The Reagan administration's economic guru Arthur Laffer joined Just the News founder John Solomon's
virtual discussion of the US president's multi-trillion spending initiative with GOP lawmakers including Rep. Chip Roy and other conservative thought leaders on Thursday evening. According to the economist, Joe Biden's bill "is a catastrophe and will hurt the economy for generations to come".
The Democrats are seeking to ram the 2,465-page bill through the US Congress via the reconciliation mechanism as the GOP resolutely opposes the legislation, which they see as a waste of money and a danger to the country's economic growth.
Meanwhile, maverick Democratic Senators Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) have thrown some sand into Biden's gears, urging their party fellows to slash the bill's price tag at least in half. The two lawmakers also insist that the House should pass the Senate's $1.2 trillion infrastructure legislation first,
something that progressives vehemently oppose. Under these circumstances, "Democratic leaders' goal of passing both bills by their self-imposed October 31 deadline seems doubtful at best",
admitted CNN.
Laffer
suggested that the much discussed $3.5 trillion package will cost a lot more than it's purported to, especially with the "unfunded liabilities of government programmes". What makes matters worse, the current size of the federal deficit and debt-to-GDP ratio are "unprecedented in peacetime in the United States' history", according to the economist. "It puts us in third-world country status", he highlighted.
The US' national debt is nearing a whopping $30 trillion, while the country's inflation is up 5.4% from a year ago, matching a 13-year high, according to the Labour Department.
The Dems' economic models are flawed, argued the economist. He recalled that they used to lash out at Trump's tax cuts legislation, which in fact started to pay for itself after being implemented.
According to the economist, Biden's spending bill is nothing but "giveaways and redistribution". To illustrate his point, Laffer explained that "redistribution occurs when you take from someone who has a little bit more, and you give to someone who has a little bit less".
"By taking from someone who has a little bit more, you reduce that person's incentives to produce, and that person will produce a little bit less", the economist said. "By giving to someone who has a little bit less, you provide that person with an alternative source of income other than working, and that person, too, will produce a little bit less. The theorem here — and it's math, it's not left-wing, right-wing, Republican, Democrat, liberal or conservative — it's a theorem, it's math. Whenever you redistribute income, you always reduce total income, period".
Given all of the above, the economics of the reconciliation bill are "exactly the wrong thing you want for a prosperous future of this country", the former Reagan adviser underscored, agreeing that the US has not had a healthy economy for the last 20-25 years.
Meanwhile, the GOP allowed the Dems to raise the debt ceiling by $480 billion, which, however, is not enough for Biden to push ahead with his milestone spending package. America's two major parties are expected to cross swords over the debt limit again in December 2021, with the Dems pinning their hopes on another "retreat" by McConnell.
Still, some conservative observers suggest that
the Republican political dinosaur will not cave in, leaving his political opponents to pass the debt limit suspension on their own and taking full responsibility for their mammoth spending spree.