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Prepared Floor Remarks by U.S. Senator Chuck Grassley of Iowa
On the Partisan “American Rescue Plan”
Delivered on Wednesday, March 3, 2020

 
This week, my Democrat colleagues are poised to push through the Senate an untargeted and unfocused $1.9 trillion tax and spending package under the guise of COVID relief.
 
This is unfortunate because it didn’t have to be this way. In the past year, Republicans and Democrats were able to work together to pass more than $4 trillion in COVID relief with strong bipartisan support.
 
From the start of this year, my Republican colleagues and I have stood ready to engage in good faith bipartisan negotiations to provide further targeted relief. However, despite talk of unity and bipartisanship by President Biden, the new Senate Majority hasn’t even attempted to reach across the aisle.
 
The majority, demonstrating their unwillingness to compromise, have resorted to using special budget procedures so that they may pass a partisan proposal strictly along party lines. The result is an unwieldly nearly $2 Trillion package that isn’t shaped according to current economic realities, but by a partisan liberal agenda.
 
In February, the non-partisan Congressional Budget Office (CBO) projected that even without any further stimulus, gross domestic product (GDP) will return to its pre-pandemic levels by mid-2021. And, for the year, the economy will grow at 4.6 percent.  
 
Moreover, it was recently reported that retail sales jumped 5.6 percent in January. And, the National Retail Federation is projecting retail sales for the year to grow at the fastest rate in two decades. At the same time, personal income is reported to have risen by 10 percent and the personal savings rate has surged from a historically high 13.4 percent to over 20 percent.
 
It’s no longer March of 2020 when the economy was in free fall and businesses and places of employment were shut down by government edict. While many individuals and certain sectors of our economy continue to struggle and deserve a helping hand, others have largely recovered and are no longer in need of assistance.
 
A COVID relief package should reflect this reality in both size and scope.
 
Even long-time Democrat economists, such as Obama’s former Director of the National Economic Council, have raised concerns about enacting nearly a $2 trillion stimulus package at this point in the recovery. As Mr. Summers noted, “the proposed Biden stimulus is three times as large as” the gap between actual and potential output as estimated by CBO.
 
Enacting a stimulus unmoored from economic reality poses real risks to our economy, including inflation and slower economic growth moving forward. In fact, a Penn-Wharton Budget Model analysis of the President’s proposal projects the proposed stimulus would result in a decrease in both GDP and wages in 2022 and over the next two decades.
 
While inflation has been subdued in recent years, we shouldn’t let that lull us into a false sense of confidence that we can spend with impunity with no consequences.  We are in unchartered waters with debt held by the public exceeding the size of our economy and trillion dollar annual deficits.
 
Moreover, as economist John Greenwood and Steve H. Hanke, professor of economics at John Hopkins, recently warned, the “money supply will grow by nearly 12% this year. That’s twice as fast as its average growth rate from 2000-19. It’s a rate that spells trouble – inflation trouble.”  And that is without another round of stimulus.
 
Concerns of inflation have been dismissed by the White House and the Federal Reserve. This sounds familiar to those of us who witnessed the stagflation of the 1970’s. We were told by President Nixon and his advisors that they could spend their way to lower unemployment and economic growth, without inflation. They were wrong. The Nixon administration’s mistakes ushered in a decade of disastrous inflation.
 
It was with this background that I first ran for Congress on a platform of fighting inflation. Inflation is a regressive, stealth tax on every single American. It is particularly unfair to those who have very little money to begin with, and those who have lived beneath their means to save for the future only to see the hard work wiped out as the value of the dollars they put away plunges.
 
Not only is the size of the package detached from reality, so is its scope. A common adage for stimulus and economic relief measures is that they should be timely, temporary and targeted. By this standard, the Democrat’s stimulus is well wide of the mark.
 
More than one third, or $700 billion, of the funding in the bill wouldn’t be spent until 2022 or beyond according to CBO. Hundreds of billions still wouldn’t even be spent by 2023. I don’t know about you, but I don’t see how spending hundreds of billions of dollars years from now is either timely or targeted. What does it have to do with fighting the pandemic in 2021?
 
Nearly a quarter of the package, or $422 billion, is dedicated to direct payments to households with incomes up to $200,000 regardless of whether they have lost a job or experienced any loss of income.
 
Such untargeted payments make little sense when just this past week it was reported that personal income was up 10 percent and the personal savings rate soared to over 20 percent. We clearly shouldn’t be using taxpayer dollars to pad the bank accounts of those with six figure incomes.
 
Another $350 billion of the package is allocated to bail out fiscally irresponsible states at the expense of states that have managed their budgets wisely, like my home state of Iowa.
 
This spending is hard to justify given recent reports indicating most states saw little to no drop in revenue between in 2019 and 2020. And, many states that were previously projecting shortfalls are now projecting budget surpluses.   
 
The package also includes hundreds of billions of dollars in liberal wish list priorities that have little to do with the current pandemic. This includes enhancements to refundable tax credits, an expansion of Obamacare subsidies, and an $86 billion taxpayer bailout of poorly managed multiemployer pension plans.
 
This entire COVID package suffers from my Democrat colleague’s flawed belief that just throwing money at a problem is always the solution. But, money alone often fails to address the underlying problem.
 
In the case of COVID, there are some things that no amount of money can address. Until widespread immunity is achieved, many people will not feel comfortable eating out, going to a movie, taking in a concert, or traveling on vacation. Spending trillions of dollars will not change this.
 
So yes, let’s prioritize funding for vaccine distribution, assistance for the unemployed, and aid for small businesses in struggling sectors. And by all means, let’s open the schools! Doing this doesn’t require $2 trillion.
 
Let’s remove the pork. Let’s set aside the long term left-wing wish list and work together as we did before.
 

Several of my Republican colleagues approached the White House weeks ago with a long list of items proposed by President Biden that could get Republican support with minimal tweaks. A bipartisan package along those lines could well have passed by now. It’s not too late.