How the American Rescue Plan Saved Lives and the U.S. Economy — Committee on the Budget (June 14, 2022)
Summary
The printed record of a hearing before the Committee on the Budget, House of Representatives, on Tuesday, June 14, 2022 (Serial No. 117-13), titled "How the American Rescue Plan Saved Lives and the U.S. Economy," with Chairman John A. Yarmuth presiding. Statements and letters for the record are listed for Yarmuth and Ranking Member Jason Smith. Witnesses are Julia Coronado of Macropolicy Perspectives; Vince Williams, Mayor of Union City, Georgia and President of the National League of Cities; Sharon Parrott of the Center on Budget and Policy Priorities; and Stephen Moore of the Save America Coalition and the Heritage Foundation. The record also lists material from Hon. Sheila Jackson Lee and Hon. Lloyd Smucker and questions and answers for the record.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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“How the American Rescue Plan Saved Lives and the U.S. Economy — Committee on the Budget (June 14, 2022).”
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[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
HOW THE AMERICAN RESCUE PLAN
SAVED LIVES AND THE U.S. ECONOMY
=======================================================================
HEARING
before the
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, D.C., JUNE 14, 2022
__________
Serial No. 117-13
__________
Printed for the use of the Committee on the Budget
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available on the Internet:
www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
48-270 WASHINGTON : 2022
COMMITTEE ON THE BUDGET
JOHN A. YARMUTH, Kentucky, Chairman
HAKEEM S. JEFFRIES, New York JASON SMITH, Missouri,
BRIAN HIGGINS, New York Ranking Member
BRENDAN F. BOYLE, Pennsylvania, TRENT KELLY, Mississippi
Vice Chairman TOM McCLINTOCK, California
LLOYD DOGGETT, Texas GLENN GROTHMAN, Wisconsin
DAVID E. PRICE, North Carolina LLOYD SMUCKER, Pennsylvania
JANICE D. SCHAKOWSKY, Illinois CHRIS JACOBS, New York
DANIEL T. KILDEE, Michigan MICHAEL BURGESS, Texas
JOSEPH D. MORELLE, New York BUDDY CARTER, Georgia
STEVEN HORSFORD, Nevada BEN CLINE, Virginia
BARBARA LEE, California LAUREN BOEBERT, Colorado
JUDY CHU, California BYRON DONALDS, Florida
STACEY E. PLASKETT, Virgin Islands RANDY FEENSTRA, Iowa
JENNIFER WEXTON, Virginia BOB GOOD, Virginia
ROBERT C. ``BOBBY'' SCOTT, Virginia ASHLEY HINSON, Iowa
SHEILA JACKSON LEE, Texas JAY OBERNOLTE, California
JIM COOPER, Tennessee MIKE CAREY, Ohio
ALBIO SIRES, New Jersey
SCOTT H. PETERS, California
SETH MOULTON, Massachusetts
PRAMILA JAYAPAL, Washington
Professional Staff
Diana Meredith, Staff Director
Mark Roman, Minority Staff Director
CONTENTS
Page
Hearing held in Washington, D.C., June 14, 2022.................. 1
Hon. John A. Yarmuth, Chairman, Committee on the Budget...... 1
Prepared statement of.................................... 4
Letter submitted for the record.......................... 132
Letter submitted for the record.......................... 135
Hon. Jason Smith, Ranking Member, Committee on the Budget.... 7
Letter submitted for the record.......................... 8
Prepared statement of.................................... 12
Julia Coronado, Founder and President Macropolicy
Perspectives............................................... 15
Prepared statement of.................................... 17
Vince Williams, Mayor, Union City, Georgia and President,
National League of Cities.................................. 22
Prepared statement of.................................... 24
Sharon Parrott, President, Center on Budget and Policy
Priorities................................................. 35
Prepared statement of.................................... 37
Stephen Moore, Chair, Save America Coalition, America First
Policy Institute, and Distinguished Fellow in Economics,
Heritage Foundation........................................ 64
Prepared statement of.................................... 66
Hon. Sheila Jackson Lee, Member, Committee on the Budget,
document submitted for the record.......................... 89
Hon. Lloyd Smucker, Member, Committee on the Budget, letter
submitted for the record................................... 98
Questions submitted for the record........................... 146
Answers submitted for the record............................. 147
HOW THE AMERICAN RESCUE PLAN
SAVED LIVES AND THE U.S. ECONOMY
----------
TUESDAY, JUNE 14, 2022
House of Representatives
Committee on the Budget
Washington, DC.
The Committee met, pursuant to notice, at 10:32 a.m., in
Room 210, Cannon Building, Hon. John A. Yarmuth [Chairman of
the Committee] presiding.
