Economic experts pan Hochul’s ‘inflationary’ ‘inflation refunds’: ‘Not difficult math’
Several economic experts panned New York Gov. Kathy Hochul’s "inflation refunds" she plans to distribute to qualifying New Yorkers as part of her 2025 State of the State initiative.
Last week, Hochul proposed $3 billion in direct payments to about half of the Empire State’s 19 million residents: $300 for single taxpayers making up to $150,000 per year and $500 for joint filers making twice that.
"Because of inflation, New York has generated unprecedented revenues through the sales tax — now, we're returning that cash back to middle class families," Hochul said in a statement announcing the proposal.
However, some economists and economic experts, like Andy Puzder, said the move simply "redistributes [money] to people so the people will vote for them."
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"If you really wanted to help everybody, and if you have an excess of sales taxes, then you reduce the sales tax," added Puzder, the former CEO of the parent company of Hardee’s and Carl’s Jr., CKE Restaurants. "It’s not difficult math," he added.
Puzder is a lecturer on economics and a senior public policy fellow at Pepperdine University who was considered for Labor secretary in the first Trump administration.
In his work at CKE Restaurants, Puzder increased the average franchise sales volume for the then-struggling Hardee’s from $715,000 in 2001 to more than $1 million a decade later.
The U.S. economy has been in trouble because of the same types of policies forwarded by Hochul and other tax-and-spend Democrats, he said – adding that President Biden’s American Rescue Plan was what lit the fuse on nationwide inflation in the first place.
"If you reduce taxes, fewer people will also be leaving the state," he added, as New York shed another population-based House seat and electoral vote in the decennial census.
Puzder noted a few top Democrats have warned their own leaders against such "refunds" from the government, citing former President Bill Clinton’s Treasury chief Lawrence Summers cautioning the Biden administration that similar handouts in 2021 would drive up inflation.
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Former Rep. Dave Brat, R-Va., an economist and currently vice provost of Liberty University in Lynchburg, cited Nobel laureate Milton Friedman’s assertion that inflation is a monetary phenomenon.
Therefore, he said, in Hochul’s case, the better fix for inflation lies not in Albany, but in Manhattan.
"Inflation has to do with how much money the Federal Reserve prints. If she wants to give people money back from the government, that’s fine – but she’s in a prominent position in New York in that the Fed has one of its chief desks there and if you want to solve inflation, you go to the Federal Reserve."
He added that $500 for a family is a "trivial, symbolic move against a massive, hidden tax," noting that with an estimated 22% real-inflation rate over the past four years, $500 in 2020 purchasing power is only worth $390.
Brat added that Democrats’ penchant for such "refunds" put Republicans at a consistent political disadvantage because the GOP essentially has to "compete against Santa Claus" handing out presents versus the right warning the public to "eat their spinach."
Economist EJ Antoni echoed some of the sentiment about the refunds being inflationary themselves, saying that what got the U.S. into inflation in the first place was too much government spending.
"So this idea that we're going to add on another government expenditure, you're essentially just creating a feedback loop," Antoni said.
"Now, that's not to say that New York State alone is going to cause inflation. Inflation comes from the federal government, because the federal government is the one that can't create money, can print money out of nothing. But at the same time, you're still talking about increasing the cost of living for New Yorkers, just in a different way," he said.
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"Any additional government spending is going to have to be paid for one way or another."
Antoni added he could see such payments to the public "snowballing" into more and more payments down the line, which in turn would lead to higher taxes being needed to fund the handouts.
Antoni also said Hochul’s proposal differs from then-President Donald Trump’s COVID-era checks, because the latter came during a time people needed "money to survive" amid stay-at-home orders and various shutdowns of job sectors.
"If the issue is that we need to reduce people's cost of living, the best way to do that would just be to reduce their taxes, not have another payment by the government," he said.
Fox News Digital also reached out to the left-leaning Brookings Institution for a further diverse viewpoint on Hochul’s move.
Fox News Digital also reached out to Hochul's office for comment but did not receive a response by press time.