The rebounding economy may become the biggest obstacle to President Joe Biden’s push to pass $4 trillion in new spending initiatives through Congress.
The Commerce Department announced this week the nation’s economy grew at an annual rate of 6.4% during the first three months of the year, and economists believe economic output is poised to return to the levels seen before the coronavirus pandemic and the subsequent shutdowns threw the nation into a recession.
The good news came a day after Biden’s joint address to Congress that outlined plans to spend $4 trillion on two wide-ranging spending plans that would address infrastructure, climate change, healthcare, education, and child care, among many other provisions.
Biden touted the proposals in the speech after first celebrating his success in signing into law a $2 trillion coronavirus aid package. The additional spending, Biden said, will further help the country climb out of the economic slowdown caused by the pandemic.
But the strong economic recovery is poised to leave some lawmakers hesitant to spend double the price tag of the aid package and enable Biden to spend a record $6 trillion in his first year in office, much of it added to the nation’s staggering debt.
“The bottom line is to make sure we can pay for it,” Sen. Joe Manchin, a key centrist Democrat, said following the speech. “The economy’s taking off. The economy is going to do well for the next year or two. We want to make sure in the long run, we don’t do any damage.”
Lawmakers' concerns about overspending have been reinforced by economists who fear it will fuel inflation.
Olivier Blanchard, who is the former chief economist for the International Monetary Fund, tweeted that “there is a limit to how expansionary fiscal policy should be, and that the Biden plan could be too much of a good thing.”
Blanchard’s tweet was in response to former Clinton-era Treasury Secretary Larry Summers, who warned that too much spending could spur high inflation.
Manchin, for now, won’t indicate whether he would support Biden’s spending plan, telling reporters he is awaiting details from the White House.
But Democrats cannot pass the legislation without Manchin, even if they use a special budgetary tactic to avoid a GOP filibuster.
Democrats control only 50 votes and can pass certain legislation with a simple majority and the tiebreaking vote of Vice President Kamala Harris.
“Give it to the committees. Get it to the floor. Let’s see what happens, and we’ll make adjustments,” Manchin said. “That’s the way it’s supposed to work anyway.”
In his joint address Wednesday night before a scaled-back audience in the Capitol, Biden acknowledged that the nation is headed toward “the fastest pace of economic growth in this country in nearly four decades.”
But it’s not enough, Biden said.
The president said that “we have to build back better” with universal preschool, free community college, massive spending on infrastructure and green energy initiatives, and much, much more.
Republicans are so far opposed to the spending bills, meaning that potentially critical bipartisan support may be out of reach.
Senate Minority Leader Mitch McConnell, a Kentucky Republican, called the package “a multitrillion-dollar shopping list that was neither designed nor intended to earn bipartisan buy-in.”
Biden, in recent weeks, held meetings with Republican and Democratic lawmakers to discuss infrastructure.
Senate GOP lawmakers introduced a narrow infrastructure measure worth about a half-billion dollars that leaves out much of the spending in the Biden package that has nothing to do with crumbling roads and bridges.
Biden, during the joint address, praised Republicans “who put forward their own proposal” and said that the two sides would need to work out a deal quickly.
“I welcome those ideas,” the president said. “But the rest of the world is not waiting for us. I just want to be clear. From my perspective, doing nothing is not an option.”
Republicans are far less eager to pass more massive spending legislation quickly, however, and they see the booming economy as a prime reason to hit the brakes.
Sen. Shelley Moore Capito, a top Republican negotiator from West Virginia who spoke to Biden by phone Thursday about infrastructure, told reporters earlier in the day that the president’s plan to spend $4 trillion “is way over the top of what I think is necessary.”
Capito said the government must consider new spending after factoring in the new 6% growth that shows the nation is rebounding.
“We need to recalibrate where we are,” she said. “The most important, fundamental thing is getting people back to work and getting kids in school. But work, and the value of work, can’t be trumped by the government just giving you stuff.”
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