In the whirlwind activity during his “first hundred days,” Joe Biden signed into law the $1.9 trillion “American Rescue Plan” back in March.
Whether every state required a financial “rescue” was not seriously discussed at the time. California got a windfall, ending up with an enormous $75 billion budget surplus for last year and an expected $31 billion more in surplus funds this year. Thanks to the extra money flowing from Washington, other states are running in the black.
The Rescue Plan bill came with the warning that state governments had to have much more federal money due to the pandemic to pay government workers, fund pensions, and pay for health care.
The harsh reality turned out that the bill became a major force behind the surging 2021 price inflation and increasing cost of living facing almost all Americans. The National Review calls it the “worst spending bill in decades,” pointing out that it was initially advertised as a health care measure to pay for COVID vaccines and treatments first and foremost.
As it turns out, less than 5 percent of the allocated funds had any relation to health care. Like every spending bill, it became a big feed trough of “stimulus” giveaways in the end. The multi-trillion-dollar bonanza came directly on the heels of the Republican-driven $900 billion “relief” bill passed last December.
Democrats were thrilled at the prospect of using budget reconciliation to pass the American Rescue Plan without Republican support and with precious little in the way of Republican objection.
The Rescue Plan will cost taxpayers around $60 billion in additional interest payments every year. That new bill comes with the knowledge that the other federal debt has virtually no chance of being paid down and the hope that interest rates will forever remain at the currently artificially low levels.
The more immediate problem with the bill is its direct contribution to the inflation of the money supply and the inevitable impact on consumer prices. Money supply inflation beyond production can only result in more dollars chasing after fewer goods and the skyrocketing prices the country is already experiencing.