Inflation DA - Michigan 2024 STARTER

Inflation DA- Starter Packet
Notes
This is the inflation da. It argues that the plan would increase prices across the economy, which would cause either economic disruption or undermines the military’s purchasing power.
There are lots of good e-commerce links, and this da is definitely the strongest vs that affirmative. There are links to some other affs, but they might require a bit of spin (for example, the fair use links are not specific to AI, but there are cards in this file that you could use to say that narrowing fair use over ai causes a spillover to narrow fair use in other areas).
1nc
1nc econ
Inflation is cooling and economic fundamentals are strong
Rugaber 24 (Chris Rugaber covers the economy and the Federal Reserve for the Associated Press. “US inflation cooled in May in a sign that price pressures may be easing” 6/12/2024. Accessed 6/18/2024. https://apnews.com/article/inflation-prices-rates-economy-federal-reserve-biden-8e1d14563d83f55e1773bcddd622bb2b) wtk
Inflation in the United States eased in May for a second straight month, a hopeful sign that an acceleration of prices that occurred early this year may have passed. The trend, if it holds, could move the Federal Reserve closer to cutting its benchmark interest rate from its 23-year peak.
Consumer prices excluding volatile food and energy costs — the closely watched “core” index — rose 0.2% from April to May, the government said Wednesday. That was down from 0.3% the previous month and was the smallest increase since October. Measured from a year earlier, core prices climbed 3.4%, below last month’s 3.6% rise, and the mildest such increase in three years.
Fed officials, who will end their latest policy meeting later Wednesday, are scrutinizing each month’s inflation data to assess their progress in their fight against rising prices. Even as overall inflation moderates, such necessities as groceries, rent and health care are much pricier than they were three years ago — a continuing source of public discontent and a political threat to President Joe Biden’s re-election bid.
Most other measures suggest that the economy is healthy: Unemployment remains low, hiring is robust and consumers are traveling, eating out and spending on entertainment.
And Wednesday’s report indicated that consumers are beginning to get some relief from the price spikes of the past three years. Grocery costs were unchanged, on average, from April to May, after actually falling 0.2% the previous month. Food prices have risen just 1% over the past 12 months, though they’re still up about 20% from three years ago.
Average gas prices tumbled 3.6% nationally just from April to May, though they’re 2.2% higher than they were a year earlier. Those declines have continued, with gas averaging $3.45 a gallon Wednesday, down 17 cents from a month ago. Americans didn’t drive as much over the Memorial Day weekend as they have in previous years, reducing demand, and oil prices have fallen.
Overall inflation also slowed last month, with consumer prices unchanged from April to May. Measured from a year earlier, prices rose 3.3%, less than the 3.6% increase a month earlier.
“It’s certainly welcome news,” said Tom Porcelli, chief U.S. economist at PGIM Fixed Income. “It drives home that the inflation challenge in the United States is not as challenging as monetary policy makers believe.”
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Inflation causes economic disruptions and war—trade weaponization and great-power re-organization mean it escalates
Julius 23 (Dame DeAnne Julius DCMG, CBE, Senior Adviser, and Distinguished Fellow, Global Economy and Finance Programme at Chatham House. PhD in Economics from the University of California. “Where might high inflation lead to? Economic warfare” Last updated 1/17/2023. Accessed 6/18/2024. https://www.chathamhouse.org/publications/the-world-today/2022-10/where-might-high-inflation-lead-economic-warfare) wtk
Higher wages translate into higher costs for companies which, in turn, leads them to raise prices further as they attempt to remain profitable or at least break even. Wages make up more than half of total costs in the hospitality, food service and retail sectors where profit margins are already low. It is the job of central banks to halt such a wage-price spiral before it gets out of hand.
Raising interest rates is their main tool to do so, which is why Jay Powell, the US Federal Reserve chairman, promises to ‘keep at it’ until inflation comes down to the US target of 2 per cent on the Fed’s preferred measure of inflation, the core Personal Consumption Expenditure, which rose by 4.6 per cent in August. This could mean much higher interest rates will be needed, both in the US and elsewhere.
