Subsidies Only Feed Inflation – WSJ

President Biden insists he fights inflation by making things more affordable for middle-class American households. To that end, last month his administration and Congress rolled out big-dollar subsidies to consumers of green energy, drugs, and higher education. But the bulk of that federal money will likely end up in the pockets of businesses, not consumers. August could go down in history as the epic month of feeding the fat cats.

In a normal market, sellers get what buyers pay. If you have a flea market where your chair sells for $100, you get all $100. But in the US, such markets are virtually non-existent because taxes and subsidies pay a wedge between what buyers pay and what sellers get. Companies pay more for workers than workers take home because of income and payroll taxes. Poor patients pay less than what hospitals receive because of Medicaid subsidies.

https://www.wsj.com/articles/subsidies-inflation-reduction-act-taxes-middle-class-companies-workers-income-payroll-biden-government-intervention-11663255440 Subsidies Only Feed Inflation – WSJ

Alley Einstein

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