Opinion of Senator Grassely
Q: What are you hearing from the Iowans about inflation?
A: So far this year, I’ve met Iowans in nearly two-thirds of my 99 annual county meetings. Without exception, I heard deep concerns about inflation and an impending economic recession. Volume rose as Biden’s economy drove $5 in gas with no relief in sight. What the Biden administration insisted was “transitional” turned out to be long-term and painful. Inflation in the United States hit its highest level in 40 years, hitting 8.6%, fueled by the reckless partisan spending mania enacted a year ago in March.
The misnamed US bailout passed in a party-line vote when the Democratic Senate majority leader used the budget reconciliation process to avoid having to work across the border. gone with the Republicans. The Biden administration relied on the levers of party-controlled government and look what happened.
What did the Biden administration expect after Congress had already pumped $4 trillion in pandemic relief spending into the economy? They opened a fire hose on the US economy and ignored the warnings of Larry Summers, the Harvard economist and former Treasury secretary and director of the National Economic Council in the Clinton and Obama administrations. He said more federal spending would stoke the fires of inflation. You bet your boots he did. The highest inflation in 40 years is eating away at savings and making it harder than ever for Americans to make ends meet. The rising cost of consumer goods and services, from food and fuel to utilities and rent, is forcing families to look back on dining out and rethink their summer vacation plans.
More and more Iowans are being forced to dip into their hard-earned savings that have been eroded by inflation to pay the bills. Many Americans remember the Great Inflation years of the Carter administration which reached over 13% in 1980.
Today, homeowners, farmers and small businesses are collapsing in anticipation of the higher interest rates it will take to bring inflation under control. In the meantime, I hear from Iowans across the state struggling to pay for groceries and fill up the gas tank from week to week. Farmers struggled to find fertilizer and buy diesel to put their crops in the ground. Many fear paying for fuel at harvest time. Small businesses are stretched with soaring transportation, production and labor costs.
I urged President Biden to stop his war on American energy. Instead of begging foreign dictators to increase production, reverse the edicts he implemented that drive up the cost of gas.
Q: How would your Middle Class Savings and Investment Act help the people of Iowa?
A: As former chairman of the Senate Finance Committee, I worked to establish responsible fiscal policies that allow Americans to keep more of their hard-earned money and encourage savings, savings and investment.
I wrote pro-growth tax policies under the George W. Bush and Trump administrations that closed foreign corporate tax loopholes to bring investment back to the United States and foster job creation, the expansion of small businesses and entrepreneurship in communities across the country, especially among minorities. Priming the economic pump with growth-friendly tax policies helps raise wages, savings and investment.
Today, Americans – especially seniors on fixed incomes – are strapped for cash due to 40 years of high inflation. I work to provide relief through the federal tax code. Under the Biden economy, the purchasing power of American consumers is shrinking and squeezing budgets, gobbling up paychecks and swallowing up savings.
Middle-class families, retirees, small businesses and farmers have seen their savings erode in value while still facing taxes on earnings that may not even keep pace with inflation. This creates a perverse incentive to spend now rather than save, which further fuels inflation. The Middle Class Savings and Investment Act would target interest income relief for low- and middle-income Americans to help them save and invest.
Specifically, it would exclude from tax up to $600 of interest income for married couples/$300 for individuals; doubling the size of the zero percent (lowest) tax bracket for long-term capital gains and qualified dividends, indexing income thresholds to inflation; eliminate the net investment tax marriage penalty, which subjects certain income to an additional tax of 3.8%, indexing its income threshold to inflation; and increasing the maximum “savings credit” an individual can receive for contributing to a qualified retirement account and expanding eligibility to more taxpayers.
Making it pay to save rather than spend is a tool Congress can use to help bring inflation under control without the adverse consequences of more reckless federal spending, dangerous windfall taxes, or wage and price controls.