Sen. Chuck Grassley (R-Iowa) in a statement issued on Friday warned President Joe Biden not to exploit the pandemic to push a laundry list of liberal causes in his newly proposed relief package, characterizing the president’s bid as “a big government take-over of the U.S. economy.”
Biden became president this week with Congress already having approved $4 trillion in pandemic-related aid, including $900 billion just last month. His new proposal for another $1.9 trillion economic package has resulted in mounting skepticism among Republicans, particularly conservatives who are panning the new proposal as an expensive, unworkable liberal wish-list.
At Treasury Secretary-designate Janet Yellen’s confirmation hearing Tuesday, she defended Biden’s CCP virus spending plan, urging lawmakers to “act big” on relief spending, arguing that the economic benefits outweigh the risks of a higher debt burden.
“To avoid doing what we need to do now to address the pandemic and the economic damage that it is causing would likely leave us in a worse place … than taking the steps that are necessary and doing that through deficit finance,” Yellen said.
Grassley responded to Yellen’s remarks in his statement, saying that by “championing the so-called rescue proposal, she revealed what the Biden administration has in mind for the next four years: a big government take-over of the U.S. economy, from dismantling the Trump tax cuts to imposing mandates on small businesses and restructuring the nation’s health care and energy infrastructure.”
The Iowa Republican acknowledged the need for more relief, but called the $1.9 trillion proposal “reckless” and some of its line items “a political pipe dream for progressives.”
He took aim at the $15 minimum wage mandate, saying it would put a freeze on small business hiring and expansion plans and, at worst, would entirely “wipe out small businesses hanging by a thread.”
“A shuttered Main Street business diminishes economic vitality and means no jobs, no paychecks, and no tax revenue,” he said.
Grassley also pushed back on Biden’s proposal to raise taxes, arguing that it “won’t grease the wheels of an economy starting to gain traction. To the contrary, they’d slam the brakes on the rebound and unbridled spending would throw taxpayers under the bus.”
“‘Go big or go home’ could turn out to be a self-fulfilling prophesy,” Grassley warned. “Ramming through a liberal laundry list without building consensus and winning bipartisanship is more than likely a one-way ticket for a one-term presidency.”
Yellen’s proposal to ramp up deficit spending and worry about the debt burden later also faced skepticism from Sen. John Thune (R-S.D.), who at her hearing said: “When do we hit the point where the thing starts to collapse? That’s what really concerns me and nobody is talking about it really in either party any more.”
Some economists have argued that when interest rates are lower than an economy’s rate of growth, countries shouldn’t hold back on debt-fueled spending, particularly in times of crisis, when demand for goods and services is weak.
Democrats like Jason Furman, who chaired former President Barack Obama’s Council of Economic Advisers, have broadened the debate even further to frame the point Yellen made on Tuesday, arguing that it is borrowing costs, not debt levels, that matter.
“There’s no single metric that summarizes our overall fiscal situation, but one metric I do think is useful to keep in mind is the interest burden,” Yellen said. “What we’re seeing is that even though the amount of debt relative to the economy is going up, the interest burden hasn’t.”
Other economists fear that the U.S. will become stuck in a “debt trap,” with high debt tamping down growth, leading to even more debt that could divert investment from vital areas, such as infrastructure.
“We should be very worried,” said Atif Mian, an economics professor at Princeton University, in remarks to The Washington Post in August. He argued that the U.S. is ensnared in a “debt trap,” and that “we are talking about a level of debt that would certainly be unprecedented in modern history or in history, period. We are definitely at a tipping point.”
Brian Deese, director of the White House National Economic Council, is scheduled to meet privately on Sunday with a bipartisan group of 16 senators, who were among those instrumental in crafting and delivering the most recent round of CCP virus relief, in a bid to hammer out a compromise that will win Republican support.
Pushing for both bipartisanship and the full contents of their stimulus plan, Biden officials have signaled that the price tag and contents could change but have declined to provide any specifics.
“The final package may not look exactly like the package that he proposed, that’s OK, that’s how the process, the legislative process, should work,” White House press secretary Jen Psaki said Friday.
Republican lawmakers want to tackle the pandemic, though they see much of the package as a Democrat wish list, with its nationwide $15 minimum wage and aid to state and local governments.
Sen. Rick Scott (R-Fla.), who leads the GOP senators’ reelection efforts, said the Biden proposal would “spend too much of the $1.9 trillion in taxpayer money on liberal priorities that have nothing to do with the coronavirus.”
Thune told reporters Friday there simply won’t be Republican votes for a package “in that price range.”
Reuters and The Associated Press contributed to this report.