Last month the Bureau of Labor Statistics released data showing that inflation is rising at the fastest pace in 40 years—7.5 percent over the past 12 months. This has led to speculation that the Federal Reserve will raise rates more aggressively at its March meeting, underscoring that everyone is looking to monetary policy as the key to bring down rising prices.

There is no doubt that the Fed must raise rates several times this year to protect the economy from rising inflation. But to keep Fed Chair Jerome Powell from having to slam the brakes too hard on the current economic recovery, it's important that the president and Congress can use fiscal policy to combat high inflation as well.
 

The Federal Reserve has taken some initial steps to pull back the reins on the monetary stimulus issued to help the economy rebound from the onset of COVID-19. The central bank has begun to taper back its policy of quantitative easing—purchasing Treasury bonds and mortgage-backed securities—that flooded the economy with liquidity. In addition, the Fed is forecasting multiple federal funds rate increases starting next month.

Meanwhile, the White House and Congress have focused on the transitory causes of inflation, such as bottlenecks in the supply chain and spikes in energy prices. While important, these efforts do not cancel all that two years of stimulus did to stoke inflation.
 

Biden and Congress Can Fight Inflation Too
By: Paul Weinstein Jr.
PPI Senior Fellow

In September 1989, the brand-new Progressive Policy Institute published The Politics of Evasion: Democrats and the Presidency. Nearly 33 years later, this political study written by William Galston and Elaine Kamarck maintains more than just historical interest today as the Democratic Party once again must wrestle with basic questions of political outlook and electoral strategy.

In this episode of the Radically Pragmatic podcast, William and Elaine sit down with PPI President Will Marshall to unpack the contents of their new report and discuss what changes Democrats need to make in order to stop Republicans from taking back control of Congress this November and the White House in 2024.

ICYMI: How the U.S. Can Better Compete Globally on R&D

On March 3, the Innovation Frontier Project at the Progressive Policy Institute held a virtual panel discussion for policymakers, staffers, and journalists titled “How the U.S. Can Better Compete Globally on R&D.”

Between the pandemic, supply chain snarls, and an increased economic competition with China, there is a growing recognition of the role that R&D plays in solving today’s pressing issues and building tomorrow’s economy. To address these concerns, the U.S. Innovation and Competition Act passed by the Senate in 2021 and the America COMPETES Act passed this year by the House include provisions to increase advanced manufacturing, initiatives for STEM education and workforce development, and measures to increase the resilience of supply chains.

The Innovation Frontier Project assembled a panel of leading experts with recently published papers on how reforms to government procurement could boost R&D spending by U.S. corporations and how the U.S. can focus on manufacturing complex goods to better compete globally. The panelists discussed how the U.S. can better compete with China on R&D and how proposed legislation currently under consideration by Congress can accomplish that goal.