Top Republicans are now pointing to nearly one trillion dollars in unspent funds from earlier stimulus and COVID relief bills as a reason why President Joe Biden’s $1.9 trillion proposal should not be passed, as Democrats are currently trying to do using budget reconciliation to bypass the need for Republican votes.
“It is estimated that approximately $1 trillion in existing COVID-19 funding has yet to be spent,” said top Republican on the House Budget Committee Rep. Jason Smith (MO).
“Before President Biden and congressional Democrats try to pass trillions more in spending, the American people need, at the very least, a thorough and accurate accounting of the trillions of dollars already approved,” Smith said.
Not only has nearly a quarter of the money allocated to COVID relief not been spent on that relief, but the economy is already in the process of strongly recovering and may not need another large stimulus to continue its upswing, Republicans argue.
Large states that have been mostly locked down since shutdowns began in March 2020 announced reopening plans in January, including New York and California. These reopenings have led to a rapid uptick in employment and revenue to reopening businesses.
Republicans want a much smaller stimulus package of about $600 billion. They argue that another huge stimulus will hurt the economy in the long term when the deficit needs to be repaid.
The Congressional Budget Office has forecast that the economy will return to pre-pandemic levels of growth by the middle of 2021, even without any further stimulus payments, the New York Times reported.
In other words, if we add another $1.9 trillion in stimulus to our debt, it won’t really help the economy much, anyway.
Debt causes inflation
Republicans understand that such a huge level of debt will have adverse consequences one or a few years down the road. A huge debt load causes inflation, so that salaries, investments and dividends will be worth less and all products and services will cost more.
That means food, housing, gas, heating oil, clothing, and all the things people need to live their daily lives will cost more, but their salaries will not increase.
In addition, a heavy debt load can impact the willingness of lenders to give us more money, which could eventually bring the whole system crashing down if things get too dire.
Of course, Democrats will just use the situation to call Republicans heartless and claim they don’t care about people’s difficulties, even though in reality Republicans just want people to keep having what they need and preserve the system.