How the GOP’s welfare fence-sitting inflames the cost-of-living crisis

The welfare programs that Republicans hesitate to cut are the main drivers behind the rising cost of living. They cannot claim to support “the little guy” while backing programs that fuel persistent inflation and erode the dollar’s purchasing power to benefit wealthy investors and corporations. Republicans need to choose a clear path forward.

During COVID-19, the government printed massive amounts of money to sustain a bloated federal budget that remains untouched to this day. As part of this spending spree, the Treasury Department sent out three rounds of checks to families earning less than $150,000 between March 2020 and March 2021.

This situation is dire for families who already own homes, but it’s even worse for young people entering the workforce, starting families, and looking to buy a house.

The average family of four below this income threshold received $10,400 in federal aid that year. Sounds like a great deal, right?

The trouble is that Republicans have failed to clearly explain to Americans how the money-printing that funded those stimulus checks and other spending led to a cost-of-living crisis that has hit consumers hard.

According to the Bureau of Labor Statistics, the rise in living costs in the three years since the COVID-19 stimulus far outweighed the benefits families received from those checks. In 2020, the average family of four needed $61,332 to cover annual expenses. By 2023, that same family required $77,280 — a staggering $16,000 increase.

From 2021 through 2023, families spent an additional $33,179 on the same goods and services due to inflation driven by COVID-era spending.

So how did those stimulus checks work out? It’s worth noting that these payments weren’t even universal. Many middle-class families in high-cost areas, just above the income threshold, received little or no cash.

The Bureau of Labor Statistics has not yet released data for 2024, but the average family budget likely exceeded $80,000 — at least $18,000 more than in 2020. This year’s costs are already rising.

In effect, we traded a year of $10,400 in “free” cash for some families in exchange for more than $50,000 in additional costs over four years — a burden that will only grow unless we cut federal spending.

The cost-of-living crisis caused by deficit spending is far worse than government reports suggest. Families know that the Consumer Price Index numbers are a joke. In reality, consumers are paying much more for essential goods and services than the reports indicate.

For instance, the Bureau of Economic Analysis claims that the cost of medical insurance has dropped 26% over the past two years. Everyone knows that’s absurd. In fact, the Kaiser Family Foundation reports that average premiums for family health insurance plans rose by 7% in both 2023 and 2024. These increases are taking a significant toll on families, including those with employer-based coverage.

This situation is dire for families who already own homes, but it’s even worse for young people entering the workforce, starting families, and looking to buy a house. Deficit spending and inflation have created an interest rate cliff on top of the existing housing bubble, making homeownership unaffordable.

A recent Zillow report found that a typical household now needs to earn more than $106,000 a year to afford a home — assuming a 10% down payment and spending 30% of income on housing. That’s an 80% increase from $59,000 a year in 2020, or $47,000 more annually. And that’s not even for homes in desirable markets.

So do Medicaid and food stamps, along with $22 trillion in new deficits, still sound like good ideas? At this rate, we’ll never regain our parents’ standard of living, and things will only get worse.

Bankrate’s annual Financial Freedom Survey found that people now believe they need an income of $186,000 a year to live comfortably.

How much income does it take to achieve the middle-class dream of the last generation? According to Smart Asset, the 50/30/20 budget rule suggests spending about 50% of income on basic needs like food and housing, 30% on wants, and the remaining 20% on savings or debt repayment.

For a family of four, reaching that goal is costly. In Mississippi, the least expensive state, you would need an income of $178,000. In Michigan, the median state, you’d need $214,000. In higher-cost states like Maryland and California, the required incomes jump to $240,000 and $301,000, respectively.

But living comfortably is no longer the main concern. Many Americans can’t afford housing, food, and transportation — even before the deficits and money-printing start to have their full effect. As a result of existing debt and rising interest rates, the Consumer Price Index has stayed above 3% for 45 consecutive months.

Household debt has reached a record $18.04 trillion, and credit card balances have soared to a record $1.21 trillion, rising 7.3% in just one year. A recent Bankrate report found that 42% of Millennials now have more credit card debt than savings. Meanwhile, a record 8.8 million Americans are working multiple jobs to make ends meet.

The fiscal outlook is even bleaker. Federal revenues rose by just 0.7% in the first third of this fiscal year, but spending increased by 15%, creating a $840 billion deficit in only four months. Over the past decade, federal tax revenue has increased by 59%, while government spending has surged by 96%. This spending spree has doubled the national debt from $18 trillion to $36 trillion.

Republicans have failed to connect these spending habits to rising personal debt and inflation. The consequences are clear, and they’re hitting Americans hard.

We will not bring back an affordable standard of living so long as we have the welfare state. And no, we will not accomplish this simply by cutting foreign aid or wasteful government subscriptions.

So yes, Democrats and lukewarm Republicans can complain about cuts to welfare. And yes, they can complain about inflation. But they have no right to complain about both at the same time. Pick a lane.