It is customary in discussing Biden’s economic policies to acknowledge that the last stimulus package was a mistake. A well-intentioned act perhaps but a mistake nonetheless. (Republicans of course say that all the stimulus packages that kept the country running were a Great Big Democratic Disaster–complete nonsense but a different story.)

Is that true? Well, it is certainly true that the stimulus package stimulated the economy. However it is also true that there were other factors that contributed to inflation: the unanticipated shortage of chips that affected not just electrical equipment but even the production of cars, and also the bottlenecks that developed in shipping and other forms of product transportation worldwide. These affected inflation categories such as the price of used cars for example that drove up the consumer price index. There was also profit taking by large companies in food processing, for example, that were able to manipulate pricing in markets they controlled.

So there is no question that significant parts of the inflation were not due to the stimulus. What was a result of the stimulus however was that people had more money to spend. This is usually discounted entirely by saying that “but it didn’t keep pace with inflation”. That line of argument is false, because a good chunk of the inflation was going to happen regardless of the stimulus.

Biden’s position was that with the end of Covid the US was moving into a period of extreme economic uncertainty, and in such a situation one should err on the side of keeping people as close to whole as possible. That is precisely what happened. The main result of the stimulus package was that people had more money to spend to deal with a lot of unanticipated inflation that had nothing to do with the stimulus itself.

Despite all of the tons of nonsense that have been printed, Biden’s stimulus package was correct policy both in view of what was known at the time and in view of what actually happened.