The Republicans Have No Plan To Reduce Inflation

The following is part of an op-ed in The New York Times by Nobel Prize-winning economist Paul Krugman:

Republicans have largely given up on the recession story. Instead, their economic attacks, in both debates and campaign ads, have been focused overwhelmingly on inflation, especially gas prices.

It therefore seems worth pointing out that the G.O.P. doesn’t have a plan to fight inflation. Actually, it doesn’t have any coherent economic plan at all. But to the extent that Republicans have laid out what they will try to do if they win the midterms, their policies would make inflation worse, not better.

When pressed about how, exactly, they would reduce inflation, Republicans often fall back on some version of “Gas was only $2 a gallon when Trump left office!” . . .

Despite G.O.P. rhetoric, Biden administration policies have had little impact on gas prices, which have been driven by events affecting world markets — notably Russia’s invasion of Ukraine — and to some extent by bottlenecks in refining, which grew worsefor several weeks starting in mid-September but have eased again.

So what is the Republican plan to bring gas prices down? There isn’t one.

What about inflation more generally? You can make the case that large deficit spending early in the Biden presidency fed inflation (although it had little effect on the most politically salient prices, for energy and food, which have soared around the world).

If you’re worried about the inflationary impact of budget deficits, however, you should know that almost the only concrete economic policy idea we’re hearing from Republicans is that they want to extend the Trump tax cuts, which would … substantially increase the deficit.

It’s true that many Republicans adhere to an economic ideology that doesn’t see deficits caused by tax cuts as a problem, either because they believe — in the teeth of all the evidence — that tax cuts somehow pay for themselves, or because they believe that government spending, not deficits per se, is what causes problems.

But if you believe that cutting taxes without any plausible plan for offsetting spending cuts isn’t a problem even in a time of inflation, markets beg to disagree. Look at what happened to the pound and British interest rates after Liz Truss, the quickly deposed prime minister, announced an economic plan that, broadly speaking, looks a lot like what Republicans are proposing here. (There’s more to it than that, but still.)

The bottom line is that while the G.O.P.’s election strategy is all about blaming the Biden administration for inflation, the Republican Party doesn’t actually have any plan to reduce inflation. To the extent it has an economic plan at all, it would make inflation worse.