If the last two years have taught us anything, it is that federal economic policy can either empower America’s workforce or its bureaucracy. As we sit in a period of historic inflation, chaotic housing and energy markets, and a 6.2% increase in the personal consumption expenditures price index this year, people are experiencing economic whiplash because the Biden administration has chosen to empower the latter.
If you compare the economic outcomes resulting from legislation passed in 2017 with those passed in 2021 and 2022, you’ll find a clear representation of the differences in conservative and liberal economic policies. In 2017, a Republican majority enacted pro-growth reforms that lowered taxes, raised wages, and grew the economy. In contrast, Democrats have used their majority over the past couple of years to pass record spending measures that led to rampant inflation, increased taxes, reduced wages, and negative GDP growth.
In 2017, Republicans held the White House and majorities in Congress. GOP leaders prioritized cutting taxes for individuals and businesses to keep more money in Americans’ pockets, grow the economy, enhance our competitiveness, and incentivize industries to invest in America. The result of this effort was the Tax Cuts and Jobs Act, which kicked our economy into high gear and made the tax code work better for the people.
Following TCJA’s passage, we became more economically competitive on the global stage, and the real median household income grew by $5,000. According to the Bureau of Labor Statistics, real average hourly earnings jumped by 1.1% from December 2017 to December 2018 and again the following year by 0.6%. Most importantly, hardworking Americans in every single tax bracket saw a reduction in their taxes; and with inflation in check, families grew their discretionary income.
Fast forward to 2021, with a Democratic majority in Congress and President Joe Biden in the White House. The Democrats’ first major push was the American Rescue Plan Act, marketed to help people in the wake of the pandemic. However, less than 9% of this nearly $1.94 trillion package went toward supporting public health efforts.
The majority of ARPA’s funding was anti-growth and made Americans more dependent on federal programs. It expanded entitlement programs without implementing necessary reforms and bailed out badly run states by giving $350 billion to state and local governments. ARPA funds are still being used for everything from a 60-acre RV campground in Ohio to new trash cans in Portland.
To add insult to injury, Democrats prohibited states from using this cash to cut taxes, which could have helped spur growth. ARPA extended and increased unemployment benefits to force small businesses to compete with the government for workers and allowed schools to remain closed.
Whereas TCJA saved each middle-class family an average of about $2,420, ARPA added an estimated $15,000 in spending per household.
ARPA also increased federal spending by 20% of GDP over two years. Even former President Bill Clinton’s treasury secretary and former President Barack Obama’s director of the National Economic Council, Larry Summers, warned before it passed that ARPA could “set off inflationary pressures of a kind we have not seen in a generation.” He was right. The bill ultimately caused a 9.1% increase in the Consumer Price Index from June 2021 to June 2022 — the highest inflation our nation has experienced in over four decades.
Real wages have decreased by 4.3% since Biden was sworn into office, and real average weekly earnings decreased by 2.8% from August 2021 to August 2022. The COVID-19 pandemic certainly brought on major economic challenges, but the Democratic majority in Washington chose to use the pandemic to advance longtime political priorities rather than target relief to those especially hurting.
The spending did not stop there. Since passing ARPA, Democratic leadership has leveraged more popular legislation, such as the Bipartisan Infrastructure Law and the CHIPS+ Act, to ram through an additional $730 billion in nondefense discretionary spending and $700+ billion on the Inflation “Reduction” Act. And, most recently, President Biden announced that he intends to cancel a massive swath of student loans, costing each taxpayer $2,503.22 per year, an estimated $400 billion total.
As the midterm elections near, the choice is clear. And while I hope voters entrust Republicans with the majority again, I believe it is incumbent upon all elected leaders to put aside their political agendas and advance pro-growth policies that will support workers and address our major deficit problems.
To do our part, my team and I recently launched my Debt and Deficit Task Force in Ogden, Utah. Comprising local leaders, our task force aims to bring Utah’s fiscally responsible practices to Washington by putting forth solutions to grow the economy, save and strengthen vital programs, focus America’s spending, and fix Congress’s budget process. I also was recently appointed to the House Budget Committee, my third committee assignment in Congress, to further this work and dig in on solutions.
I am confident we can pick up where we left off in 2017 and return to an economic environment that empowers the workforce, hardworking families, and the next generation. We’ve done it before, and we can do it again.
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Mr. Blake Moore is a U.S. representative for Utah and a member of the House Budget Committee.
