Republicans on Wednesday lambasted Democrats for attempting to unilaterally pass a sprawling $3.5 trillion reconciliation bill, raising concerns that another burst of government spending will act as an accelerant to already rapidly inflation.
"This is a liberal wishlist," Sen. Lindsey Graham, R-S.C., said during a Wednesday press conference alongside five GOP senators. "And how does it add to inflation? Well, spending $3.5 trillion is not a good idea when you have an inflationary economy."
The government reported last week that prices for goods and services jumped by the most in 13 years, fueling concerns that a rapidly rebounding economy could lead to runaway growth. The Labor Department said in its monthly report that consumer prices rose 0.9% from May and 5.4% over the past year. Excluding volatile oil and gas prices, so-called core inflation jumped 4.5% over the past year, the largest increase since November 1991.
GOP lawmakers have latched onto the higher-than-expected inflation, blaming the $1.9 trillion stimulus bill that Democrats passed without any GOP votes in March for the price spike and attacking Biden for moving forward with another $4 trillion in new spending.
"What we're talking about here is the largest expansion of government, the largest expansion in spending, and the largest tax increase literally in the history of the country," Sen. John Thune, R-S.D., said. "It is a reckless, radical agenda. And the American people are going to end up paying for it."
But President Biden and Democratic lawmakers are continuing to push forward with a reconciliation bill that envisions spending $3.5 trillion over the next decade in order to drastically expand the government-funded safety net.
The spending agreement, announced last week, would invest billions in an array of planned health, education, environment and social programs as Democrats seek to use their power monopoly in Washington to squeeze through a slate of left-wing priorities. It would be paid for by new taxes on wealthy Americans and corporations.
"It's going to be a nightmare for the American people if this reconciliation bill passes," Graham said. "It will take an inflation problem that we have today and pour jet fuel on it."
Biden has argued the government investments would curtail rising inflation – rather than inflame it.
"If we make prudent, multiyear investments in better roads, bridges, transit systems and high-speed internet, a modern resilient electric grid, here’s what will happen: It breaks up the bottlenecks in our economy," he said on Monday while speaking at the White House. "These steps will enhance our productivity, raising wages without raising prices. That won’t increase inflation, it’ll take the pressure off of inflation."
Federal Reserve Chairman Jerome Powell has mostly downplayed the rising prices for goods and services, blaming the increase on supply shortages and a wave of pent-up demand among consumers as more Americans are vaccinated and embark on their post-pandemic life. Though he's said inflation could turn out to be "higher and more persistent than we expect," Powell has maintained that it's likely transitory.
The concern among investors is that rising inflation could force the Fed to pump the brakes earlier than expected and start pulling back the massive monetary support it's providing for the economy.
But Powell, testifying before Congress last week, said the economy is "a ways away" from where it needs to be in order for the U.S. central bank to begin unwinding some of the ultra-easy monetary policies put in place during the pandemic.