A new era of economic fragmentation
The Russian invasion has dramatically changed the geopolitical backdrop. We may be entering a new era of economic fragmentation, reversing four decades of globalization that brought lower production costs for businesses from off-shoring, lower prices for consumers from cheaper imported goods and higher incomes in many developing countries from new jobs in manufacturing goods for export, with China a key player. All of these effects kept a lid on prices through global competition.
Now the debate about temporary versus long-lasting inflation must reflect the weaponizing of trade and finance to disrupt past patterns of production and exchange.
The political rift between the US and China that developed under the Trump administration resulted in trade tariffs and restrictions on cross-border sales of semi-conductors and other high-tech equipment. The rift deepened under President Biden with bans on US companies to prevent them selling chips to China and the threat of delisting Chinese companies from the US stock market.
Then the invasion of Ukraine brought a raft of economic sanctions against Russia including freezing the foreign exchange reserves of its central bank and the assets of some Russian companies and individuals.
We may be in the foothills of an economic war between the great powers. The deeper ‘no-limits friendship’ proclaimed by Vladimir Putin and Xi Jinping presents a potent threat to an integrated world economy. Despite their chequered history, Russia and China perceive a common enemy in the West and share a resentment of being treated without the respect they feel they deserve.
China and Russia’s weak economic models
There is also a natural complementarity in their two economies. Russia has the energy and natural resources that China needs; while China has the technology and industrial know-how Russia lacks. Trade between the two has jumped with increased Russian oil exports to China, partly offsetting Russia’s loss of European markets due to sanctions. The two have also agreed to use their domestic currencies to pay for trade, rather than the dollar.
In addition, they are both autocratic regimes capable of controlling their domestic narratives and suppressing dissent. This provides a powerful base for propaganda and paranoia that can lead to irrational policy and a tit-for-tat escalation of disputes.
A chaotic period of economic disruptions and resulting inflation spikes is not certain. Both Russia and China have weaknesses in their economic models.
The Russian state is heavily dependent on energy exports which themselves are vulnerable to curtailed western demand, to the lack of western equipment and expertise and to the accelerated investment by others in renewable energy alternatives. China’s long period of rapid economic growth is staggering to a halt from its zero-tolerance policy towards Covid, while there is no sign of an exit strategy.
Meanwhile the property sector is in free fall and the many foreign enterprises that set up manufacturing in China, bringing skills and technology as well as money, have begun to relocate to India, Vietnam, Singapore and other more predictable business environments. Both countries suffer from shrinking labour forces and growing numbers of retirees needing healthcare and income support.
The incompatible reordering of global alliances
The West too faces challenges, including destabilizing threats to its democracies from populist political parties. The relative predictability of the post-Second World War era has been shaken by the global pandemic, geopolitical incursions and extreme climate events.
Instead of cooperative attempts to tackle such issues, they have led to a re-ordering of global alliances with incompatible narratives and increasing barriers and sanctions. This changing international environment means that the debate about inflation – its causes and possible persistence – is no longer just about economics and central banking. It reflects the complexity of today’s interconnected world and the tectonic shifts in great power rivalry.
1nc heg
Inflation is cooling and economic fundamentals are strong
Rugaber 24 (Chris Rugaber covers the economy and the Federal Reserve for the Associated Press. “US inflation cooled in May in a sign that price pressures may be easing” 6/12/2024. Accessed 6/18/2024. https://apnews.com/article/inflation-prices-rates-economy-federal-reserve-biden-8e1d14563d83f55e1773bcddd622bb2b) wtk
Inflation in the United States eased in May for a second straight month, a hopeful sign that an acceleration of prices that occurred early this year may have passed. The trend, if it holds, could move the Federal Reserve closer to cutting its benchmark interest rate from its 23-year peak.
Consumer prices excluding volatile food and energy costs — the closely watched “core” index — rose 0.2% from April to May, the government said Wednesday. That was down from 0.3% the previous month and was the smallest increase since October. Measured from a year earlier, core prices climbed 3.4%, below last month’s 3.6% rise, and the mildest such increase in three years.
Fed officials, who will end their latest policy meeting later Wednesday, are scrutinizing each month’s inflation data to assess their progress in their fight against rising prices. Even as overall inflation moderates, such necessities as groceries, rent and health care are much pricier than they were three years ago — a continuing source of public discontent and a political threat to President Joe Biden’s re-election bid.
