Once again, Republicans (and many Democrats) are running around like Chicken Little warning about the economic sky collapsing now that Congress has passed the recent covid relief bill.
It is a tired, predictable, knee-jerk, conservative reaction to any government spending that aims to help the average American.
Remember that none of these folks expressed similar concerns about the folly of “deficit spending” when president Trump’s retrograde tax plan added between $1 to $2 trillion to the national debt.
None of these people complained about the CARES Act last March when a vast portion of that relief money, intended for the unemployed and small business owners, ended up lining the pockets of the richest Americans.
The litany of deficit-hawk hypocrisy could go on and on…
[For an excellent analysis of this misguided concern written by a well-regarded economist, I recommend reading the recent book by professor Stephanie Kelton called The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy (PublicAffairs, 2021)].
At the DCReport, Bruce Bartlett has a good article exposing not only the
hypocrisy of this deficit fear mongering but also how very wrong the warnings have always been.
The article is titled “Inflation Hawks: Never Right, But Never in Doubt.” You can read an excerpt below or click on the title to find the entire piece:
Predictably, conservatives are once again warning about inflation. This happens every time a Democrat takes office—even if he merely continues the identical policies of his Republican predecessor.
Unfortunately, these concerns, which always receive wide media attention, are costly both politically and economically.
Bill Clinton was forced to adopt a deficit reduction plan in 1993 that led to the defeat of many Democrats in 1994 and the installation of Newt Gingrich as speaker of the House.
Barack Obama was forced to scale back his stimulus plan in 2009 and was browbeaten into deficit reduction in 2011. That kept the economy running in slow gear throughout Obama’s presidency paving the way for Donald Trump.
Now that Joe Biden has gotten his stimulus, the inflation-mongers are just getting started again. . .
. . . It’s been an article of faith among conservatives since the beginning of the financial crisis in 2008 that inflation is right around the corner.
This conviction follows from a core conservative belief that inflation invariably results from increases in the money supply. As Milton Friedman, the Nobel Prize-winning economist put it a half-century ago in an oft-quoted line: “Inflation is always and everywhere a monetary phenomenon.”
Thus, when the Federal Reserve vastly expanded the money supply in late 2008, conservatives anticipated a sharp rise in inflation. It didn’t happen. . .
. . . Yet, year after year, there was no inflation. In 2009 we saw prices fall slightly, the opposite of these predictions and warnings. The Federal Reserve couldn’t even hit its own target of 2% inflation. The average inflation rate for 2009 through 2020 was less than 1.3% annually.
That did nothing to dislodge right-wing orthodoxy, however. Conservatives continue to say that inflation was right around the corner. No amount of empirical data could shake their deeply held belief. . .
