Brian Riedl was one of seven experts asked to weigh in on how to tackle inflation beyond interest rate hikes from the Fed.
The Federal Reserve is going to have to do most of the work to fight inflation, but Congress and the administration can determine how hard of a brake pedal they have to use. The more that the Biden administration and Congress do to worsen inflation, the harder the brake pedal will be, and the more likely we’re going to go into a recession.
There’s a lot that can be done. Step one, stop the spending. The student loan bailout is inflationary, the American Rescue Plan is one of the main drivers of inflation, and proposals for additional spending will worsen inflation. I’m not saying Congress has to cut a trillion dollars, I’m just saying stop digging so rapidly.
Secondly, take a look at tariffs. I like to cite a Peterson Institute for International Economists study that says a 2 percentage point reduction in tariffs could lower inflation by 1.3 percentage points and save $800 per household. If they just repealed some of the Trump tariffs, that would help — they don’t have to go to the free trade utopia that I would prefer.
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Brian M. Riedl is a senior fellow at the Manhattan Institute. Follow him on Twitter here.
This piece originally appeared in Vox