The Economic Hostage Situation in Congress
Our legislative process calls for relatively slow development, so as not to risk fracturing the core of our democratic republic by attempts at rapid, unsustainable reform. Unfortunately, this healthy slowness seems to have disappeared as Democrats have taken control of the legislative and executive branches under the auspices of a worldwide pandemic.
COVID-19 relief policy is the most significant legislative battlefield early in this new session of Congress. It may not only determine the future political balance of power but also gravely threaten the economic underpinnings of the United States. The power of COVID-19 relief policy to shape the coming years is not yet fully recognized. After unconscionable numbers of Americans have been forced indoors and away from their jobs, stymieing economic growth, the Democratic leadership has increased its national influence by foisting upon the nation the $1.9 trillion American Rescue Plan Act of 2021.
The details of this act are unacceptable, at odds with our country’s fundamental principles. To begin with, it includes blatant reverse discrimination, promising over $1 billion to subsidize farmers based on their ethnicity. Meanwhile, social justice initiatives, city bailouts, and flawed public works projects are set for billions of federal tax dollars. The nonpartisan Congressional Budget Office found that one-third of its funds are not to be spent until fiscal year 2022, and another $140 billion is not to be used until fiscal 2024, more than two years from now. So much for “emergency” relief.
And even in terms of spending levels alone, this package is an absurdity. Nonetheless, Americans who recognize the waste will have to overlook all of this in order to pocket much-needed relief checks.
While I was working in Washington two years ago, I briefly met Senator Rick Scott. He had just delivered remarks at the Heritage Foundation, at one point discussing how he funded public initiatives while governor of Florida. If a state project produced returns on investment, he continued its funding; otherwise, he attempted to adjust the program or cut it altogether. This core principle of financial management is missing not only in the politically unilateral American Rescue Plan Act, but also in many other appropriations bills. Instead, a mentality of throwing money at problems when legislating, and looking good because of it, dominates Washington. While this strategy may win re-election for some, it leaves the American people in a far worse position by rewarding flawed programs rather than making them or policy more productive.
Now for a crash course on a word economists rarely wish to hear: inflation. With most Americans gaining at least $1,400 in their bank accounts, many are set to spend immediately. This will prompt price increases for various commodities, while devaluing the power of the dollar, on which the entire U.S. economy is based. Make no mistake: this freshly minted money will produce dire consequences for the country because what comes up must come down. When products eventually become out of reach for many Americans–thereby prompting a decrease in demand–their prices will fall. The potential end result: recession. Therefore, it is not an overreaction to say that Congress may have purchased our next 2008. If so, good luck landing that entry-level position at Morgan Stanley right out of college.
We likely have not seen the last COVID-19 relief bill enter the halls of Congress. Lockdowns still dominate the country one year into the pandemic, and vaccines have not restored our maskless way of life. But a new method of legislating has emerged: disguising bills as “COVID-19 relief” while taking billions out the back door. Our country is in an economic hostage situation, where $1,400 checks are provided in return for one political party’s further authority over our industry and communities.