Most other measures suggest that the economy is healthy: Unemployment remains low, hiring is robust and consumers are traveling, eating out and spending on entertainment.
And Wednesday’s report indicated that consumers are beginning to get some relief from the price spikes of the past three years. Grocery costs were unchanged, on average, from April to May, after actually falling 0.2% the previous month. Food prices have risen just 1% over the past 12 months, though they’re still up about 20% from three years ago.
Average gas prices tumbled 3.6% nationally just from April to May, though they’re 2.2% higher than they were a year earlier. Those declines have continued, with gas averaging $3.45 a gallon Wednesday, down 17 cents from a month ago. Americans didn’t drive as much over the Memorial Day weekend as they have in previous years, reducing demand, and oil prices have fallen.
Overall inflation also slowed last month, with consumer prices unchanged from April to May. Measured from a year earlier, prices rose 3.3%, less than the 3.6% increase a month earlier.
“It’s certainly welcome news,” said Tom Porcelli, chief U.S. economist at PGIM Fixed Income. “It drives home that the inflation challenge in the United States is not as challenging as monetary policy makers believe.”
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Inflation escalates global hotspots---extinction
Brands 22 (Hal Brands is a Bloomberg Opinion columnist and the Henry Kissinger Distinguished Professor at Johns Hopkins University’s School of Advanced International Studies. “Inflation’s Biggest Risk Is Geopolitical Unrest” 1/20/2022. Accessed 6/18/2024. https://www.bloomberg.com/opinion/articles/2022-01-20/inflation-s-biggest-risk-is-geopolitical-unrest)
Yet now as before, inflation is a geopolitical phenomenon, which is rooted partly in rising global tensions and could have deeply corrosive effects on the U.S.-led world order.
That’s what happened the last time the U.S. faced this problem, from the late 1960s to the early 1980s. “To all Americans,” Ronald Reagan said while running for president in 1980, inflation had become "something as violent as a mugger, as frightening as an armed robber and as deadly as a hit man." The causes were closely tied to global affairs.
In the late 1960s, the combined costs of the Vietnam War and President Lyndon B. Johnson’s Great Society programs sent prices rising. In the 1970s, the chief drivers were soaring energy costs and supply disruptions caused by the Yom Kippur War of 1973 and then the Iranian revolution of 1978-1979. It was a vicious cycle: Geopolitical upheaval caused economic upheaval, which then added to the underlying global instability.
High oil costs and scarce supplies caused ruptures within the democratic world, as Japan, France and other U.S. allies scrambled to cut bilateral deals with oil producers. Inflation ate away at an American defense budget that was already falling as a result of post-Vietnam retrenchment.
Secretary of State Henry Kissinger worried that economic chaos might destabilize the Western world. It certainly contributed to a general malaise in America and other advanced democracies, feeding fears that the Soviet Union — then benefitting from record oil prices — might win the Cold War after all. “Can Capitalism Survive?” Time magazine famously asked in 1975. Only when the Federal Reserve finally broke the inflationary cycle with bone-crushing interest rates did the U.S. regain its geopolitical footing.
Today, rising energy costs are again pushing prices higher. The messy divorce of economies between the U.S. and China is disrupting supply chains and generating inflationary pressure. The economic messiness provoked by another geopolitical breakup — Brexit — isn’t helping matters. Not least, the inflation surge has resulted from the massive stimulus that governments pumped into their economies in response to Covid, the greatest global crisis of this century.
In countries where there is lots of revolutionary kindling, inflation can provide the fatal spark. Historically, rising prices contributed to political upheavals such as the French Revolution, which touched off a quarter-century of war in Europe, and the Arab Spring, whose effects are still roiling the Middle East. This month, a doubling of fuel prices triggered protests, revolt and then Russian-backed repression in Kazakhstan. There’s probably more of this to come. In late 2021, the Food and Agriculture Organization at the United Nations reported that global food prices had reached their highest point in a decade.
Look out for geo-economic turbulence, as well. Argentina, the European Union, Russia and other countries have restricted the export of commodities such as grain to keep domestic food prices manageable. If Washington ratchets up interest rates to tame rising prices, it could unintentionally batter deeply indebted countries that have already lost years, even decades, of economic progress due to Covid. Indeed, when the Fed slayed inflation in the early 1980s, a decade-long Latin American debt crisis was part of the collateral damage.
