Nearly four years ago, the Biden administration and Congressional Democrats made a $1.9 trillion bet in the form of the American Rescue Plan. They lost, as it contributed to a surge in inflation that fueled massive voter discontent and Donald Trump’s return to the White House.
Why it matters: In the next recession, politicians and policymakers may be more hesitant to unleash the type of programs that drove America’s rapid recovery from the pandemic-induced crisis.
I’m no economist but I don’t think inflation moves that quickly. The Act was signed in early March and by the end of April we hit inflation levels unseen since 2008. $1.9 trillion was not spent in a month and I’d be surprised if they spent even 25% in a month.
And a year earlier, also in March, Trump signed a $2.2 trillion stimulus bill ($1 trillion of which was basically a handout for businesses). But I’m sure his “brilliant business mind” knew exactly how to spend the money so as to not cause any inflation.