That message hasn’t yet made it here to Massachusetts, where Democratic state lawmakers have proposed sending out checks to most residents to help absorb the “increased costs due to inflation [that] have cut into family budgets.” Gov. Charlie Baker (R) has said the proposal would represent “a welcome piece of relief.”
“Given that the cost of everything has gone up, anything helps,” the governor said last week.
Sadly, it’s not actually the case that “anything” helps. “Inflation relief” check proposals like this one, which have also been proposed or adopted in California, Indiana, Delaware and several other states, are likely to be actively harmful in the fight against inflation. That’s because these and other tax cuts or rebates will make red-hot demand even hotter.
Inflation has lately reached 40-year highs because demand is strong while supply remains constrained. Consumers have a lot of cash on hand, thanks to both pandemic-forced savings (delayed vacations, fewer restaurant outings, etc.) and federal policies that pumped a lot of money into their pockets as well as the broader economy.
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