With inflation higher than it has been in 40 years, Sen. Shelley Moore Capito, R-W.Va., said Thursday the most immediate action needed is for the Federal Reserve to raise interest rates.
Another action is to “abandon” the Build Back Better plan because pumping more money into the economy would exacerbate the inflation problem, she said during a virtual press briefing from her Washington office.
The U.S. inflation rate rose in January to 7.5 percent, according to government figures, sustaining a 40-year high.
“We should be addressing it,” she said of the “astounding” inflation growth. “I don’t think the administration is doing anything.”
Capito said Pres. Joe Biden and his staff have maintained that inflation is “transitory,” but that is not what is happening.
“We now know it is not transitory,” she said. “It is sustaining and growing.”
If the Federal Reserve raises interest rates, the money supply would be tightened (as borrowing is more expensive) and that would help bring down inflation, she said of a possible immediate move.
Getting people back to work will help as well because the number of people who are quitting their jobs is “staggering,” she said, and that is tied to a degree with easing any restrictions related to the pandemic.
“I think we are seeing the light at the end of the tunnel on that (the pandemic),” she said.”We have to get people back to work.”
But inflation won’t be eased overnight as prices of just about everything have kept rising.
“This won’t turn on a dime,” she said, pointing out it took two years (since the pandemic started) to get to this point when a combination of factors started driving prices up, including worldwide supply chain problems and too much federal money pumped into the economy.
Long-term solutions, she said, will be to tackle the supply chain problems by easing certain regulations to avoid red tape delays and to not pass legislation that spends more dollars.
“We can’t depend on that any more,” she said of any transitory nature of inflation. “It has momentum.”
Prices of just about everything continue to rise, including food and electricity.
“It don’t think they realize how much this is hurting people,” she said. “That message has not gotten through to the President.”
Capito said she is against lowering the federal gas tax to offer short-term help to consumers because that money is essential for highway maintenance and losing it even for a short period of time would not be cost-effective in the long run.
Because of high food prices, Capito said food banks need to be a focus to make sure people who are struggling with inflation have enough to eat.
Food banks need to be sustained, she said, and many food banks may need an increased amount of supplies.
Sen. Joe Manchin, D-W.Va., released a statement about inflation on Thursday, agreeing with Capito that the Federal Reserve must make a move.
“For months, I have been ringing the alarm bell about inflation,” he said. “Once again, we are witnessing that the threat of inflation is real. There is not a corner of this nation where hard-working families are able to escape the noticeable impact of this ‘inflation tax.’ Inflation taxes are draining the hard-earned wages of every American, and it’s causing real and severe economic pain that can no longer be ignored.”
Manchin said the Federal Reserve should have already tackled this issue “head on.”
The Federal Reserve is scheduled to meet next month and speculation is the rate may be raised at that time, along with other rate hikes during the year. The current fed rate is 0.25 percent.
Another agreement with Capito is on any further spending.
“Congress and the Administration must proceed with caution before adding more fuel to an economy already on fire,” Manchin said. “As inflation and our $30 trillion in national debt continue a historic climb, only in Washington, DC do people seem to think that spending trillions more of taxpayers’ money will cure our problems, let alone inflation. We must get serious about the finances of our country. It’s time we start acting like stewards of our economy and the money the American people entrust their government with.”
Capito also released a statement Thursday evening saying she has tested positive for COVID-19.
“As I have routinely tested, today I received a positive COVID-19 test,” she said. “Thankfully, I am asymptomatic. I have consulted with the Attending Physician and plan to follow the CDC’s recommendations and quarantine for five days.”