House Speaker Nancy Pelosi defied basic economics on Friday, claiming that increased government spending is "reducing national debt&q...
House Speaker Nancy Pelosi defied basic economics on Friday, claiming that increased government spending is "reducing national debt" — not contributing to the economic crisis.
What is the background?
The Biden administration began last week blaming Russian President Vladimir Putin for growing economic problems, despite inflation and gas prices being issues before Russia invaded Ukraine.
The shifting blame game comes as President Joe Biden begins a renewed push to revive his social spending agenda, which was killed last year when Sen. Joe Manchin (D-W.Va.) refused to support it. Deflecting blame for economic woes is a strategic political move because a majority of voters believe the economy is heading in the wrong direction and believe Republicans can fix it.
What did Pelosi say?
Speaking at the 2022 House Democratic Issues Conference on Friday, Pelosi regurgitated the Biden administration's talking points blaming Putin for domestic economic problems that existed before last month.
Then Pelosi defied basic economic sense by claiming that spending more money, referring to the Build Back Better Act, lowers debt.
"Seventeen Nobel laureates in economics said that that legislation does not increase inflation. It is non-inflationary because of the way it is written," Pelosi said, claiming the multitrillion-dollar BBB Act would save money.
"So when we're having this discussion, it's important to dispel some of those who say, well, ‘Is the government spending' — no, it isn't," Pelosi continued. "The government spending is doing the exact reverse, reducing the national debt. It is not inflationary."
Pelosi then celebrated Biden for "breaking records" of job growth, an assertion that has been thoroughly debunked. While the government added more jobs in 2021 than any previous years, most of those jobs were simply people returning to the workforce after pandemic lockdowns ended. The economy remains at a net loss on jobs when compared to pre-pandemic levels in February 2020.
2022 Issues Conference: House Democratic Leadership Closing Press Conference 3.11.2022youtu.be
Is Pelosi correct?
The Congressional Budget Office determined, in fact, that Biden's plan would add $367 billion to the national deficit over the next decade. However, the CBO score said that increased tax enforcement could bring in another $207 billion in tax revenue, leading to approximately $160 billion added to the deficit.
The Committee for a Responsible Federal Budget agreed that after offsets, the BBB Act would add roughly $200 to the national deficit.
Meanwhile, the Federal Reserve bank in San Francisco determined the American Rescue Plan, Biden's COVID-19 stimulus, is contributing to inflation, an analysis made before inflation reached unfortunate historic highs this year.
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