[Congressional Record Volume 168, Number 189 (Tuesday, December 6, 2022)]
[Senate]
[Pages S6979-S6980]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                               Inflation

  Mr. KENNEDY. Mr. President, I want to talk a few minutes today about 
inflation, but I don't want to just talk about the problem; I want to 
talk about the solution as well as Congress's role. I don't need to 
tell the American people--and I certainly don't need to tell my 
colleagues--about inflation.
  The inflation we are experiencing today is the highest since 1982, 
and it really is ravaging the American people. It is gutting them like 
a fish.
  Depending upon which experts you believe, the inflation rate right 
now is about 8 percent. Most Americans will tell you viscerally they 
feel that it is higher. Every time they go to the grocery store, they 
feel like prices have gone up 8 percent.
  And I don't really want to debate or discuss the causes too much.
  There are basically two types of inflation. There is what is called 
demand-pull inflation and cost-push inflation.
  Inflation is just basically too much money chasing too few goods. If 
you restrict the supply of the goods, that is called cost-push 
inflation. If you keep the supply of the goods constant and raise 
demand for the goods, that is called demand-pull inflation.
  And the truth is, our current inflation is a direct product of both 
cost-push and demand-pull.
  I do think--well, I know that the U.S. Congress had to spend more 
money than we would have liked to deal with the pandemic, but I also 
believe that once the pandemic was over and the economy was recovering, 
we kept on spending and all of that spending was stimulatory or 
stimulative and all of that spending did add to inflation. Once again, 
too much money chasing too few goods.
  Since the 1950s, we have had roughly 10 periods of inflation--some 
very high inflation, some more moderate--but 10 inflationary periods, 
if you will, in which government decided we need to reduce the rise in 
prices. We need to reduce inflation.
  Most people remember the inflationary period of the 1980s--I know you 
do, Mr. President--but there have been 10 inflationary periods. And 
normally what we do to deal with inflation--we talk about Federal 
Reserve. And we know the Federal Reserve, to get prices down, raises 
interest rates.
  Well, why does the Federal Reserve do that?
  It does that to slow the economy.
  Well, what does that mean? How do you measure slowing the economy?
  Well, here is the dirty little secret that we all don't talk about 
much: When the Federal Reserve raises interest rates to slow the 
economy, I will tell you how they measure it, they measure it in jobs, 
and they measure it in the unemployment rate.
  And, in effect--I am not being critical of them. The Federal Reserve 
is doing its job. But what the Federal Reserve does when it raises 
interest rates to slow the economy, they are trying to throw people out 
of work. They are trying to throw people out of work.
  Now, I made a few notes. Right now, the unemployment rate is about 
3.7 percent. And if you go back in these 10 periods of inflation since 
the 1950s and look at how many people the Federal Reserve had to put 
out of work in order to get the inflation down, here is what you see: 
On average, during those 10 periods, to get inflation down 2 percent, 
we had to see a rise in unemployment of 3.6 percent.
  Now, what does that mean?
  Today, unemployment is about 3.7 percent. Inflation is--let's call it 
8 percent. Historically--I am not saying it will be the case this time, 
but historically that would mean that the Federal Reserve, in order to 
reduce inflation by 2 percent, would have to raise unemployment to 7.3 
percent.
  And those aren't just a bunch of sterile statistics on a page. Those 
are 6 million jobs that will be lost, people out of work.
  We have some really smart economists who have looked at this 
problem--Jason Furman, for example, Larry Summers. They both happen to 
be smart economists who served President Obama. They are suggesting 
that in order to get this high inflation down, if we just depend on the 
Federal Reserve alone, that we will have to have an unemployment rate 
of between 7.5 and 10 percent for a pretty long period of time.
  That is anywhere from 8 to 10 million Americans out of work, and that 
is a lot of pain.
  Now, what can Congress do to help?
  If you look at the worst of those 10 periods of inflation, most 
people--I do--think of the 1980s, and most people consider Paul Volcker 
to be a hero because the then-Federal Reserve Chairman got inflation 
down.
  And a lot of people think that the Chairman of the Federal Reserve 
then did it all by himself by raising interest rates so high, causing 
unemployment to go up so high, causing a lot of pain.
  He didn't do it alone. Congress helped him. When the Reagan 
administration came in, the Reagan administration--first thing it did, 
it cut taxes, which was inflationary--no question--but then the Reagan 
administration and the U.S. Congress worked with the Federal Reserve 
whereby the Federal Reserve would raise interest rates, but Congress 
tried to slow the growth in spending, not cut spending in the sense of 
our budget this year will be less than last year, just slowing the 
growth in spending and slowing debt accumulation. And that is how we 
conquered, other than now, the worst inflationary period in the United 
States. It wasn't just the Federal Reserve; Congress did its part.

  We have to slow the rate of growth in our budget, and we have to slow 
the accumulation of debt. Now, one might say: Well, you know, Congress 
doesn't have to do anything; the United States Senate can do what it 
wants. And that is true. That is true. But if we don't, if we don't 
slow the rate of growth in our spending, if we don't slow the 
accumulation of debt, that is going to cause the Federal Reserve to 
raise interest rates even higher to slow the economy, to raise the 
unemployment rate, to throw people out of work.
  All I am saying is, we all hate inflation. Nobody wants this 
inflation. And we can debate until the cows come home about what caused 
it, OK? Was it supply chain? Is it Ukraine? Is it Putin? I happen to 
think a big part of it is demand-fueled inflation, and we just spent 
too much money once the

[[Page S6980]]

pandemic was over. But I know many of my Democratic friends disagree 
with me, but they can't--they shouldn't disagree with me on this: We 
need to do our part to help the Federal Reserve because the Federal 
Reserve is not raising interest rates just to raise rates; it is 
raising interest rates, which is its job, to throw people out of work. 
If it has to raise interest rates to 10 or 12 percent and keep them 
there, we are going to have 10-plus million Americans out of work. And 
do you know what is worse than not having enough money to pay for what 
you need? Not having any money. Losing your job.
  Congress can help, but it is going to require help from both sides, 
both Democrats and Republicans. We are going to have to agree to spend 
less money. We just are. And I know we have needs, and I am not saying 
cut the budget in half, but we have to reduce the rate of growth in our 
spending, and we have to reduce the rate of accumulation in our debt. 
Even then, we won't be able to avoid all the pain of inflation, but we 
will be able to save, I predict, millions and millions of jobs we would 
otherwise lose to these high interest rates.
  I know not all my colleagues agree with me. They don't. I have 
Republican colleagues--I know there are some of my Democrat friends, 
but I have some Republican colleagues who think that how much we spend 
makes no difference. They think it makes absolutely no difference. With 
all the respect I can muster, they are wrong. All you have to do is 
look at history, and the only way we conquered inflation the last time 
it was this bad in the 1980s was through cooperation of the Federal 
Reserve doing its job on the monetary side but also this Congress doing 
its job on the fiscal side.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BLUNT. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Tester). Without objection, it is so 
ordered.