With inflation soaring under President Joe Biden, recently reaching a 40-year record high of 8.6%, a number of governors are pondering taking matters into their own hands while the U.S. government attempts to find ways to get much-needed relief to struggling Americans.
California is perhaps one of the hardest-hit states due to inflation, as the cost of goods, services, and gas in the deep blue state were already some of the highest in the nation. California Gov. Gavin Newsom (D) has proposed launching a relief program for residents of his state in the form of “inflation relief checks.”
Thanks to a recent budget vote, according to CNBC, the deal is all but done. Billions will be allocated to the program, which will provide checks to California residents for up to $1,050 each by next year.
But some economists aren’t happy with the plan, with some arguing that such a program will only make the inflation problem much worse, similar to the government continuing to spend big at a federal level while trying to reign in the soaring inflation numbers.
The Sacramento Bee ran a hard-hitting story this week in which it slammed the program, which was approved officially on Sunday.
Jared Walczak, vice president of state projects at the Tax Foundation, a Washington-based research group, said of the program, “One-off tax holidays or rebates which put more money in people’s pockets without doing anything to boost supply are inflationary.”
“Any increases in government spending will generally increase inflationary pressures,” said Michael Shires, associate professor of public policy at Pepperdine University, according to the Bee.
Of all of the economists contacted by the newspaper, all of whom are intimately familiar with California’s economy, only one didn’t think such a program would make inflation worse.
Newsom was also roasted by critics across social media after the plan was announced.
So let’s understand how this works.
* CA has highest state tax rate.
* “Everything is free” in the Dem-run state with new
“Inflation Relief Checks”.
* Taxpayers pay for it.
* Newsome’ w/ bought votes gets reelected.
* Then raises taxes.
Simple! 🤔😕 https://t.co/UxOfiMBSab
— TexasRex 🇺🇸🇮🇹🇺🇸 (@texasrecks) June 27, 2022
Economists are now waiting to see if other states follow suit, though it could take some time, given that such programs have to be approved by a state’s legislature, typically through a budget vote.
Newsom’s office has dismissed the criticism of the program, simply writing them off as “academic” concerns.