Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen say that inflation is rising higher than they originally predicted, as democrats continue to push for the $3.5 trillion spending bill.
“Inflation is elevated and will likely remain so in coming months before moderating,” Powell said during a Tuesday Senate hearing. “As the economy continues to reopen and spending rebounds, we are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors. These effects have been larger and longer lasting than anticipated, but they will abate, and as they do, inflation is expected to drop back toward our longer-run 2 percent goal.”
The Fed adjusted its inflation prediction from 3.4 percent in June to 4.2 percent.
According to Just the News, Yellen originally predicted 2 percent inflation for 2021 but changed her mind during questioning from Sen. John Kennedy.
“Probably closer to 4 percent and that already almost must be the case based on what’s happened this year,” she said.
Despite this, Yellen pushed for the spending bill. She told the committee that the “Build Back Better” legislation would be fully paid for over a period of time due to the tax hikes proposed by Biden and the democrats.
“There is nothing compassionate about spending money we don’t have on new benefits we can’t afford all the while discouraging work, and increasing the likelihood of a future default, when the yet to be born American receives the bill for benefits she didn’t experience and are no longer available,” Sen. Tim Scott said in response.
“It’s also important to note,” he added, “that our labor force participation rate is down, not up even with the new programs and the payouts that I heard this morning during this hearing that somehow is supposedly increasing our labor force participation, when in fact, it’s apparent and clear to Americans that’s not the case.”