The Senate will soon begin debate on President Joe Biden’s tax and spending increase bill. Democrats are hoping to rush the 2,000-page bill through the chamber in the closing days of the year.
Aside from not having the time to read the bill, there are two major reasons why the Senate should put the bill on hold until next year.
First off, inflation is increasing at the fastest rate in 31 years. Most mainstream economists believe the House bill would push inflation even higher. Federal Reserve Board Chairman Jerome Powell testified recently that the risk of higher inflation has increased, and he is “not at all sure” that inflation will fade next year. Recent polling suggests that 9 in 10 people are concerned about inflation, with 60% very concerned. What’s more, 62% believe Biden administration policies are responsible for the rising inflation.
Financial markets are signaling the Fed will be forced to raise interest rates next year to combat inflation. Higher interest rates would slow the economy and increase government borrowing costs, which are already projected to average $650 billion a year for the next 10 years.
Then there are the concerns about risks that the omicron COVID variant might pose to the economic recovery. Powell has warned the variant could have downside risks to the economy and prolong supply chain disruptions and inflation. Treasury Secretary Janet Yellen has cautioned the variant “could cause significant problems” for the recovery.
Given these possibilities, it makes no sense to rush through a massive tax and spending increase bill. The Senate would be taking an enormous risk jamming the bill through without knowing where inflation, interest rates, and recovery are heading over the next few months.
The world’s greatest deliberative body should put this bill on hold.
Bruce Thompson was a U.S. Senate aide, assistant secretary of Treasury for legislative affairs, and the director of government relations for Merrill Lynch for 22 years.
