Subject: Republicans busy as beavers destroying the good economy handed tothem by Democrats
It's an undeniable Republican pattern. The economy was rescued from the near-total Republican
collapse by the Obama administration and now the Republicans should be reducing debt, not piling it
on. The Obama administration imposed spending caps during his first term. The Republicans want to
scrap those. What for? For the tax giveaway to America's wealthiest. Economic meltdown by choice.
Why should the ultra-wealthy care? The effect on them is negligible and they couldn't give a shit
less about Americans.
'WASHINGTON — Republicans are pouring government stimulus into a steadily strengthening economy,
adding economic fuel at a moment when unemployment is at a 16-year low and wages are beginning to
rise, a combination that is stoking fears of higher inflation and ballooning budget deficits.
The $1.5 trillion tax cut that President Trump signed into law late last year, combined with a
looming agreement to increase federal spending by hundreds of billions of dollars, would deliver a
larger short-term fiscal boost than President Barack Obama and Democrats packed into their $835
billion stimulus package in the Great Recession.
The administration is also expected to soon roll out its $1.5 trillion infrastructure package, which
would include $200 billion in new federal spending, offset by unspecified cuts elsewhere.
The question is how much added fuel is good for the economy.
Fears that the extra economic boost could spark faster inflation and prompt the Federal Reserve to
accelerate the pace of interest rate increases appear to be at least partially driving the stock
sell-off that has rattled markets over the last several days. Higher interest rates would raise
federal borrowing costs as the United States continues to borrow heavily — the national debt has
topped $20 trillion and annual deficits are creeping up toward $1 trillion. Treasury officials said
last week that the United States will need to borrow $441 billion in privately held debt this
quarter, the largest sum since 2010, when the economy was emerging from the worst downturn since the
The added stimulus is drawing some quiet cheers from liberal economists, who say a fiscal shot at a
time of low unemployment could boost typical workers’ wages in ways unseen for two decades. But it
is raising alarms among fiscal hawks.
“This is exactly the wrong fiscal policy at the wrong time,” said Maya MacGuineas, the president
of the Committee for a Responsible Federal Budget. “We should be bringing down the debt and
ensuring we have room for stimulus during downturns. Instead we are overheating the economy and
selling out the future. It’s shortsighted and foolhardy.”
The threat of rate increases is a major reason some economists, including those at the congressional
Joint Committee on Taxation, project only a modest boost in economic growth from the tax law over
the next decade.
The tax cuts and spending increases could add up to more than $800 billion in additional federal
deficits over the course of 2018 and 2019. Analysts project they will hasten the return of
trillion-dollar annual budget deficits, and set the United States apart from other industrialized
economies, which have reined in their fiscal expansions as growth picks up.
“In a world of deficit discipline,” Ethan S. Harris, the head of global economics at Bank of
America Merrill Lynch wrote in a research note on Tuesday, “the U.S. stands out in terms of its
The Republican tax law’s $1.5 trillion deficit-financed price tag over the next decade is
front-loaded. It will reduce federal revenue by $416 billion over this year and next, before
accounting for additional economic growth, the Joint Committee on Taxation estimates. Many
corporations are showing evidence of that in their quarterly earnings releases, as companies like
JPMorgan Chase & Company and Verizon project billions of dollars in tax savings in 2018.
Administration officials say the law will spark enough growth to pay for itself, a claim that no
rigorous outside analysis supports. They also say the cuts will not stoke inflation, because they
will increase the supply of capital in the economy and boost productivity.
Economic modeling by the administration suggests growth from such tax cuts “does not put upward
pressure on prices,” Kevin Hassett, the chairman of Mr. Trump’s Council of Economic Advisers,
told CNBC on Tuesday morning. Still, he said, “it’s clear that the data are so strong that the
markets are beginning to worry about Fed policy” and rising interest rates.
Republicans have not offered similar reassurances about deficit-financed spending increases. Those
appear increasingly likely as congressional leaders work toward a deal to shatter caps on military
and domestic spending, imposed in the back half of Mr. Obama’s first term to instill fiscal
discipline, to help pave the way for a long-term spending package.
The likely spending increases include money for the military, domestic programs and disaster aid,
along with a plan to shore up faltering multiemployer pension plans. The Committee for a Responsible
Federal Budget estimates that those increases will cost more than $500 billion, and that
congressional negotiators are mulling roughly $100 billion in revenue increases to offset them,
yielding a deficit increase of $400 billion.
Those figures do not include any potential deficit spending from an infrastructure bill, which the
White House hopes to push Congress to approve this year.
Mr. Obama’s American Recovery and Reinvestment Act included about $300 billion in additional
spending for 2009 and 2010, according to the Congressional Budget Office, and slightly less than
$300 billion in tax cuts and refundable tax credits. Adjusting for inflation, that would be a
combined stimulus of about $675 billion in today’s dollars. Each of those amounts is lower than
the comparable projections for the new tax law and the contemplated new spending increases.
The 2009 stimulus package was passed when the unemployment rate was almost twice as high as it is
today, and the national debt was half what it is now.. At that time, Republicans called it a
dangerous borrowing spree. “This bill sends us on a worldwide borrowing binge,” Representative
Paul D. Ryan of Wisconsin, now the House speaker, said in a floor debate in 2009. “We’re going
to go out and borrow four times as much money this year than we ever have in the history of this
country in a single year. This is not just a road to stagnation, it is a road to stagflation.”
Fiscal hawks say that assessment is more applicable to the economy today.
“We have a growing economy, the labor market’s tight, we don’t have a lot of idle
resources,” said Matthew Mitchell, the director of the Project for the Study of American
Capitalism at the Mercatus Center at George Mason University. “Basically, the very best argument
for Keynesian economics doesn’t apply now. So it really is the time to be austere.”