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So we know as a state everything is going to cost more but we are rushing to give taxpayers a billion dollars, which will just lead to more inflation …
Instead of using that money to finish all these projects, we defer them or cut corners.
It’s as though our state legislators don’t care one whit about the future.
You beat me to it by one minute but yeah, came here to say this. We spent the last session approving tax breaks based on short-term economic conditions. It’s really bad policy.
So maybe we shouldn’t dole out $1 billion from State coffers. Not only would doing so diminish our ability to deliver public services and finish major capital projects, it would worsen the inflation situation by increasing consumer demand.
Unlike the federal govt, Indiana doesn’t control the money supply; a dollar spent by the State was a dollar taxed by the State, not created by the Fed.
So a budget tax cut doesn’t create general inflation; just some positive PR to soften and divide media attention away from the primary reason for the special session (abortion restrictions)
Michael Hicks would disagree with you.
“ The statistical model suggests that the extra $1.5 billion will boost inflation for Hoosiers by more than 1.5 percent and lengthen our period of price increases by a year. To be conservative, I’d reduce that a bit to account for out of state spending, affecting consumer prices elsewhere. Still, at that level, it’s not clear consumers will be better off.
The proposed tax rebate equals about 0.4 percent of total personal income on Indiana. A 1.0 percent inflation increase on our personal consumption is over $2.5 billion. That would leave Hoosiers $1 billion in the hole. Even if my estimates are off by half, this is simply a costly gimmick with no real benefits. A very costly gimmick.”
https://www.msn.com/en-us/money/markets/michael-hicks-yes-state-stimulus-checks-boost-inflation/ar-AAYD7SG
Scott – It still has a broader impact on consumer demand, though, which has localized inflation impacts (a loaf of bread in Indianapolis doesn’t cost the same as a loaf in Los Angeles). I agree that it’s very much a distraction from the real efforts at hand, but they’re hoping to effectively pay off Hoosiers for bad policy without consideration of the fiscal impacts, both in terms of State coffers and household finances.
During 1942, the national government appropriated amounts that were unprecedented to convert our economy to a machine producing war materials and all that new government money in the economy was fueling inflation and fears inflation would prevent the US from doing what it planned to do. The public largely joined in fighting inflation with price and wage controls. Here we are again, but not so desperate.