“It’s Not Great”: Biden Stimulus Hits Turbulence As Pushback Grows Over Disincentivized Workers
The Biden administration’s latest push to further endebt the country with unnecessary stimulus has hit a ‘series of speed bumps‘ as The Hill puts it.
In short, there’s growing belief that showering unemployed people with money has disincentivized them from finding work, while the same overstimulus has led to inflation which we’re told is ‘transitory’ despite today’s y/y PPI print of 6.2% (vs. 5.8% expected) being the highest on record.
Meanwhile, eleven GOP-led states are all making moves to cancel unemployment benefits thanks to the worker shortage, and the US Chamber of Commerce urged Biden to end pandemic handouts – saying that “paying people to work” is killing the recovery.
Of course there are, because facts are now a partisan issue. More via The Hill:
Economists are split over the issue, but it has served as an opening for Republicans to get a toehold in the unfolding battle for public opinion on Biden’s plans.
“It’s not great,” one Democratic strategist acknowledged of the April jobs report. “And it will certainly slow down the process and any momentum Biden had in recent weeks without a doubt because Republicans will use this to show that some of these ideas being pushed aren’t sound.”
The above has left moderate Democrats scrambling to reel in Biden’s $1.9 trillion pandemic relief bill. Some have suggested a smaller infrastructure package which would be much more narrowly focused in the hopes of gaining bipartisan support ahead of the 2022 midterm elections.
Progressive Democrats, however – apparently not understanding that members of their own party such as Joe Manchin will block aggressive money grabs – say the party needs to ‘go big’ and stop worrying about all this bipartisan malarkey.
“Let’s not pretend that Republicans are interested in any sort of compromise. Let’s go big, go bold, and make the ultra-rich and corporations finally pay their fair share so we can invest in working families,” said Rep. Pramila Jayapal (D-WA) in a Wednesday tweet following a meeting between Biden and bipartisan leaders regarding his infrastructure plan.
Inflation is of course the next problem for Biden – after CPI rose 0.8% in April and 4.2% y/y leading into April – exactly what we (and former Obama economic adviser Larry Summers, as it so happens) warned of while Biden was pushing the $1.9 trillion pandemic package.
The White House is downplaying the whole thing – with press secretary Jen Psaki describing the inflation as “transitory.”
“We knew just as the economy sort of shrunk and shut down that as it’s turning back on there would be some of these impacts,” she said, adding: “As we experience this massive transition, we continue to chart our path to recovery and we know that a number of the investments that we have proposed were long needed even before the last several months.”
Altogether, the latest economic data is likely to ‘complicate’ stimulus negotiations to put it lightly.
Thu, 05/13/2021 – 21:45