Even as the American economy rebounds from the lockdown-induced recession, the Biden administration is doubling down on federal spending.
In March — at which point the economy was already nearing a full recovery — Biden approved the $1.9 trillion American Rescue Plan. Currently, Democrats are attempting to pass a $3.5 trillion — or, by some estimates, $5.5 trillion — reconciliation bill that combines portions of the $2.7 trillion American Jobs Plan and $1.8 trillion American Families Plan.
Spending trillions upon trillions of dollars, however, cannot be done without fundamentally altering the landscape of the American economy — both in the short-term and long-term.
In an interview with The Daily Wire, Rep. Kevin Brady (R-TX) — the Ranking Member of the House Ways and Means Committee, which is responsible for deliberating taxes and other fiscal policy measures — discussed the three “Bidenomics” issues to which every American should be paying attention.
Unemployment
Brady warned that the American Rescue Plan’s $300-per-week enhanced federal unemployment insurance — especially when piled upon preexisting state unemployment programs — is “crushing Main Street businesses” seeking to hire workers.
“It’s certainly slowing our recovery and contributing to both slower deliveries and higher prices all up and down the supply chain,” he said. “Companies of all sizes simply can’t find the workers they need, whether they’re retailers, restaurateurs, or production lines — this is inevitable when you pay four out of ten Americans more to stay home than to work.”
Although twenty-six governors have opted out of the federal program before its automatic expiration in September, over half of the labor market is still experiencing its distortionary effects: “You’ve still got the bulk of American workers through Labor Day that are going to face real barriers in reconnecting to work.”
Beyond the federal unemployment program’s end, the new Child Tax Credits will ensure that the distortions continue. For instance, Brady recounted his recent visit with a group of restaurant owners in Maryland — one of whom noted that one of his best employees was able to entirely quit her job because of the Child Tax Credits.
“For the first time, it is divorced from work. That’s not a requirement for getting it, and so you’re seeing this barrier begin to impact businesses starting last week,” Brady said. “I think the point here is that the federal government is sending a seemingly never-ending supply of checks, regardless of whether you work or not. You’re going to have economic problems, and that’s what we’re seeing.”
Of particular concern — especially for the stimulus programs passed hurriedly during the recession — is the potential for rampant fraud.
“Good intentions in an emergency can have damaging consequences in recovery, and that’s exactly what happened. Congress was rushing to help those who are in the gig economy — Uber drivers, independent contractors — to try to save those jobs at the beginning of the pandemic, but the program is poorly designed. It was far too generous; it was one-size-fits-all. Regardless of whether your wages were in Cut and Shoot, Texas, or San Francisco, the amount was the same — and these were workers who had not paid into the unemployment system.”
As a result, the nation is witnessing “the greatest theft of tax dollars in American history” — to the tune of $400 billion so far. Democrats, however, denied conservatives’ attempts to include basic security measures in their legislation.
“Republicans under President Trump sounded the alarm, and we included provisions in the December COVID package that required states to verify their identity, their wages, and their work in a certain period after they got the benefit,” said Brady. “But the Democrats reversed that in the Biden COVID stimulus. And our Republican amendments in Ways and Means — simple ones, they required states to verify who you are, what your wages were, and where you worked before you send out those checks — were rejected.”
“What’s frustrating is that this theft continues. It is rampant, and we simply have not seen a single Democrat raise the alarm here, so it’s going to continue until we check it.”
The solution? Ending the enhanced federal handouts.
“The sooner we move away from the federal unemployment and back to the state level, the better for the job recovery, and certainly for our job hirers eager to find workers,” asserted Brady. “I think that’s going to be key to the recovery.”
“The time for emergency spending is over, and Washington cannot become the ‘Olive Garden’ of never-ending government checks, which is now becoming expected by too many Americans. If that’s done, and President Biden’s proposing that in the $3.5 trillion — and really $5 trillion — spending binge, my fear is that we will usher in a new era of government dependency. That’s bad for everyone.”
Taxes
President Biden promised that he would not raise taxes on Americans earning less than $400,000 per year. Brady predicted that the President — whether indirectly or directly — “will be violating that pledge.”
“First, Americans of every income level are going to pay a steep price from President Biden’s economic policies,” he said. “You’re already seeing it in inflation — inflation is a tax. Those rising prices are hitting families and businesses from every side, and it is now their number one concern.”
“And secondly, the impending tax hikes will land on middle-class families — directly, as the left-leaning Tax Policy Center in their analysis told us recently. President Biden’s overall tax plan will raise taxes on three out of four middle-class families starting next year; it will rise to over 95% in future years.”
The end result is a shift of economic activity away from the United States.
“Look at the taxes on businesses, on repealing the small business deduction for Main Street businesses. It’s punishing investment into local communities,” asserted Brady. “We will see our businesses moving overseas; small businesses, frankly, not having the money to hire new workers, pay higher wages, and expand.”
“It is poorer communities that pay that price; it is communities that most need that investment. So there’s no question — both directly in higher taxes, but indirectly. And I think even more seriously, low-income families are going to pay a price.”
Inflation
The inflation rate — currently at 5.3% — is reaching levels not seen for decades in the United States. Brady believes that the culprit is “massive government spending into the economy” — leading to the “mirror image” of President Trump’s policies.
“Wages grew twice as fast as prices,” recalled Brady. “Every family’s purchasing power was growing under President Trump. As a matter of fact, in 2019, household income grew more in just one year than in all eight years of the Obama-Biden administration.”
In contrast: “Every month this year, families have fallen farther behind. Prices were rising twice as fast as wages for all of the six months of this year. So the President is zero for six; we expect him to go zero for seven when we see the July jobs report as well.”
“For families trying to fight their way out of the pandemic, every dollar counts,” he added. “And it will not be a short-term challenge for families; unfortunately, these policies are going to drive inflation longer, and I think steeper.”
Brady observed that the Federal Reserve and the White House share responsibility for the rising price levels, as both are “in denial about the seriousness and the length” of inflation. “Both the Fed and the White House have been very slow to recognize the role they’re playing in driving these higher prices.”
“If we continue the emergency spending and expanding government checks as the President has proposed — and the fact that workers are not coming back to the workforce — what you’re going to see is the ‘demand inflation’ that we’re seeing today will transform into a ‘cost inflation’ — a ‘push inflation’ for the longer term.”
For inflation — as well as the worrying developments in tax policy and the labor market — the immediate solution is moving beyond the mindset of emergency spending.
“Certainly, do not add $3 trillion to $5 trillion more in government spending, including new rounds of government checks and higher entitlements, keeping the barriers to workers reconnecting,” he advised. “Stop all those bad policies.”
The views expressed in this piece are the author’s own and do not necessarily represent those of The Daily Wire.
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Source: Dailywire
