We’ve seen liberal grandees like Larry Summers warning that the Democrats’ stimulus plans are too big and risk inflation and other economic troubles down the road. Now add to that chorus the warning of Steven Pearlstein, the Washington Post‘s long time business and economics columnist who generally leans left.
Pearlstein is retiring from the Post, and his last column sounds a striking warning that Biden and crew are sure to ignore:
Welcome, fellow Americans, to the era of the free lunch.
To hear it from liberal economists, progressive activists and Democratic politicians, there is no longer any limit to how much money government can borrow and spend and print.
In this new economy, we no longer have to worry that stock prices might climb so high, or companies take on so much debt, that a financial crisis might ensue. In this world without trade-offs, we can shut down the fossil fuel industry and transition to a zero-carbon economy without any risk to employment and economic growth. Nor is there any amount of infrastructure investment that could possibly exceed the capacity of the construction industry to absorb it.
Rest assured that the economy won’t miss a beat no matter how far or fast the minimum wage is raised. And whatever benefits are required by the always struggling middle class can be financed by raising taxes on big corporations and the undeserving rich.
So party on, progressive dudes. Worries about debt and inflation are just so 20th-century, the figments of a now-discredited neoliberal imagination. We have entered a magical world where borrowing is costless, spending pays for itself, stocks only rise and the dollar never falls. In this economic paradise, government mandarins can fine-tune the economy to prevent inflation and unemployment, while economic, racial, environmental and social justice can be achieved without any painful trade-offs.
From here the article goes through the details, tradeoffs, and drawbacks of the Biden agenda, before reverting to prophetic mode toward the end:
But what we have been treated to instead are mindless talking points (“Go Big”) politically inspired lines in the sand ($1.9 trillion in stimulus, a $15-an-hour minimum wage, $1,400 rebates) and transparently partisan proposals to reward the Democratic base, buy off White working-class voters and avenge the partisan outrages of the Trump era. Instead of bringing a polarized country together after a narrow election victory, Democrats seem determined to spike the football in the end zone.
Maybe someone in the White House press corps could ask Biden about this whenever Biden gets around to holding a press conference.