Preventing a US Government Shutdown and Addressing Inflation’s Root Causes
Anthony Hernandez
Volunteer at Scobee Education Center and Educational Volunteer (NASA-STEM)
The looming threat of a U.S. government shutdown is a significant concern for both American citizens and the economy. The shutdown, triggered by disagreements over federal spending, reflects larger issues tied to government policy decisions, such as inflation, interest rates, and the burden placed on American businesses and taxpayers. Understanding these dynamics requires looking at several key factors.
The Biden-Harris Administration's Policies and Their Impact on Inflation
When the Biden-Harris Administration took office, it prioritized a shift toward renewable energy sources, aiming to reduce pollution and promote green policies. However, some of these measures, particularly the restrictions on oil drilling permits and the reduction of fossil fuel production, have led to unintended economic consequences. By curbing oil exploration and production, the U.S. lost its status as a top oil producer and exporter, which contributed to rising fuel costs. As energy prices climbed, so did inflation, affecting everything from consumer goods to business operations.
Additionally, the administration's emphasis on green energy, including wind and solar power, while commendable, has not been fully supported by the necessary infrastructure. The push for electric vehicles (EVs), while aligning with environmental goals, has resulted in higher costs for consumers, and the U.S. power grid is not yet equipped to handle the increased demand for charging stations. Many Americans cannot afford EVs due to their high costs, and the aging power grid remains an unresolved issue, slowing the transition to a greener economy.
The American Rescue Plan and Its Consequences
One of the key factors in rising inflation was the passage of The American Rescue Plan (ARP) in March 2021, which injected $1.9 trillion into the economy to support recovery from the COVID-19 pandemic. While the intentions behind the ARP were to stimulate economic recovery, it led to unintended consequences. The government pumped money into the economy, but this increased the money supply without corresponding increases in productivity. As a result, inflation began to rise. At the same time, restrictions like mandatory COVID-19 vaccinations for certain workers, including military personnel, led to workforce shortages, further disrupting businesses and contributing to economic instability.
The ARP’s funding also went to initiatives like direct payments to individuals, unemployment benefits, and other aid programs. While these programs helped many Americans, they also placed significant pressure on the federal budget, exacerbating the national debt and triggering inflationary pressures.
The Role of Government Spending in Rising Inflation and Interest Rates
Inflation is often driven by excessive government spending. When the government spends more money than it takes in through taxes, it resorts to borrowing or printing money to fill the gap. This increased money supply devalues the currency, reducing its purchasing power. Inflationary pressures increase as businesses pass on higher costs to consumers, and interest rates rise to control inflation. These rising rates impact everything from mortgage payments to credit card interest, making it harder for businesses and consumers to manage their finances.
During the Biden Administration, inflation reached levels not seen since the 1970s. This was exacerbated by rising government spending, both domestically and on international conflicts. The U.S. has been providing financial support to global issues, including wars in Ukraine and other international hotspots, further stretching taxpayer resources. While some argue that international diplomacy is important, the cost of these foreign engagements has added to the financial burden on American citizens.
The Challenges of Green Energy Transition
While the push for a green economy is gaining momentum, it has faced several obstacles. The Biden-Harris Administration’s policies have focused on the widespread adoption of renewable energy sources, such as wind, solar, and electric vehicles. However, these technologies are not yet economically viable for the majority of Americans. The high costs of electric vehicles, combined with the challenges of building a nationwide charging infrastructure and maintaining an aging power grid, have created a difficult road for the transition.
Furthermore, global supply chains for critical raw materials like cobalt, essential for EV batteries, are increasingly controlled by China. This has raised concerns about human rights violations, particularly the use of child labor in the Democratic Republic of Congo. These issues underscore the complex geopolitics surrounding the green energy transition.
The Role of Politics and Spending in Government Shutdowns
A government shutdown occurs when Congress fails to pass a budget or funding bills. The political divide between the major parties often leads to gridlock, with spending issues at the center of the debate. The increasing national debt, driven by excessive government spending, contributes to these shutdowns, as lawmakers face tough decisions on how to balance the budget.
Vice President Kamala Harris has played a crucial role in passing legislation through the Senate by casting the tie-breaking vote. As Congress debates funding priorities, programs deemed essential often receive increased allocations, contributing to the growing deficit. At the same time, discretionary spending on non-essential programs adds to the overall financial burden.
The Solution: Focusing on Economic Growth and Sustainable Spending
To address the issues of government shutdowns, inflation, and economic stagnation, the U.S. must prioritize policies that promote sustainable economic growth. This means focusing on policies that encourage private sector job creation, which in turn drives tax revenue and economic expansion. The private sector, unlike the government, is driven by profit motives, and when businesses thrive, they hire more workers, leading to lower unemployment and higher consumer spending.
Furthermore, the U.S. must re-evaluate its approach to energy. While green energy policies are important, they must be implemented gradually, with careful planning for infrastructure development and market readiness. A balanced approach, combining renewable energy with traditional energy sources, will ensure that the transition does not harm the economy.
Conclusion: A Balanced Approach to Economic Policy
Preventing a U.S. government shutdown requires a serious commitment to fiscal responsibility and long-term planning. While addressing immediate challenges such as inflation and government spending, policymakers must focus on creating a sustainable economy that promotes business growth, job creation, and tax revenue generation. A balanced approach to energy policy, a focus on private sector solutions, and a commitment to reducing government waste and excess spending will help strengthen the economy and ensure a prosperous future for all Americans.
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