Finally, there is the question of what will happen to the U.S. Biden isn’t entirely wrong to argue that inflation is actually a sign of strength: The U.S. economy rebounded quickly from Covid, fueling demand that is outstripping supply. Yet inflation is rarely a good-news story.
Inflation is psychologically demoralizing because it makes growth meaningless, and stagnation crippling, for people whose real wages are in decline. It fosters a sense that the people are victims of forces that their leaders cannot control. It gives credence to arguments that America’s true problems are at home, rather than abroad, and thus threatens to create a more distracted, inward-looking superpower just as global threats are intensifying.
The damage isn’t hypothetical: As John Ferrari of the American Enterprise Institute points out, the U.S. defense budget is already at risk of being strangled by the “inflation anaconda.” The 5% bump that Congress approved for the Pentagon this year sounds impressive, but only until one considers that inflation is running at 7% and the military is particularly exposed to rising costs for energy and materials such as steel. As inflation builds up, Pentagon is forced to build down — just as China is racing to expand its military capabilities, Russia is threatening a major conflict in Eastern Europe and relations with Iran deteriorate.
The Biden administration appears to be recognizing, perhaps belatedly, that rising prices pose a severe threat to its domestic agenda and political fortunes. Inflation may also have nasty geopolitical effects in a world that hardly seemed stable before.
uniqueness
2nc at: inflation high
Inflation is cooling—core cpi
Saraiva 24 (Augusta Saraiva, writer for Bloomberg, “US Inflation Broadly Cools in Encouraging Sign for Fed Officials” 6/12/2024. Accessed 6/18/2024. https://www.bloomberg.com/news/articles/2024-06-12/us-inflation-broadly-cools-in-encouraging-sign-for-fed-officials?embedded-checkout=true) wtk
A key measure of underlying US inflation stepped down for a second month in May, a pleasant surprise for Federal Reserve officials looking for signs that they can start to lower interest rates.
The so-called core consumer price index — which excludes food and energy costs — climbed 0.2% from April, Bureau of Labor Statistics figures showed. The year-over-year measure rose 3.4%, cooling to the slowest pace in more than three years, according to data out Wednesday.
The figures, taken with the deceleration in the core CPI in April, may represent the early stages of inflation resuming a downward trend. But policymakers have stressed that they’d need to see several months of price pressures receding before they consider lowering interest rates, especially with the latest jobs report reigniting the debate over how restrictive policy actually is.
We’re on track for a soft landing
Brown and Irwin 24 (Courtenay Brown is an economics reporter at Axios. She covers the global economy, central banks, financial markets and macroeconomic trends. Neil Irwin is chief economic correspondent of Axios. He reports on and analyzes the U.S. and global economies, the Federal Reserve, economic policy, financial markets, and how they all intersect. “Cooling inflation ignites hope of rate cuts” 6/12/2024. Accessed 6/18/2024. https://www.axios.com/2024/06/12/cpi-report-inflation-cooling) wtk
It's starting to feel a little bit like late 2023: For the second straight month, the Consumer Price Index was cooler than expected — a sign that inflation might be back on a downward path.
Why it matters: The first few months of the year stoked fears that price pressures were reaccelerating. So far, the second quarter appears much different — with a soft landing path for the economy looking like a reality.
That could shift the tenor of Wednesday's Federal Open Market Committee meeting and make officials more comfortable penciling in two rate cuts this year in their projections. The first rate cut could be in September, if that scenario comes true.
Stocks and bonds were both rallying Wednesday morning upon the news.
What they're saying: "Inflation's return to the Fed's target took two steps forward in May after one step back in the opening months of 2024," Comerica's Bill Adams wrote in a report.
By the numbers: The CPI was unchanged for the month of May after rising 0.3% in April. The core measure, which excludes food and energy prices, rose 0.2% — the slowest monthly pace since August 2021.
Year-over-year inflation edged down as well, to 3.4% from 3.5%.
Core CPI is up an annualized 3.3% over the past three months, the lowest since Octobe

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