Big spender Biden to blame for inflation and upcoming debt ceiling brawl

[ad_1]

In just two years of Joe Biden’s presidency, our national debt has grown by $3.8 trillion. Beginning in 1929, it took the US Treasury 61 years to accumulate so much borrowing.

Yet Biden has the temerity to call Republicans “fiscally crazy.”

The fight to raise the debt ceiling has only just begun, and already the embattled president is insulting those who oppose his reckless spending, which as I write this is crashing our economy. It will get worse – the slowdown and the name-calling.

President Biden threw trillions in unnecessary COVID-19 relief on a rapidly recovering economy, driving inflation to 40-year highs as too many dollars chased too few goods.

The Committee for a Responsible Federal Budget estimates that Biden added $4.8 trillion to our deficits through executive actions and legislation. This is in addition to our usual expenses.

Meanwhile, no one — including many Republicans — attended to the store.

We are now seeing the onset of the recession that the Federal Reserve deems necessary to bring down inflation. Retail sales, housing and manufacturing fell. Federal Reserve Chairman Jerome Powell said unemployment needed to rise and growth needed to fall in order to meet the central bank’s official 2% inflation target.

We are, indeed, about to pay for Joe Biden’s largesse – with people losing their jobs and businesses going bankrupt. When our country’s largest banks have set aside billions to cover expected loan losses, as they just did at the end of the year, it is because they expect businesses default on their loans and people get into financial trouble. It’s not an act of God; it is because our leaders have spent too much money.

Republicans in the House, now in the majority, want to slow spending. To elect Rep. Kevin McCarthy (R-Calif.) Speaker, a group of conservatives demanded that he present a plan to balance the budget over the next 10 years and also promise to match any increase in the debt ceiling to spending cuts.

The Biden White House is appalled. They want the debt ceiling to be raised without concession and, as spokesperson Karine Jean-Pierre announced, they will not negotiate on this subject. Treasury Secretary Janet Yellen announced last week that we would soon hit the debt ceiling of $31.4 trillion ($247,000 per taxpayer), forcing her department to take “extraordinary measures” to keep federal lights on.

This moment has arrived. His maneuvers will keep Treasury borrowing below the ceiling until June, when the government will no longer be able to borrow funds.

Get ready for a massive PR battle. Biden and his fellow Democrats are already portraying House GOP members as troublemakers and agents of chaos — ready to sabotage our economy, set markets on fire and cause a financial crisis. The liberal media will broadcast that Social Security payments will stop and veterans will go hungry.

But the Democrats don’t occupy the high ground here. Even as inflation soared on their watch, they continued to spend. Total US debt has soared to 100% of GDP from 39% in 2008. Higher interest rates and growing deficits mean payments on our debt are expected to exceed defense and Medicaid spending in a few years only, according to the Congressional Budget Office. .

Meanwhile, in the just-ended first fiscal quarter of 2023, interest payments on our debt soared 37% and the deficit widened 12% – sobering news.

Republicans need to sell the virtues of discretionary spending cuts to the public. (Reforming our benefit programs, which make up 64% of the federal budget, should also be on the table, but don’t hold your breath.) They need to convince people that:

Continued excessive spending will push inflation higher for longer; The continued and necessary monetary tightening will drive up the cost of buying a car or a house; Allocating an ever larger slice of our economic pie to government means less productivity and slower wage growth in years to come.

The public understands that you cannot live beyond your means indefinitely.

The Peter G. Peterson Foundation is monitoring sentiment on our financial situation. A survey conducted last month shows that “76% of voters want the national debt to be one of the three priorities of the President and Congress, including 69% of Democrats, 72% of Independents and 88% of Republicans.” Some 89% of respondents want lawmakers on both sides to work together to fix our out-of-control budget.

Will the White House make a deal with the GOP to bend the spending arc? They say no. They argue that the vote on the debt ceiling is not the place to take a stand, that raising the ceiling is necessary to pay for bills already passed by Congress.

That would include the $1.7 trillion 4,000-page omnibus bill stalled in December. The Democrats’ spending package included $800 billion for domestic spending, a 9.3% jump from the previous year. With soaring inflation and mounting debt, did Democrats really think we needed a 16% increase in “legislature” spending or an 8% increase in HUD funding for transportation? Or 7,200 credits totaling $15 billion?

Does it matter that Trump thinks he won the 2020 election? The world loses when Big Oil holds all the cards

The enormity and recklessness of this spending bill calls for a fight. If he exceeds the debt ceiling, so be it. Better a messy fight now than to continue on a self-destructive path.

Kevin McCarthy must craft a compelling argument and keep his caucus united in the fight for spending cuts. It will be hard and ugly. But someone who survived 15 votes to become President has courage. Hope he uses it wisely.

Liz Peek is a former associate of the large Wall Street firm Wertheim & Company. Follow her on Twitter @lizpeek.

[ad_2]