Saying that spending hurts the economy doesn't make it true

[Nevilledog]

Link to tweet

https://www.editorialboard.com/saying-that-spending-hurts-the-economy-doesnt-make-it-true/

No paywall
https://archive.ph/pqkG7

Biden and Democrats are responsible for our shrinking economy, and they’re only trying to make it worse,” Ronna Romney McDaniel, chairwoman of the Republican National Committee, insisted at the end of July. Republicans have consistently claimed that Biden’s policy initiatives — covid aid, money to fight climate change, student loan forgiveness — have harmed the economy and increased inflation.

Fact is, the US economy has performed strongly under Joe Biden. That’s especially true when you compare it to European economies.

There are a number of possible reasons for the discrepancy. But one thing is certain: Democratic spending programs did not result in economic catastrophe. Republicans claim that government aid is useless and harms the economy. They have been proven wrong.

The Times’ Paul Krugman summarizes the relatively strong position of the US in comparison to Europe. In the fourth quarter of 2021, US GDP was 3 percent higher than before the pandemic. Europe, in contrast, had just reached the level it was before the covid.

*snip*

[BillyBobBrilliant]

1. Uhhh

Spending IS the economy. Duh?

[Metaphorical]

2. Milton Friedman

articulated the Ur message that became the Republican creed in the 1950: Excess government spending creates inflation. Yet if you track inflation, there is almost no correlation between the two. What causes inflation is existing supply being unable to match demand quickly enough, usually when it is constrained be external events, such as pandemics, wars or natural disasters, coupled with price increases being sticky. The one real exception to this is when the rate of birth rises, which means that the supply of dollars decreases relative to the population, and more needs to be printed

Consider this, if inflation was correlated to government spending, then TFGs 2017 corporate tax cut, one of the largest in history, should have spurred inflation. It didn't, even in the stock market. In 2020, encumbered supply chains due to Covid did cause inflation, well before any stimulus money was allocated, and as gas prices have dropped, so too has inflation.

[Samrob]

3. Saying that raising interest rates stops inflation doesn't make it true either. nt