U.S. Sen. Bill Hagerty said that Democratic spending packages in the trillions of dollars are driving up inflation and will not only add to the deficit but will act as an ever-increasing hidden tax on working-class Americans even though President Joe Biden said during his campaign they would not see increases under his various tax plans.
In an interview on CNBC’s “Squawk Box” program last week, the Tennessee Republican said his constituents, as well as Americans all over the country, are feeling pinched as prices rise on nearly everything they regularly consume, from food and gasoline to building materials and clothing.
What’s more, trillions in spending packages passed since Biden took office are part of what’s adding to inflationary pressures, as more money floods into the economy while there are shortages of goods due to pandemic-related supply disruptions.
Worse, Democrats are eyeing another $3.5 trillion spending measure that they are reportedly considering passing via the budget resolution process, which only requires a simple majority in the evenly divided Senate which is controlled by the party thanks to Vice President Kamala Harris’ vote.
“As you know, inflation can be a self-fulfilling prophecy. It has to do with expectations. And I think people in my home state, I think people across America are feeling this. If they look at things that they buy every day, they’re more expensive tomorrow than they’re going to be today,” Hagerty said, adding that it’s creating a “sense of panic” among businesses and families alike.
“So I am concerned about inflation becoming a very, very real concern that as I said, an insidious tax and more stimulus spending only increases that,” Hagerty, a former board member with NASDAQ and the New York Stock Exchange, said.
The Tennessee Republican also voiced concern about the size of spending bills and what impact they will have on the economy in the near- and long term. He also noted that additional spending isn’t needed since the economy has begun to rebound well after states and cities reopened amid a mostly declining pandemic.
“We saw what happened in March, a $1.9 trillion package. That’s roughly 10 percent of our GDP that they want to dump right into the economy at a time that our economy is rebounding,” he told CNBC. “Now they’re talking about doubling that number, at least 20 percent of our GDP, at a point where we just had month over month. If you annualize from May to June, that’s a 12 percent inflation increase.”
Hagerty said current inflationary figures and pressures haven’t been seen in the U.S. since the late 1970s during President Jimmy Carter’s term. He also said that Federal Reserve Chairman Jerome Powell wants inflation at 2 percent, which is far below what it is now, for an ever-growing basket of products and commodities.
“I think we need to be very, very cognizant of that before we consider any more sort of stimulus spending that’s being discussed right now,” he said.
Hagerty also said that Democratic spending plans will include significantly higher taxes, especially on job-creating corporations and businesses which will, in turn, drive down investment and limit job growth while further increasing the cost of goods and services.
“What they want to put through and whatever they want to call it, it’s essentially the Green New Deal. They want to raise death taxes,” he said. “What they’re going to wind up doing with their energy policy again is making America less competitive.
“They want to do away with fossil fuels. As you mentioned, they’ve got capital gains proposals there that will absolutely freeze capital in place. What this does is it pushes American jobs offshore,” he continued. “What I want to see is America become the most attractive place in the world to invest capital. Capital investment begets jobs and economic growth. That’s what we need to see.”
As for inflation generally, Hagerty said it “isn’t transitory,” generally speaking, meaning higher prices are coming.
“There are transitory components of it, certainly, having to do with supply chain dislocations. But they talk as though this is some sort of pig in the python moment,” he told “Squawk Box.”
“What you see though, are inherently inflationary policies coming out of the Biden Administration right now,” he added.
That includes killing the Keystone XL pipeline project and forbidding new gas and oil exploration of federal lands, all of which is going to lead to higher energy prices — which in turn raises the price of nearly everything else.
“I think that what we’re seeing is an increase in government dependency, subsidization of unemployment, which makes Chairman Powell’s job very difficult on the unemployment mandate. So we really need to be focused on inflation. That’s an insidious tax that’s being imposed on every American. I’m very concerned about it,” Hagerty said.
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