The week in Bidenomics: crazy talk on inflation

Yahoo Finance's Rick Newman on what Republicans and Democrats get wrong on inflation.

Video transcript

SEANA SMITH: Well, another hot topic on Wall Street and also down in DC lately has been inflation. But there is some debate about how big of an issue it is right now and also, what the infrastructure package could potentially do for inflation.

We want to bring in Rick Newman on this. This is this week's Bidenomics topic. And Rick, where it stands right now, President Biden saying, hey, there's nothing to worry about when it comes to inflation. The infrastructure package isn't going to push inflation higher. The GOP says the exact opposite. So who's right?

RICK NEWMAN: Neither of them. I don't think either side is right here.

So just to recap, Biden did address inflation earlier this week when he talked about the economy. And he said, look, if you're worried about inflation, then pass my paid leave act, pass my childcare, my eldercare proposals, and that will actually keep inflation in check. And then Mitch McConnell, same day, went on the Senate floor and said, oh my God, Biden's American Rescue Plan is the reason we have this 5.4% inflation in the first place. And if you want more inflation, just pass Biden's other proposals, and I guess we'll get something like 10% inflation.

So what's happening here is inflation is now politicized, which means don't believe either side on this. No one is really giving you a straight story. And I'm not sure even economists know what's going to happen. We've got respectable arguments among economists on the left, on the right. Is inflation temporary or not? It's just not really clear right now. So it's going to take a couple of more months before we really know if we have worrisome inflation or if it's simmering down.

ADAM SHAPIRO: Spoiler alert-- Rick, at the end of your article, you save the best for last because your advice is to ignore the politicians. I'm going to let you pick if you want to share some of your other advice or pick up what Jessica talked about with the debt ceiling. Could the debt ceiling-- would Republicans shoot the country in the foot to force a default? Or could this be what the Democrats need to get rid of the filibuster?

RICK NEWMAN: Republicans would not be shooting the country in the foot. They'd be shooting themselves in the foot if they actually allowed the Treasury to default on its debt. We've seen this show many times before, Adam. What typically happens is we kind of get close to a worrisome phase. Markets get a little bit nervous. But nobody's willing to go over the brink on this one. So we are going to get an extension in the debt limit. And I think almost all investors know that.

As for inflation, you know, a couple of things for people to keep in mind-- the national inflation picture doesn't matter as much as your personal inflation. So if you're somebody who needs to buy a car, or you need to buy a house right now, or you need to travel out of your own pocket, then yeah, inflation is a problem for you. But a lot of people don't need to do those things. And there are other things where prices just are not going up that much, so don't worry about it. I mean, you can also put off expenses.

And I think people should ask for a raise, honestly. If you earn more money, that's a great hedge against inflation. Companies say they need all these workers. So give it a shot. See if your boss will give you a raise.

SEANA SMITH: If you want to take a look at Rick's advice, you can check it out on YahooFinance.com. Rick, thanks so much. Have a great weekend.