Are ‘Inflation Relief’ Checks Like Pouring Gas Onto Inflationary Fire?

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As some states mull or roll out “inflation relief” in the form of checks or tax rebates in a bid to help households weather soaring prices, critics argue such measures amount to fiscal stimulus that will keep inflation higher for longer.

American households face crushing inflation that has squeezed buying power and made basic necessities less affordable.

Some states have responded by offering relief to offset the cost-of-living crunch.


In one such thrust, some 23 million Californians will receive checks of up to $1,050 as part of a $17 billion “inflation relief” package that also includes a suspension of the state’s sales tax on diesel, rental assistance, and money to cover past-due utility bills.

“Cha-ching! You just received a deposit,” California Gov. Gavin Newsom’s office wrote in a June 30 statement touting the fact that the Democrat leader had just signed a $308 billion state budget that includes $9.5 billion in tax refunds “to help address inflation.”

Other states have taken similar steps in a bid to take the edge off high prices.

Colorado officials in late June announced a $750 cashback rebate, with Gov. Jared Polis describing the measure as “real relief when Coloradans need it most” while citing “the impact of rising costs.”

Indiana plans to return a total of $1 billion to Hoosier taxpayers in the form of a $350 tax refund per individual, with Gov. Eric Holcomb saying early in June that the state’s residents have “real needs right now during this period of high inflation.”

Maine plans to dole out a round of $850 “relief checks” as residents “are grappling with the increased costs as a result of pandemic-driven inflation, ranging from higher energy costs to increased prices of everyday goods,” according to the office of Maine Gov. Janet Mills.

Other states that have introduced similar schemes to offset rising prices include DelawareGeorgia, and New Mexico.

‘This Will Only Do More Damage’

While the payments are sure to be welcomed by families struggling to cope with rising prices, critics say dumping cash onto the problem is like pouring oil onto a fire and will only add to inflationary pressures by boosting demand.

By Tom Ozimek

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