Economy

Republicans Start Calling for Austerity

JM Ashby
Written by JM Ashby

I figured the GOP would at least wait until Trump is out office to call for austerity in the face of a global pandemic, but they apparently aren't wasting any time.

Several Republicans in the Senate are publicly saying we need to pump the brakes on new spending and the Republican Study Commitee is calling for offsetting any new spending.

One Republican Senator said something so stupid I felt compelled to call it out as soon as I read it.

The Republican Study Committee’s Budget and Spending Task Force also put out a blueprint this week to flatten the “debt curve.” The proposal calls for Congress to offset the effect of future coronavirus packages on the debt by cutting and capping spending. [...]

There’s a real danger that at some point we’re going to create serious inflation and seriously higher interest rates,” [Senator Pat Toomey] said. “And the problem is, we don’t know when we’ll hit that point.”

“We should’ve been doing deficit reduction when the economy was good,” said Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget. “Now is not the time.”

It is truly amazing in the worst way to warn of "serious inflation" at a time when consumer demand has completely fallen off a cliff. Republicans routinely (and wrongly) warn of runaway inflation any time they want to argue against progressive fiscal policy, but it makes even less sense now than it ever has.

Demand shocks create deflation, not inflation. Oil recently traded in negative territory, for example, because its value had been deflated; because it became virtually worthless. It's worthless because no one is driving. There's no demand.

Deflation is a result of businesses being unable to even give things away, figuratively speaking, as consumer demand evaporates. That forces them to cut prices and possibly even accept losses to move excess inventory. The "serious inflation" Republicans are warning about is the exact opposite of we're likely going to see.

Look, I'm not a Senator, but I did pay at least a little bit of attention in school.

I agree that Congress should be more careful moving forward, but in my book that means we shouldn't keep flushing money down the unaccountable Paycheck Protection toilet, not cut spending. Imposing austerity at a time when consumer demand has vanished would annihilate what remains of the economy.

While the economy was still in relatively healthy shape, Republicans, who controlled the entire federal government at the time, massively increased government spending and also cut taxes by $1.5 trillion.

  • muselet

    Part of this nonsense is Mitch McConnell cynically using phony concern over the deficit to extract concessions from the Ds, specifically liability immunity for businesses and healthcare workers. It’s exactly the sort of thing one would do if one were a soulless ghoul.

    However, much of it is the usual economic ignorance of Rs, like that of Pat Toomey and the inexcusable Ted Cruz:

    “Relief can only go so far,” said Sen. Ted Cruz (R-Texas). “Our deficit this year is projected to swell to nearly $4 trillion, an unprecedented level that we’re borrowing from the generations to come. We cannot simply spend our way out of this crisis.”

    And then there’s this:

    Lou Crandall, chief economist at Wrightson ICAP, a research firm specializing in U.S. government financing, also pointed out that ballooning deficits could increase pressure to roll back those tax cuts going forward and suggested that might be a motivating factor for Republicans to be cautious. “This is defending the signature achievement of the Trump era,” he said.

    Rs don’t care about the economy, as long as tax cuts for their big donors remain in place. Some things never change.

    –alopecia

    • Draxiar

      These idiots are playing the shell game with clear cups. We all know what they’re trying to do and where their intentions are.

  • Tony Lavely

    Must be part of Jared’s great success story.

    • Draxiar

      HAHA!