An Open Letter to Senator Manchin

Today’s inflation report was a disaster. Inflation is broadening, deepening, and accelerating. Senator Manchin issued a very fine statement today about this disastrous report. Permit me to quote: “It is time for us to work together to get unnecessary spending under control, produce more energy at home and take more active and serious steps to address this record inflation that now poses a clear and present danger to our economy. No matter what spending aspirations some in Congress may have, it is clear to anyone who visits a grocery store or a gas station that we cannot add any more fuel to this inflation fire.” Senator, as an old friend, I want to say first how right you are. Especially about getting unnecessary spending under control. Therefore, I must ask, friend to friend: Why on earth are you huddling privately with Senator Schumer over a reconciliation package that could add a trillion dollars to spending and raise taxes on our small businesses?If we want to fight inflation, we should freeze domestic spending. You proposed this freeze last summer. You were right then. You were instrumental in saving America and killing the $5 trillion “Build Back Better” bill. All to your great credit. No one praised you more than I did, along with our Save America coalition.You spoke brilliantly on the subject of spending controls and stopping inflation. So, how can it be that now, suddenly, you’re dancing cheek-to-cheek with Mr. Schumer? You know you’re breaking my heart. You also know that more spending will steepen inflation and deepen the recession. You’re totally right about grocery stores and gas stations. You’re totally right about not adding any more fuel to this inflation fire. This sounds like the Joe Manchin I know and respect. Heck, I wanted you to run for president on these ideas.But this Schumer-smooching has got us all in a tizzy. Say it ain’t so, Joe. I might add, Mr. Senator, that taxing small businesses and corporations and wealthy, successful entrepreneurs will do great damage to the supply side of the economy. Which will bring on more inflation.So, I am begging you to reconsider. We know you’re a patriot. Please think about how federal fiscal policy could help the Fed and mitigate the recession. By spending, taxing, and regulating less. Take the shackles off business. Take the shackles off the oil and gas sector. Stop these regulatory agencies from running wild and making up laws — the way the Supreme Court’s decision in West Virginia v. EPA was meant to do.Here’s how bad the inflation report is today: You could take out food and energy — which we shouldn’t do — and inflation over the past three months is still nearly 8 percent at an annual rate, much faster than the 12-month change of nearly 6 percent.Services inflation, even without energy, is now up 8.5 percent for the last three months, compared to only 5.5 percent year on year.The Cleveland Fed has an important measure that removes the high and low price outliers and gives a more accurate reading of underlying inflation. That metric has gone to 7 percent from 2 percent 18 months ago. The Fed’s going to have to raise its target rate in a couple of weeks by a full 100 basis points. The Bank of Canada just raised its rate by a full percentage point. We’re going to have to follow if we’re serious about stomping out monetary inflation.Already, typical working families have been watching their weekly wages drop more than 6 percent in the past year and a half. Family costs are up by probably $5,000, or close to it. Sixty-eight percent of the CPI components are rising at 5 percent or faster.Inflation expectations are becoming embedded throughout the economy. It’s going to take a couple of years to get back to the Fed’s 2 percent inflation target, if it can even do that.That’s why I’m imploring you to adopt a pro-growth fiscal approach. We do not need to spend and tax more. We do need to spend, tax, and regulate less.A supply-side boost to the economy will help working people, avoid a catastrophic recession, and calm inflation. Help us save America, Senator Manchin. Kill the bill. From Mr. Kudlow’s broadcast on Fox Business News.

An Open Letter to Senator Manchin

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