Inflation hit a record-breaking 7.9% last month compared to a year prior, according to new economic data released today by the Bureau of Labor Statistics. And just in time, progressives in Congress want to make this inflation even worse, with the U.S. House passing a $1.5 trillion spending bill last night that will spur even higher inflation.
Government Executive has a rundown on what’s in this wasteful bill, including $20 billion for Green New Deal gimmicks while also managing to cut funding for Customs and Border Protection. Imagine that: Congress is spending $13 billion to protect Ukraine’s border while slashing spending for protecting our own.
POLITICO reports this bill is “enacting Democratic spending priorities after more than 400 days operating under Trump-era budgets extended via continuing resolutions.” In other words, any budget discipline from the previous administration has now gone out the window, and Americans will suffer higher inflation because of it.
Sen. Mike Lee (R-Utah), ranking member of Congress’ Joint Economic Committee, explains why:
If legislators continue pushing government spending to new heights, they should be aware of the costs. These costs go beyond the simple sticker price of new spending. For instance, government investment has well-demonstrated opportunity costs and in many cases replaces relatively more productive private investment to the point that the private sector shrinks.
Furthermore, large government spending packages are usually accompanied by tax increases which reduce economic growth by depressing employment and investment. One study finds that, if the $3.5 trillion budget resolution boosts productivity in line with historical norms, the effect of the corresponding proposed tax increases eliminate any benefits of the government investment, decreasing economic growth only five years after its enactment.
Lawmakers should also be aware of the additional risks that swelling government spending poses to American families. The most pressing risk today is rising inflation. While monetary tightening serves as the traditional tool to prevent inflation, future monetary tightening may not be effective if extraordinary spending patterns continue.
Of course, even this $1.5 trillion bill wasn’t enough for the White House, which was upset because the spending bill failed to include $15 billion in new COVID spending, even as billions in allocated COVID relief is sitting unspent. You can be sure that the White House will push for this COVID spending in future bills, even as the country continues to reopen and, thankfully, the worst of COVID appears to be far behind us.