Biden Attacks GOP Fiscal Policies As ‘Chaos And Catastrophe’ In First Economic Speech Of 2023

Topline

President Joe Biden accused “extreme MAGA Republicans” of backing policies that threaten to drive up inflation and taxes for the middle class—and highlighted his own economic record—in a speech on Thursday, hours after new fourth quarter figures showed the economy grew at a faster-than-expected pace.

Key Facts

During a speech at a steamfitters union hall in Springfield, Virginia, Biden took aim at Republican plans he said would raise gas prices, cut taxes for billionaires, slash Social Security and Medicare and raise taxes for the middle class, while vowing to veto the proposals if they passed Congress.

Biden specifically focused on the Republican-backed Fair Tax Act, which would impose a 30% national sales tax and eliminate most other taxes, warning that it would effectively “raise taxes on working and middle class people” (the legislation faces long odds of passing, as House Speaker Kevin McCarthy, R-Calif., has said he opposes it and the Democrat-controlled Senate is unlikely to pass it).

Democrats claim GOP-backed legislation that limits the federal government’s ability to sell oil from the Strategic Petroleum Reserve would raise gas prices, and have raised concerns that Republicans will demand cuts to Medicare and Social Security in debt ceiling negotiations (though McCarthy has reportedly agreed to preserve those two programs).

Linking the GOP to former President Donald Trump—whose four years in office marked a steeper increase in the national debt than under any other president, Biden said—the president said “30% to 40%” of Republicans are “MAGA Republicans” who are “determined to be the party of chaos and catastrophe.”

Biden cited several hallmark pieces of economic legislation passed during his time in office, including the American Rescue Plan Act that provided $1.9 trillion designed to help the economy recover from the Covid-19 pandemic, and the Inflation Reduction Act aimed at reducing the federal deficit, lowering drug prices and reducing carbon emissions, among other initiatives.

The president also highlighted what he said was the “strongest years of job growth ever in American history” during his first two years in office: “We’ve created nearly 11 million jobs, including 75,000 manufacturing jobs,” he said.

The falling unemployment under Biden and uptick in the federal deficit under Trump are partially due to the coronavirus pandemic, however: The federal government’s debt grew significantly in 2020 due to Covid-19 relief programs, while job growth surged during Biden’s tenure as the unemployment rate fell to pre-pandemic levels.

Contra

The economy has faced a mixed picture over the past 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. New economic figures released Thursday show the nation’s GDP rose 2.9%, a larger-than-expected margin, in the fourth quarter of last year, the Bureau of Economic Analysis said Thursday. 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.

Crucial Quote

“I’m not sure, and I mean it sincerely, the news could have been any better. Economic growth is up, stronger than experts expected, at 2.9%,” Biden said. “Jobs are the highest number in American history and wages are up, and they’re going faster than inflation. Over the past six months, inflation has gone down every month.”

Key Background

Thursday’s address was Biden’s first major 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. 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)