Present: Representatives Yarmuth, Jeffries, Kildee,
Horsford, Lee, Chu, Jackson Lee, Sires, Peters, Moulton
Jayapal; Smith, Kelly, McClintock, Grothman, Smucker, Burgess,
Carter,Cline, Boebert, Donalds,Geenstra, Good, Hinson,
Obernolte, and Carey.
Chairman Yarmuth. The hearing will come to order. Good
morning and welcome to the Budget Committee's hearing on How
the American Rescue Plan Saved Lives and the U.S. Economy. At
the outset, I ask unanimous consent that the Chair be
authorized to declare a recess at any time. Without objection,
so ordered.
I will start by going over a few housekeeping matters. The
Committee is holding a hybrid hearing. Members may participate
remotely or in person. For individuals participating remotely,
the Chair or staff designated by the Chair may mute a
participant's microphone when the participant is not under
recognition for the purpose of eliminating inadvertent
background noise. If you are participating remotely and are
experiencing connectivity issues, please contact staff
immediately so the issues can be resolved.
Members participating in the hearing or on the remote
platform are responsible for unmuting themselves when they seek
recognition. We are not permitted to unmute Members unless they
explicitly request assistance. If you are participating
remotely and I notice that you have not unmuted yourself, I
will ask you if you would like staff to unmute you. If you
indicate approval by nodding, staff will unmute your
microphone. They will not unmute your microphone under any
other conditions.
I would like to remind Members participating remotely in
this proceeding to keep your camera on at all times, even if
you are not under recognition by the Chair. Members may not
participate in more than one committee proceeding
simultaneously. If you are on the remote platform and choose to
participate in a different proceeding, please turn your camera
off. Finally, we have established an email inbox for submitting
documents before and during Committee proceedings and we have
distributed that email address to your staff.
Now, I will introduce our witnesses. This morning we will
be hearing from Dr. Julia Coronado, the Founder and President
of MacroPolicy Perspectives. The Honorable Vince Williams, the
Mayor of Union City, Georgia, and the President of the National
League of Cities. Ms. Sharon Parrott, the President of the
Center on Budget and Policy Priorities. And Mr. Stephen Moore,
Chair of the Save America Coalition, the America First Policy
Institute, and a distinguished fellow in economics at the
Heritage foundation. We welcome all of you.
I now yield myself five minutes for an opening statement.
Good morning. I want to welcome our distinguished panel of
witnesses. Thank you for joining us for this important hearing
on the American Rescue Plan.
This legislation, which I was proud to sponsor, was signed
into law 15 months ago. A lot has changed since then and the
American people have benefited enormously from the provisions
of this law. But they have also been subjected to a lot of
misinformation about the law. So today, I want to start by
laying out the facts.
In 2021, the Rescue Plan powered the strongest economic
growth in nearly 40 years, helping to improve our fiscal
standing and laying the foundation for our record-breaking
recovery.
On the jobs front, before the Rescue Plan, the nonpartisan
Congressional Budget Office projected our unemployment rate
would be 5 percent right now, and that it wouldn't drop below 4
percent within this decade. Thanks to the Rescue Plan,
unemployment is near historic lows at 3.6 percent. Seventeen
states, including my home state of Kentucky, are seeing their
lowest unemployment rates on record. In fact, the Rescue Plan
nearly doubled GDP growth and led to the creation of 4 million
additional jobs in 2021. That is millions of Americans earning
a paycheck as a direct result of the Rescue Plan.
And it is not only jobs. Incomes are up too by more than 5
percent overall, and by nearly 12 percent for the lowest-
earning workers. That is even after accounting for inflation.
The child poverty rate dropped nearly 40 percent from 2020 to
2021. Despite the economic fallout of the pandemic and the
possibility of a wave of evictions, foreclosures hit an all-
time low last year.
Across-the-board, the data shows that the Rescue Plan
helped American families enormously, ensuring they could put
food on the table, stay in their homes, and avoid economic
devastation despite the turbulent times.
The law was also enormously beneficial to state and local
governments. During the Great Recession, the contraction at the
state and local level hurt our overall recovery and prevented
states from addressing community needs and longer-term impacts
of the recession.
This time, funding from the Rescue Plan helped state and
local governments avoid massive layoffs, keeping teachers,
firefighters, police, and millions of other essential workers
on the job. Local leaders had the resources necessary to meet
urgent needs and ensure their communities came out of the
pandemic better than they went into it.
Not only was the Rescue Plan more effective than other aid
packages during the previous recession, it also helped the
United states recover more quickly than other nations. In fact,
the U.S. had the fastest economic recovery among the G-7
countries, and our economy is projected to be larger at the end
of this year relative to its pre-pandemic size than any other
G-7 economy.
Clearly, we have made significant progress, but now
inflation is a challenge. Again, here are the facts: Experts
across the ideological spectrum agree that the main drivers of
current inflation are international supply chain issues and
energy price hikes caused by Russia's war in Ukraine. These are
global challenges, which is why inflation is a global issue. As
Treasury Secretary Yellen said last week, ``We are seeing high
inflation in almost all of the developed countries around the
world. And they have very different fiscal policies.''
But unlike our global counterparts, America is in a better
place to face these economic headwinds because of the American
Rescue Plan. We have avoided the kind of long-lasting financial
damage to families and communities that typically follows an
economic downturn of the size we experienced. We have avoided
the grim forecasts CBO projected before the Rescue Plan. We
saved our economy and we delivered lifesaving and life-changing
relief to families across the country, all while fueling the
most equitable and impressive economic recovery in recent
memory.
There is a lot to learn from the Rescue Plan and the
important role the federal government can play in the lives of
Americans. I look forward to discussing this further with our
esteemed panel of witnesses today.
With that, I would like to yield to the Ranker Member, Mr.
Smith, five minutes for his opening statement.
[The prepared statement of Chairman Yarmuth follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Smith. Thank you, Mr. Chairman. It has been over 15
months since the $2 trillion American Rescue Plan, as I refer
to it as the Biden bailout bill, was signed into law, sparking
the highest inflation in 40 years. Inflation has risen 12.2
percent since Joe Biden took the oath of office. We have seen
gas prices surge to 109 percent above since Joe Biden took the
oath of office. I want to thank the Chairman for agreeing to
hold this oversight hearing. We have been asking for it for
some time and yet, this oversight hearing undercut by the fact
that President Biden's Rescue Czar Gene Sperling and Treasury
Secretary Yellen are not here.
Mr. Chairman, as you know, I sent you a letter requesting
you add a second panel of executive branch witnesses for the
hearing so Mr. Sperling and Secretary Yellen could answer the
questions they have thus far ignored from our timeless efforts
one after another. And I ask unanimous consent to submit the
letter to the record.
Chairman Yarmuth. Without objection.
[Letter submitted for the record follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Smith. Thank you, Mr. Chairman. Mr. Sperling was
appointed to oversee the implementation of this $2 trillion
boondoggle. Secretary Yellen's Department is responsible for
administering over $1 trillion worth of its programs and
benefits. Many of these made it more rewarding to stay out of
the work force in 2021 than seek gainful employment, worsening
the labor and supply chain problems we see today.
For over a year, we have cataloged numerous examples of
ridiculous waste of federal tax dollars from the American
Rescue Plan:
$1,400 stimulus checks to Japanese citizens living
in Japan;
$783 million in checks to prisoners;
$2 million to purchase a ski area;
$140 million for luxury hotel developments in
Florida;
$20 million to modernize fish hatcheries in Maine;
$4 million for a bird sanctuary;
$2 million for a golf course.
Sounds like a lot, but there is a lot more:
$15 million of taxpayer dollars to help develop a
venue in New Jersey to host the 2026 World Cup;
$7 million to social media influencers to promote
seafood;
$2 million to plant trees in New York;
$5 million for a moonshine walking trail;
$7 million for horseracing in Arizona;
$250,000 for pickle ball courts;
$800,000 for luxury apartments in Connecticut;
$4 million for beach bathrooms and parking lots in
South Carolina.
This list goes on and on. This is why we need answers from
the Administration.
So, what did American families get? I will tell you. They
got higher prices and lower real wages. Inflation began to rise
to the fastest level in 40 years the month after Democrats
passed the $2 trillion bill. Inflation was 1.7 percent in
February 2021, the month before passage of this boondoggle.
The economy shrank 1.5 percent in the first quarter of
2022, 4.4 percentage points lower than where the Congressional
Budget Office said it should be prior to passage of this
boondoggle. The labor force participation rate is still below
pre-COVID levels. The deficit in 2021 was $517 billion higher
than the Congressional Budget Office said it would have been
before passage of this boondoggle. At $2.78 trillion deficit,
it was the second highest deficit in the history of this
nation.
Interest rates are rising faster than it has seen in 30
years. When Joe Biden took office, the CBO predicted no tax
rates until 2024. We have two already, one expected this week.
In February 2021, CBO reported that the economic growth would
return to pre-pandemic levels by the middle of last year and
unemployment would continue decline, all without further
federal government stimulus. Despite this and with $1 trillion
in unspent COVID money, Democrats chose to gamble with the
financial security of the American people.
Our Democrat colleagues are holding this hearing to take a
victory lap that which shows just how of touch they are with
what real Americans are facing with uncontrollable inflation. I
yield back.
[The prepared statement of Jason Smith follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Yarmuth. I thank the gentleman for his opening
statement. Two points. One is you misspoke. You said tax rates
instead of interest rates. I am just correcting it for your
benefit.
Mr. