Economic policy

Without fiscal responsibility, the United States is heading for a worse economic crisis: economic policy expert

Democrats and Republicans need to limit spending: Heritage Foundation’s Joel Griffith

With inflation soaring and the Democratic-led Congress mustering enough support in the Senate to spend billions in additional spending, Joel Griffith, a fellow at the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundationtold NTD TV that if the United States does not restrain its irresponsible fiscal measures, the country is heading for a worse economic crisis.

Griffith said raising taxes on the wealthy will not pull the federal government out of the financial hole it has dug itself over the past few decades, especially the spending that has taken place over the past two years.

“The only way to pay for all of this would be to print money, borrow money or raise taxes on the middle class. There is no easy way out” , Griffith said during the interview, “And politicians don’t want to fix the problem. So there’s going to be a crisis if we don’t fix our habits. It’s just a matter of time.”

By technical definition, the United States has already entered a recession, but the Biden administration continues to deny the facts.

“Everyone loves sweets, and now we are suffering the consequences. And it’s so important that people realize that the economic misery we’re feeling right now is directly related to the mistakes that have been made over the past two years, with the closings, the spending and the printing,” Griffith said. .

US government debt now stands at more than $30 trillion, or $100,000 per person, and with current interest rates, an additional $1,000 debt per person is added every year, a said Griffith.

Democrats’ ‘Cutting Inflation’ Bill

Senators Joe Manchin (DW.Va.) and Chuck Schumer (DN.Y.) announced on July 27 that they had enough votes to pass a measure called the “Inflation Reduction Act of 2022” (pdf), which aims to spend some $433 billion, or about $369 billion on energy and climate programs over the next 10 years, and $64 billion to extend federal subsidies for an additional three years for certain people taking out insurance. private health insurance.

Meanwhile, many on both sides of the aisle viewed Manchin as a fiscal moderate who would not opt ​​for further government spending, especially in a recession.

Sen. Joe Manchin (DW.Va.) speaks during a hearing at the Dirksen Senator Office Building in Washington, DC on July 19, 2022. (Anna Moneymaker/Getty Images)

Griffith, however, said he was not surprised that Manchin supported liberal legislation that would expand the federal government and hurt his own state of West Virginia, as he observed that the senator supported liberal policies.

“We know what [Manchin has] supported in the past. And it has been for expanding the size and scope of government. So I’m disappointed that he accepted a package that will significantly increase corporate taxes, [that] it’s actually going to include more taxes on fossil fuels. And it’s going to socialize our healthcare industry even more,” Griffith said.

The American consumer is already paying, via taxes and inflation, for the trillions of dollars the government has spent and printed in the name of pandemic relief, Griffith said. This new package will only make the economic situation worse.

“We are bearing the brunt of overspending…and seeing the Senate move forward now on a package that will raise taxes and raise [the] fuel production costs, it’s unfortunate,” Griffith said.

Not Putin’s fault

Griffith said of a family with a middle-class income, “We’ve seen your real take-home pay drop by over $6,000 a year because of all this inflation.”

And even if inflation returned to normal tomorrow, at around 2% a year, that would not undo the economic damage, but only reduce it for the future, he said.

“Put the blame on [Putin] and his actions in the war in Ukraine for higher prices – that is simply, largely untrue,” Griffith said.

Gas prices were already on the rise long before Russian President Putin invaded Ukraine, Griffith said, adding: “The same goes for our food costs, raw material costs, fertilizer costs – all of these were growing rapidly long before Putin decided to invade Ukraine.”

Jerome Powell
Federal Reserve Board Chairman Jerome Powell speaks during a press conference in Washington, DC on July 27, 2022. (Mandel Ngan/AFP via Getty Images)

“Let us remember that it was our own politicians who shut down our economy. It was our own Congress in the United States that voted to spend $6 trillion that we don’t have. And it was our central bank, our Federal Reserve, that printed $6 trillion out of thin air. That is what is largely responsible for this inflation, not Vladimir Putin,” Griffith said.

Another contributing factor to the poverty of the economy is an aspect of the employment rate called the participation rate (i.e. the percentage of people of working age who are working or looking for work), which describes specifically who works, Griffith said.

“The [participation rate] is close to generational lows. In fact, if we were to have a participation rate that would have remained stable over the past three years…it shows that over a million people have in fact completely dropped out of our workforce.

“That’s part of the reason why if you go to a restaurant, a bar, a retail store, you notice the service isn’t that great right now,” Griffith added. “And that’s because relative to our overall population, we have fewer people working today than just two and a half years ago.”

There has been some increase in voter turnout in the United States, Griffith said, because “when people tap into those savings [accumulated during the time when the government was doling out pandemic relief funds]they find it necessary to return to the labor market.

Middle class most affected

Griffith said the money the government spends comes from the taxpayer and it will affect the middle class the most as they will not be able to save and ‘create wealth’ due to the current, runaway inflation. .

“And that’s what I’m very afraid of – that as we continue to spend well beyond our means, it won’t just have an impact this year, and next year, [but] 10 years and 15 years from now, [and] we’re going to see even fewer opportunities [like the creation of new jobs] for typical American families,” Griffith said.

Mimi Nguyen Ly contributed to this report.

Masooma Haq

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Masooma Haq began reporting for The Epoch Times from Pakistan in 2008. She currently covers a variety of topics, including US government, culture and entertainment.

Paul Greney

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