Federal spending drives inflation, but NC lawmakers can offer relief

If you’re like many North Carolinians, you’ve had to make more hard choices recently, like between paying your bills and buying your medicine. You might have even skipped meals to fill up your gas tank. We got here because big-government politicians put the yoke of regulations on your shoulders and spent money we don’t have for wars and for corporate and personal entitlements.

We can all agree that the government has a proper role to play in our state and country, but when they overstep their bounds, everyone but the well-connected suffers. Big-government policies are driving inflation. But politicians in our own state are not powerless to offer some relief.

North Carolina lawmakers can help by reducing regulations and spending. By doing so, they can bring prices down when compared to other states. North Carolina is currently ranked in the middle of the pack when it comes to regulatory freedom, according to the CATO Institute. Getting in the top 10 would go a long way in alleviating the impact of federal spending on prices.

In the long term, of course, we need to work to decrease the spending and regulations coming from Washington, which are the ultimate root of the problem.

CNBC reported on March 1 that the national debt is increasing by $1 trillion every 100 days. Fox Business reported on April 10 that the interest payment on our national debt now exceeds our defense spending. Meanwhile, the latest inflation report from the Bureau of Labor Statistics shows that we are not close to taming it, with an additional 3.5% in March. Inflation occurs when regulations are high and when money is pumped into the system. Right now, the Democrats and Joe Biden are doing both.

Inflation increases income inequality. Daniel Webster is credited with saying “Inflation is the surest way to fertilize the rich man’s field with the sweat of the poor man’s brow.” If in 2020 if you had scrimped and saved $10,000 and put it in a bank, it would only have $7,800 of buying power today, and that number will decrease significantly in the near term as inflation continues to go burn hot due to state and federal policy. Historically the Federal Reserve used interest rates to manage fiscal policy, but big government has taken over that responsibility through bureaucracy and spending. It seems unlikely that we will see any rate cuts this year, despite the market believing we would see as many as three.

Big businesses discovered they can become rich through inflation and regulations that make it difficult for competitors to meet government demands. They can use lobbying and feel-good stories in the media to create government policies that drive out competition and make it too costly to enter into certain markets. Businesses won’t have excessive profits in a true free-market economy, at least not for long, because competitors would come in and undercut their prices.

The progressives, like Massachusetts Sen. Elizabeth Warren, say inflation is from corporate greed. But this is inaccurate because business must pass on cost to consumers when their cost to operate goes up. They also have responsibilities to their employees and shareholders to create a sustainable business. If progressive policies increase the cost of doing business and serving customers, then those costs cannot be absorbed by the business. In this case, the business will go under and people will lose their livelihoods.

North Carolina lawmakers may not be able to do as much about our runaway federal government. And it seems like whomever we send to DC, in either party, with a few key exceptions (like US Rep. Dan Bishop), is happy to spend money we don’t have. But we do seem to wield a bit more leverage over those we send to Raleigh.

In the upcoming legislative session, state elected officials should give North Carolinians relief by prioritizing reducing state regulations and by reducing the scope of government in our everyday lives. In November, we the people need to elect representatives that will continue to make that a priority. Only then will inflation come down, and when that happens, so can income inequality.