With raging inflation and the Democrat-led Congress gathering enough Senate support to pass billions more in spending, Joel Griffith, a research fellow in the Thomas A. Roe Institute for economic policy studies at The Heritage Foundation, told NTD TV that if the United States does not rein in its irresponsible fiscal actions, the nation is headed for a worse economic crisis.
Griffith said that raising taxes on the wealthy will not get the federal government out of the financial hole it’s dug for itself over the past few decades, particularly the spending that’s occurred in the last two years.
“The only way to pay for all this would be to print the money, to borrow the money, or to raise taxes on the middle class. There’s no easy way out of this,” Griffith said during the interview. “And politicians don’t have an appetite to correct the problem. So, there’s going to be a crisis if we do not correct our ways. It’s just a matter of time.”
By technical definition, the United States already has entered a recession, but the Biden administration continues to deny the facts.
“Everybody loves the goodies, and now we’re suffering the consequences. And it’s so important for people to realize that the economic misery that we’re feeling right now is directly related to the mistakes that were made in the past two years, with shutdowns, with spending, and with printing,” said Griffith.
The U.S. government’s debt now amounts to more than $30 trillion, which calculates to $100,000 per person, and with current interest rates, it’s an additional $1,000 in debt, per person, being added each year, said Griffith.
Democrats’ ‘Inflation Reduction’ Bill
Senators Joe Manchin (D-W.Va.) and Chuck Schumer (D-N.Y.) announced on July 27 that they had enough votes to pass a measure called the “Inflation Reduction Act of 2022” (pdf), which seeks to spend some $433 billion—about $369 billion toward energy and climate programs over the next 10 years, and $64 billion toward extending federal subsidies for three more years for some people buying private health insurance.
Meanwhile, many from both sides of the aisle viewed Manchin as a fiscal moderate who would not opt for further government spending, especially during a recession.
Griffith, however, said that he is not surprised by Manchin supporting liberal legislation that will expand the federal government, and hurt his own state of West Virginia, because he has observed that the senator supports liberal policies.
“We know what [Manchin has] supported in the past. And he has been for expanding the size and the scope of government. So I’m disappointed that he has agreed to a package that is going to dramatically increase taxes on businesses, [that] it’s going to actually include more taxes on fossil fuels. And it’s going to even further socialize our health care sector,” said Griffith.
The U.S. consumer is already paying, via taxes and inflation, the trillions of dollars the government spent and printed in the name of pandemic relief, said Griffith. This new package will only make the economy worse off.
“We are suffering through the consequences of too much spending … and to see the Senate now moving forward on a package that’s going to increase taxes and increase [the] costs on fuel production, it’s unfortunate,” said Griffith.
Not Putin’s Fault
Griffith said for a family with a middle-class income, “We’ve seen your real take-home pay decline by more than $6,000 annually because of all this inflation.”
And even if inflation were to revert to normal tomorrow, about 2 percent annually, it will not negate the economic damage, only lessen it for the future, he said.
“Putting the blame on [Putin] and his actions in the war in Ukraine for rising prices—that’s simply, largely untrue,” said Griffith.
Gas prices were already on the rise long before Russian President Putin invaded Ukraine, said Griffith, adding, “Same thing goes with our food costs, commodity costs, fertilizer costs—all of those were rapidly increasing long before Putin decided to invade Ukraine.”
“Let’s remember, it was our own politicians who shut down our economy. It was our own Congress in the United States that voted to spend $6 trillion that we don’t have. And it was our central bank, our Federal Reserve, that printed $6 trillion out of thin air. That is what is largely responsible for this inflation, not Vladimir Putin,” said Griffith.
Another contributing factor to the poor economy is an aspect of the employment rate called the participation rate (i.e., the percentage of people who are working age and are either working or looking for work), which more accurately describes who is working, said Griffith.
“The [participation rate] is near generational lows. In fact, if we were to have a participation rate that would have remained steady over the past three years … it shows that more than a million people have actually dropped out of our workforce entirely.”
“That’s part of the reason why if you go to a restaurant, a bar, a retail store, you notice the service isn’t so good right now,” added Griffith. “And that’s because relative to our overall population, we have fewer people working today than there were just two and a half years ago.”
There has been some increase in the participation rate in the United States, said Griffith, because “as people draw down on those savings [accumulated during the time when the government was doling out pandemic relief funds], they’re finding it necessary to return to the workforce.”
Middle-Class Most Impacted
Griffith said the money the government is spending is coming from the taxpayer and that this will affect the middle-class the most because they won’t be able to save and “build wealth” because of the current and rampant inflation.
“And that’s what I’m very fearful of—that as we continue to spend far beyond our means, that it’s not just going to have an impact this year, and next year, [but] 10 years and 15 years from now, [and] we’re going to see even fewer opportunities [like the creation of new jobs] for typical American families,” said Griffith.
Mimi Nguyen Ly contributed to this report.