While the U.S. economy is continuing to add new jobs, Congressman Bob Good (R-Va.) sees warning signs for the economy going forward.
On Friday, the U.S. Labor Department reported that the United States added 253,000 jobs in April, beating a 180,000-job forecast for the month. This comes at the same time the U.S. Federal Reserve continues to raise interest rates in hopes of slowing inflation.
Raising the interest rate is meant to increase the cost of borrowing money in order to disincentivize demand. A drop in consumer demand typically helps to lower prices of goods and services.
The strong April jobs report may be a double-edged sword as it indicates that the labor market is strong but that the Federal Reserve’s monetary policies haven’t done enough to stifle consumer demand in this inflationary economy. Good, who serves on the House Budget Committee, said that maintaining the Federal Reserve’s current track with interest rates will make life tougher for U.S. consumers.
“[Federal Reserve Chair Jerome Powell’s] policy of a five percent rise in interest rates over the past year is crushing the American people,” Good told NTD News.
While low interest rates may lead to increased spending and inflation in the economy, inflation is also fed by increases in the supply of money in the economy. The Federal Reserve increased the money supply during the COVID-19 pandemic to help the government fund economic stimulus programs as they encouraged lockdowns.
“Historically, interest rates are increased, as you know, to try to slow a hot economy and to ward off potential inflation,” Good added. “In this case we’ve caused the inflation with the massive spending, we don’t have a strong economy and yet [Powell is] crushing the American people.”
Good argued that raising interest rates alone is not enough to address inflation and that Powell and Treasury Secretary Janet Yellen ought to more strongly oppose pricey legislation favored by President Joe Biden.
“Janet Yellen [is] equally derelict in her responsibility as Treasury Secretary,” Good said. “They will not call out the administration, their boss, for the massive spending that’s causing so many problems.”
The Debt Limit
Government spending has been an issue that has fed into another flashpoint between Democrats and Republicans—the debate on the debt limit.
The United States has been at its debt limit of about $31.4 trillion since January and is closing in on a potential default on a debt payment.
The Biden administration has called for Congress to pass a so-called “clean bill” to increase the debt limit without setting any new conditions on government spending. Republicans, by contrast, have argued in favor of pairing any debt limit increase with budget reforms to slow the growth of the national debt.
Last week, the Republican-controlled House passed a bill that allows the United States to add up to $1.5 trillion in additional debt until March 31, 2024, in exchange for spending cuts that Republicans estimated would result in more than $4.5 trillion in savings to American taxpayers. The bill would specifically set annual discretionary spending at Fiscal Year 2022 levels, and would regulate discretionary spending growth to 1 percent annually over the next decade. The Republican bill would also rescind any unspent pandemic-era relief funds and block Biden administration policies like his plan to forgive student loans.
Biden and other Democrats have argued in favor of separating a debt limit increase from any negotiations over spending reforms and have likened the Republican bill to a hostage situation where the United States risks a credit default if Republican demands aren’t met.
Good said the Republican bill offers a modest debt limit compromise to “get us on a path to fiscal responsibility” but that the Biden administration, in refusing to negotiate with Republicans, “has been on the sidelines.”
Good predicted that Biden will eventually agree to the Republican deal if House lawmakers hold strong.
“The House is united in our resolve to say Senate ‘pass this bill, do your job.’ This is the bill that got us a majority in the House, we cannot get another bill out of the House with the majority,” Good said. “So I believe if we hold strong the Senate will pass it and I believe the White House will sign it.”
Good said conservative lawmakers had considered cutting funding to the United Nations as an additional way to save money. Some conservative lawmakers, like Good, see U.S. funding for the international body as counterproductive on multiple fronts.
“Why are we borrowing money to send hard-earned taxpayer money to burden our kids and our grandkids with funding the U.N.? To funding, worse yet, the climate initiatives at the U.N.?” Good said.
Good noted Biden recently pledged $1 billion to the U.N.’s Green Climate Fund.
“We want to rescind that, of course,” Good said.
Good also claimed the U.N. has also been coaching migrants on how to avail themselves of the U.S. immigration system.
The Virginia lawmaker said that cutting funding for the U.N. should include cuts for the World Health Organization (WHO).
“We saw how corrupt they were, how dishonest they were with COVID, the China virus situation, and we’ve got the administration, as you know, intent on surrendering our national sovereignty to the WHO when it comes to future pandemics,” Good said. “And we want to pull out of that as well and keep that from happening.”