Prices have increased across the board in the United States in recent months. The country has reached record levels of inflation, soaring gas prices, increased interest rates, and the market continues to fall. This combination has many discussing the very real possibility of an impending recession.
Kentucky Congressman Andy Barr sat down with The Bottom Line to discuss these issues and potential solutions at the federal level to address these financial woes.
Barr pointed to excess demand in the economy due to massive federal spending in stimulus packages, as well as labor and supply chain issues, and the Federal Reserve keeping interest rates too low for too long, as major factors contributing to rapid rates of inflation and threat of a recession.
“The precipitous rate increases [the Federal Reserve] is pursuing, while needed to fight inflation, are creating massive volatility in the financial markets and there is this huge selloff as a result. And that is why we may be headed for a recession and a period of stagflation that we are really going to have to fight hard to get out of,” Barr said.
When asked what Congress can and should be doing to fight these issues, Barr said the Federal Reserve must stick to a tightening plan even if it means some short-term pain with higher interest rates and a continued slide in the financial markets. He acknowledged that the move will slow down the economy and help get inflation under control. Additionally, he said there must be more business investment which will require a “pro-growth tax and regulatory policy.”
With high prices at the pump, many are discussing ways to help ease the burden of gas prices on Americans. In Kentucky, Gov. Andy Beshear issued an executive order freezing the gas tax which avoided a one cent per gallon increase that was set to go into effect July 1. And at the federal level, President Joe Biden has called on Congress to consider a temporary suspension to federal taxes on gasoline.
Economists and policy groups have voiced criticisms of such proposals, arguing that they offer minimal relief to consumers, harm long-term road fund revenues, and potentially contribute to further price increases.
“We don’t need a temporary one cent or 16 cent reduction in gas prices. We need a permanent $2.50 reduction in the cost of gasoline. That’s what we need,” Barr said. “To do that, we need to produce more energy. We don’t need any of these tax gimmicks.”
Reduced regulations and more investments in energy are ways Barr said the country can ensure more energy independence and lower costs for consumers.
Meanwhile, a bill sponsored by Barr is moving through the legislative process. The Cardiovascular Advances in Research and Opportunities Legacy (CAROL) Act, in honor of Congressman Barr’s late wife, supports research and public awareness of valvular heart disease. The legislation has passed through the House and recently passed in a Senate committee. With bipartisan support at every level of the process, he hopes the bill can be on the President’s desk by the end of the session.
Watch the full interview with Congressman Barr below: