For our last Facing the Future program of 2021, I gathered an all-star panel of Concord Coalition staff including: Policy Director Tori Gorman, Chief Economist Steve Robinson, National Field Director Phil Smith, Deputy Director Chris Colligan, and our newest staff member, Communications Director Av Harris. I asked the team to join me to review the significant events of 2021 related to the federal budget and the economy, what surprised us all, and what challenges and opportunities lie ahead for 2022.
What was actually most surprising for me was that there was a commitment to pay for major new initiatives. Even though this was a promise made by President Biden during his 2020 campaign, I was very leery of that, and I thought at some point that “modern monetary theory” (MMT) would kick in and Congressional leaders would say, ‘well we don’t really need to find any offsets here, all of this stuff is good stuff, we can just keep printing money.’ So it was a pleasant surprise that the commitment to pay for this new spending has remained, even though we at The Concord Coalition have criticized whether the proposed funding for the Build Back Better Act is adequate or legitimate.
“It is stunning to me that so much of the 2017 Republican Tax Cut survived contact with an all Democratic Congress in 2021,” said Policy Director Tori Gorman. “Not a single Democrat voted for that bill, and here we are still negotiating Build Back Better. I surely thought that in the desire to pay for these new programs, that they would be rolling back some of those tax cuts and it is surprising to me that we are not talking about a rate increase on corporations, or a rate increase on higher income individuals. Instead, we’re talking about these obscure things that hide in the corner over here and there and things that are really hard to explain so people can’t really get that upset about them.”
Chief Economist Steve Robinson said that what caught many people by surprise was that after many years of the Federal Reserve holding interest rates low, inflation finally took hold of the economy in 2021, and it may be stubborn.
“By mid-year, we finally began to see the signs that inflation was ticking up. I come from the old school that monetary policy matters, and I had been surprised as were many of the critics that inflation had been more or less contained until this year. A lot of people were predicting inflation for the past several years and I guess a broken clock is right twice a day. On the economy side, we have now seen a turning point, and now the Fed is going to be fighting a defensive battle probably throughout the next year to get inflation expectations back down, and not see a continuation of this for the next couple of years.”
Looking ahead to 2022, the COVID-19 pandemic is still causing widespread illness, hospitalization, death, and disruption to the economy in its third year as the Omicron variant runs rampant. On the question of whether or not Congress will pass another round of emergency relief, Deputy Director Chris Colligan and Communications Director Av Harris drew different conclusions.
“There will be some form of COVID relief because there will be pressure from certain states that do have emergency levels of care that they are going to have to deal with. The pressure will be strong enough that there will be something. It probably won’t be a big package of COVID relief but it will be part of some other emergency bill at some point,” said Colligan.
“There has already been trillions of dollars in relief shoveled out the door,” said Harris. “Think about what any additional relief would pay for – either businesses that have lost revenue, or people who have been out of work. Now, we are two years into this pandemic and we have figured out how to work remotely, or how to work safely in-person. I’m not sure where the relief would go now. The biggest problem is that we have stalled in our efforts to get the population vaccinated. Two vaccinations is not enough with this new Omicron variant. You need a booster. If we continue to have a large part of the population that is not vaccinated to the level it needs to be, then more people will be sick and out of work. Largely, the people who are hospitalized with COVID are those who are either not vaccinated at all or those who have had one shot and didn’t get the rest of their vaccinations.”
National Field Director Phil Smith said one of the biggest challenges to the work of The Concord Coalition in 2022 is the budget mythology peddled by both Republicans and Democrats that either trillions of dollars in tax cuts or new spending are all the economy needs, and nothing needs to be paid for.
“Of particular concern is the continued and somewhat growing Santa Claus syndrome that we see out there. Politicians in the past have always pandered to voters. Paul Tsongas used to say ‘don’t be a pander-bear’ but they have devolved into outright misinformation now instead of just pandering. This poses a pretty big challenge to us – if not a threat – to the mission of The Concord Coalition because what we do is educate people about fiscal policy and we spend so much time now on defense, simply extinguishing myths, that we barely have any time to go on offense and talk about solutions. We haven’t gone over any fiscal cliffs yet, which means we still have a short but undetermined amount of time left to fix some of the unsustainable problems that we talk about.”
Hear more on Facing the Future. I host the program each week on WKXL in Concord N.H., and it is also available via podcast. Join me and my guests as we discuss issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.