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NBC News: Covid Stimulus and Trillions for Infrastructure Spending Ignore that U.S. Debt Still Matters

March 24, 2021
Image for NBC News: Covid Stimulus and Trillions for Infrastructure Spending Ignore that U.S. Debt Still Matters

Article by James Pethokoukis in NBC News website

Do you know the cost of the Covid-19 relief bill that President Joe Biden just signed? It’s the one that includes more stimulus checks, more unemployment benefits and more aid to cities and states. The Congressional Budget Office estimated the price tag at $1.86 trillion over 10 years — but we’ll give you full credit if you guessed “nearly two trillion bucks.” Most news headlines have opted for a nice, round $1.9 trillion.

Aside from possibly winning an online current events quiz, there’s little need for precision. After all, those numbers may well turn out to be way off. The package contains a bunch of tax credit expansions — the child tax credit, the child and dependent care tax credit and the earned income tax credit — that are presented as temporary. They might not be, however, given their popularity, especially among Democrats. So that "nearly $2 trillion" bill could really be a more than $3 trillion bill, according to an American Enterprise Institute analysis.

Then again, what’s another $1.5 trillion or so when you just spent $5 trillion? (Indeed, no rich country has spent more on pandemic relief than America.) Additionally, the upcoming Biden proposal to overhaul infrastructure and address climate change may call for spending another $3 trillion, with only a portion paid for via tax hikes, perhaps.

A flood of spending and a flood of debt — all of it pretty popular with voters. If they don’t care, why should the politicians?

Over the long run, bigger deficits mean government is gobbling up funds that could otherwise be available for private investment. And less investment means economic growth is slower than it would be otherwise. A slower growing, less productive economy is one where wages and living standards also grow more slowly than they would otherwise, if at all.

What economists don’t know is how .....

To read this article in NBC News website in its entirety, click here.

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