By Mike Connolly
The American Rescue Plan—the official name for the $1.9 trillion COVID-relief proposal—has passed both chambers of Congress, been signed by President Joe Biden, and is now being implemented. You may very well already know this because $1,400 may already be in your account, whisked from the federal Treasury to you through the magic of direct deposit.
Many have argued that the plan’s price tag was too large, with our own junior senator from Pennsylvania among the loudest critics.
They were wrong. What’s more, they’re going to have to watch themselves continue to be wrong as childhood poverty is cut in half through the expanded child tax credit, states and cities are saved from having to implement harsh austerity measures, and the funding is in place to finally wrestle the pandemic into submission, all likely without a major rise in inflation.
What self-proclaimed deficit hawks such as U.S. Sen. Pat Toomey, R-Pa., choose not to understand is that inflation is not nearly the mortal enemy they fear, hiding in the depths of every bill that isn’t a tax cut. Modest and sustained inflation is actually the goal of most economists, whose real fears are generally focused on the cycle of falling prices, wages, and jobs that constitute a depression.
What’s more, inflation doesn’t kill human beings. But the lack of enough government spending often does. Tens of thousands of Americans die every year from delaying or avoiding healthcare due to a lack of coverage. Americans die from hunger, from substance use disorder, from self-inflicted harm, and so many other maladies and woes that can be helped or avoided with increased and sustained public spending.
The inflation-fearful do have one powerful argument at their disposal, wrapped in the Traditional America iconography that fills the paragraphs every talent-deprived speechwriter produces: the kitchen table. More specifically, the kitchen table conversations about family finances, balancing a checkbook, paying off debt, and living within your means.
In reality, the economics are far more complicated. No government has finances all that similar to a family’s, most especially the American federal government. Families don’t have the ability to issue their own currency. They can’t apply tariffs to the goods of other families.
But most of all, families don’t get to control their own debt. One of the great terrors of kitchen table finances are high-interest credit cards with high balances. Yet, the $1.9 trillion of the American Rescue Plan is not like a family owing money to Capital One.
It would be more like if Capital One owed money mostly to Capital One, decided it wanted to loan more money to Capital One at a historically low interest rate, and then control the terms of what they owed to Capital One for about as long as they wanted to.
The most destructive deficit hawks are not the people that don’t understand this. They’re the ones like Senator Toomey that do.
Toomey’s prior life in the finance sector provided ample time to learn the details of both micro and macroeconomics. Yet for his entire political career, the lane he’s found open to him has been funded by ideologues like the Club for Growth. Their bad faith arguments lay the groundwork for the Tea Party, which lay the groundwork for Trump.
If people such as Toomey can point to real victims of hyperinflation in America, they’re more than welcome to do so.
This past year has, however, given us more than half-million dead Americans. That number could’ve been vastly lower if we had paid people enough to stay safely at home early in the crisis. But mostly, that death toll could have been reduced by years of sufficient investment in public health prior to the outbreak.
Thankfully, we didn’t have to worry about Toomey’s vote for the American Rescue Plan to pass, and we won’t have to worry about his vote at all for much longer. Let’s remember in the years to come that every time the deficit hawks cry and screech, we don’t have to listen.
Opinion Contributor Mike Connolly is the principal of Salthill Communications, and former Deputy State Treasurer for Communications under Treasurer Joe Torsella. He served two tours in Iraq as an Infantryman and can be found on Twitter: @MD_Connolly. His work appears biweekly on the Capital-Star’s Commentary Page.