflation further.

“By all accounts, the threat that record inflation poses to the American people is not ‘transient’ and is getting worse instead,” he said. Manchin tweeted Wednesday. “From the grocery store to the gas pump, Americans know that the inflation tax is real, and DC can no longer ignore the economic pain Americans feel every day.”

Biden acknowledged the contribution of state aid to inflation after the Labor Ministry’s consumer price index rose 6.2 percent in October from a year earlier, reflecting a rise in the price of goods and services as well as energy and food. Fuel costs rose 30 percent.