Biden is a total failure. "Inflation would eventually undo the good things the government is trying to do.” Will President Biden’s $4.2 trillion, 10-year spending package cause inflation? The number to look at isn’t the consumer price index, which is up 5.4 percent over the year, twice as high as the average 2.1 percent over two decades. There’s an even more startling figure: the record 23.4 percent growth in house prices since June 2020.
Biden’s $600 billion infrastructure plan, plus the nearly $3.6 trillion 10-year “reconciliation” plan Sen. Bernie Sanders has put forth, would increase the country’s discretionary spending over the next decade by a full quarter. It would increase total spending by 7 percent. This, when the pre-COVID economy was at full employment. Congress, under Biden and former President Donald Trump, has already pumped $4.5 trillion into the economy to deal with the pandemic’s temporary dislocations. So the traditional view would be that even more money would send prices spiraling even more than they already have: All that new money has nowhere to go.
Senate Democrats, led by Chuck Schumer, insist that won’t happen. Last week, they touted a report by Moody’s economist Mark Zandi. “Worries that the plan will ignite undesirably high inflation and an overheating economy are overdone,” Zandi says. “The increased infrastructure spending supports stronger economic growth,” not inflation. As for new social spending, like child-tax credits, “much of the additional fiscal support being considered is designed to lift the economy’s longer-term growth,” by helping people to join the workforce.
Zandi is probably right about the infrastructure portion. Six-hundred billion over 10 years, as Biden proposes, is $60 billion a year, exactly what then-President Barack Obama signed in 2015, with a $305 billion, five-year infrastructure bill. For all the talk about transformation, people who care about mass transit should be worried that the bill spreads an average of $4.9 billion annually across 50 states, leaving not a lot for New York’s major transit projects, such as Phase two of the Second Avenue Subway.