Republicans and Democrats have dramatically different plans for killing off inflation, but the Fed has the real power

Democrats and Republicans have different ideas on how to deal with inflation.

The US economy is still experiencing high prices. The Consumer Price Index, which is one of the country's most closely watched inflation gauge, showed inflation hitting a seven-year high in December. While some signs point to inflation peaking, price growth is expected to stay elevated throughout 2022, all but ensuring it will be a hot topic in the upcoming elections.

The two major parties are not on the same page when it comes to how to solve the problem. The GOP wants a strict cap on all future spending, while the Democrats see new spending as the best way to curb inflation. Whether they can achieve their goals or not is a different story. The Federal Reserve is the real key to fighting inflation, no matter what Congress does.

President Joe Biden approved trillions of dollars in new spending between his March package and the recent bipartisan infrastructure plan. The president is doubling down on his spending spree instead of pulling it back.

In a January 19 press conference, Biden said his plan would address the biggest costs that working families face every day.

Maya MacGuineas, the president of the nonprofit Committee for a Responsible Federal Budget, said that the proposal could be effective, but probably not quickly enough.

Some Senate Republicans have a plan to stop inflation. Tim Scott of South Carolina introduced a bill on January 12 that would ban government spending that is estimated to lift inflation above a 4.5% year-over-year rate. The measure would use estimates from the Congressional Budget Office of a bill. The proposal has 12 cosponsors and is the GOP's latest plan to strike down Biden's spending plans.

Neither plan is likely to become law anytime soon

Neither proposal has the support of the other party. Manchin has been a roadblock for months, arguing that Democrats should not pass another huge spending package until inflation dies down. He recently told Insider that his negotiations with the White House over the plan would start from scratch later in 2022, which would further delay the Democrats plan to fight inflation.

Democrats are not the only ones with disagreements. The GOP's Inflation Prevention Act wouldn't do enough to pull inflation back to comfortable levels according to Sen. John Kennedy.

The ideal situation is to have companies profitable, wages going up, but no inflation, and that is possible.

The GOP proposal is in danger of being vetoed because of the 50/50 split in the Senate, in which Vice President Harris holds the tiebreaking vote. The legislation shows how Republicans could fight price growth.

Inflation is mostly in the hands of the Fed now anyway

Neither the silver bullet to cool price growth nor the discussion about inflation will be enough to cool price growth. The most effective way to rein in price growth is to raise interest rates by the Fed.

MacGuineas said that inflation is the hot topic, and that the Fed is responsible for addressing it.

The central bank is expected to start hiking in March. The clearest hint yet came on Wednesday when Powell said the Federal Open Market Committee was willing to raise the federal funds rate at the March meeting as long as conditions were right.

The Fed acts independently of Congress and the White House, so it theoretically won't adjust its policy for political reasons. Lawmakers on both sides of the aisle are in a tough spot. Both parties want the credit for killing inflation, but neither can push the Fed to use its proven tool. For now, the most they can do is coordinate with the central bank, and some are already looking to do that.

Kennedy wants to sit down with the Fed and ask if there is something they can do.