Democrats are about to take control of Congress on a promise to bring prices down. Peter Schiff has a simple message for them: good luck with that, unless you're also willing to cut government spending.

Higher Prices as a Tax on Americans

In a Sunday post on X, the veteran investor said Democrats claim they will "fight to lower prices," but with the Federal Reserve "monetizing deficit spending," prices "will keep rising" unless they cut government spending.

"Higher prices are the tax Americans pay to cover the cost of government programs Democrats love," he added.

House Democratic Leader Hakeem Jeffries (D-N.Y.) has pledged to prioritize affordability and accountability, while others have blamed Trump's tariffs for driving up prices.

Deficit Widens as Inflation Accelerates

The numbers Schiff is pointing at are not subtle. The federal government ran a $1.99 trillion deficit in fiscal 2026, up $217 billion, or 12%, from $1.78 trillion in fiscal 2025, according to Treasury data.

Meanwhile, consumer prices rose 3.7% year over year in September, above the 3.6% economists expected, the Bureau of Labor Statistics said. Gasoline, up 9.1% on the month, accounted for more than half of the increase and is up 34.2% from a year ago.

Voters ranked the economy as their top issue in the midterms, with many worried about the cost of everything from gas to groceries to utilities.

DoubleLine Capital founder Jeffrey Gundlach said Democrats must either find a way to bring prices down quickly or hand out money to help people afford them, which he said would only add to inflation.

Inflation Report Tests the Fed's Path

The October consumer price report, due Tuesday, is expected to show headline and core inflation softening month to month but staying stubbornly above the Fed's 2% target year over year.

The central bank raised rates in September, its first hike since 2023, and most economists expect another increase in December, with the CME FedWatch tool showing an 80.8% probability.

Price Action: The iShares 7-10 Year Treasury Bond ETF (IEF) closed 0.12% lower on Friday at $91.86 and fell 0.16% in overnight trading on Sunday. The iShares 20+ Year Treasury Bond ETF (TLT) was down 0.01% on Friday, closing at $81.92, and lost 0.20% in overnight trading.

MarketDash Edge rankings indicate the 7-10 year bond ETF has a Momentum score in the 40th percentile, with a positive short-term price trend. It has a negative price trend in the medium and long term.