Biden Expected To Target GOP Fiscal Policies In First Major Economic Speech Of 2023

Topline

President Joe Biden is expected to attack GOP fiscal policies in a speech on the economy Thursday, as he lays the groundwork for a potential 2024 presidential run and Democrats ramp up their rhetoric against Republicans’ economic proposals.

Key Facts

Biden will speak at 2:45 p.m. ET at a steamfitters union hall in Springfield, Virginia.

The president is expected to cast Republicans as Trump loyalists and warn that their economic policies would drive up inflation, raise taxes for the middle class and cut taxes for billionaires.

Biden will specifically target Republican-backed legislation that would restrict the administration’s ability to release oil from the Strategic Petroleum Reserve, along with a proposal to replace most federal taxes with a 30% national sales tax (both are unlikely to pass the Democrat-controlled Senate, and House Speaker Kevin McCarthy, R-Calif., has said he is against the latter bill).

While Biden will tout his own record on the U.S. economy as he weighs a re-election bid in 2024, the economy has faced a mixed picture over the last year: Unemployment is low, but inflation hit a nearly 40-year peak last year and is still unusually high, and Americans’ assessment of the economy remains low, according to Gallup’s Economic Confidence Index, which stands at -39 as of December.

Contra

The nation’s GDP rose by a larger-than-expected margin in the fourth quarter of last year. However, amid rising layoffs in some industries, a dip in household spending and the Federal Reserve’s campaign to stem inflation by raising interest rates, some experts warn the economy could begin to decline again this quarter.

Key Background

This will be Biden’s first economic speech of the year and comes as Democrats have ratcheted up their attacks on GOP fiscal policies. In a press conference on Wednesday, House Minority Leader Hakeem Jeffries (D-NY) and Senate Majority Leader Chuck Schumer (D-NY) railed against the Fair Tax Act that would implement a 30% national sales tax in lieu of most other taxes. The Democratic leaders claim it would raise taxes for 90% of Americans and lower them for top earners. Meanwhile, negotiations are underway about raising the federal debt ceiling, which reached its $31.4 trillion cap last week and must be adjusted by mid-year to prevent the government from defaulting on its debt, a scenario that would bring severe economic consequences. Republicans are calling for spending cuts in exchange for agreeing to raise the debt ceiling, but the White House has said it refuses to negotiate.

Tangent

The House is expected to consider legislation on Thursday that would prohibit the energy department from exporting oil from the Strategic Petroleum Reserve until the Department of Energy develops a plan to increase fossil fuel production on federal lands. The House passed a bill earlier this month that would prohibit the energy department from selling crude from the stockpile to Chinese-linked firms with bipartisan support. The Biden Administration has been releasing oil from the reserve for sale to the highest bidder on the global market, at least one of which has been a Chinese-linked firm. Democrats are against the bill up for consideration on Thursday, however, and it has a slim chance of passing the Democrat-controlled Senate and being signed into law by Biden. The White House on Wednesday warned it would “cause oil shortages and higher gas prices in times of crisis.”

Further Reading

New U.S. House Targets China: 2nd Bill Prohibits Oil Sales, As Beijing Becomes A Target (Forbes)

Democrats Ridicule GOP’s Proposal To Eliminate Most Taxes And The IRS — And Create One National Sales Tax Instead (Forbes)