Fact check on Sen. Rick Scott’s comments blaming inflation on government spending
![<i>Spencer Platt/Getty Images</i><br/>People shop at an outdoor food market in Manhattan on November 05](https://abc17news.b-cdn.net/abc17news.com/2021/11/hypatia-h_1c180306db4ee9f25238f95b2dd7524a-h_4df12d37929c34cbf59198b4c369d9c0-300.jpg)
People shop at an outdoor food market in Manhattan on November 05
By Tara Subramaniam
Since the summer, when inflation reached a 13-year high, Republicans have been blaming the rising prices on President Joe Biden and the Democrats.
This week, on CNN’s “New Day”, Republican Sen. Rick Scott suggested the infrastructure bill passed Friday was an example of what he said is the kind of wasteful government spending that has led to the increase in prices.
Voters, Scott said, express concerns when they see legislation, like the infrastructure bill, “that has unbelievable wasteful spending” pass, despite the fact that “We’ve got gas prices up over 50%, food prices up, all caused by wasteful government spending.”
When asked to clarify his remarks, Scott’s office sent CNN a press release doubling down on the senator’s claims that “reckless spending” under the Biden administration has fueled this “inflation crisis.”
Facts First: To blame rising gas and food prices exclusively on government spending is false. Supply chains are in disarray, not just in the US. The global production of oil and many other goods decreased last year when demand cratered as a result of the pandemic. But while demand has since increased, production remains below pre-pandemic levels, leading to higher prices.
Government spending did increase during the pandemic, with multiple stimulus packages designed to bolster the US economy passed under both the Trump and Biden administrations. However, economists widely agree that the country’s economic downturn during the pandemic would have been more severe without those aid packages. Furthermore, it’s inaccurate to suggest, as Scott did, that government spending has been the primary driver of higher prices across the board.
In fact, a July report from Moody’s Analytics found that the infrastructure bill and Biden’s Build Back Better proposal are unlikely to inflame inflation and could even have the opposite effect by adding supply and boosting productivity.
Food Prices
One big indication that US government spending is not solely to blame for the spike in prices? The cost of food is up everywhere, not just in the US.
Last week, an index published by the Food and Agriculture Organization of the United Nations which tracks monthly changes across a range of food commodities worldwide, reached its highest level in roughly a decade.
According to the FAO, this increase is the result of high global demand for a range of products including poultry, vegetable oils and barley, combined with reduced harvests from major exporters, disrupted supply chains, worker shortages and rising production costs.
Gas Prices
Higher gasoline prices are also the result of a similar pandemic-induced supply chain mess. While demand has come roaring back, production is still catching up to pre-pandemic levels.
According to the US Energy Information Administration, in 2020 crude oil production experienced its largest annual decline on record, following a “sudden drop in petroleum demand” caused by the coronavirus pandemic.
US crude oil production by the end of October was at 11.5 million barrels per day, up from lows of 9.7 million in August 2020 and February 2021 but still shy of peak levels in February and March 2020, when field production was around 13.1 million barrels per day.
Refinery utilization rates, which fell as low as 56% in February 2021, have recovered recently, reaching 86.3% by the end of October. But that’s still below where they were before the pandemic, when they were consistently above 90 percent.
Regarding the higher gas prices in particular, Patrick De Haan, head of petroleum analysis at GasBuddy, a website that tracks the price of gas, told CNN on Oct. 20, “I chalk up the high price of energy today to circumstances that no president could have brought on. The bulk of the change has everything to do with Covid.”
When asked about rising gas prices back in June, De Haan said, “This is not a political issue. It’s more of a Covid-19 challenge simply because of how Covid-19 decimated fuel demand last year. While prices are much higher this year than last year, it’s because of the recovery, the economic recovery. More Americans are getting out, gasoline demand has soared from a year ago.”
The Biden administration has already called on OPEC and its allies to do more to combat the elevated energy prices but so far they have declined to dramatically ramp up production.
Mark Zandi, chief economist of Moody’s Analytics, told CNN gas prices are high in part because the energy industry is still operating below pre-pandemic levels, though they have the capacity to produce more oil and natural gas.
“The issue is that energy producers have been slow to increase their use of that capacity as demand coming out of the pandemic has picked up,” Zandi said.
Asked about Scott’s comments on CNN Monday, Zandi said, “Scott has misdiagnosed the reasons for the higher gasoline prices and the acceleration in food and other prices this year.”
“The higher prices and inflation are due to the pandemic, especially the Delta-wave,” Zandi said. “With the Delta-wave winding down, supply chain and labor market problems will be addressed, and inflation will moderate.”
The-CNN-Wire
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