Inflation Relief Is Necessary
A recent plan from Democratic Gov. J.B. Pritzker seeks to provide inflation relief to consumers by sparing them $1 billion in taxes next year. But it's only a short-term fix, say economists. According to the consumer price index, which measures prices for goods and services, consumer prices rose to a 40-year high last month, and they may only be the beginning. Inflation relief is necessary, and states should explore their options now. One proposal that has been under consideration for several years involves direct cash payments to residents of various states. Democratic governors up for re-election are introducing new bills that aim to provide direct relief to the populace and potential voters. In California, for example, Gov. Gavin Newsom has proposed a plan to give residents a one-time $400 tax rebate for each vehicle they own. Meanwhile, Gov. David Ige of Hawaii has proposed a plan that would provide each household with $100 checks. While the Fed plans to hike rates in March, the full impact will not be felt for several months. Unlike other forms of monetary policy, the Fed can't simply order prices to fall. Instead, it can only tighten the money supply and hope that things will stabilize on their own. However, the Fed will be raising interest rates starting in March, which will bring down the cost of living. So it is a slow-and-steady approach.
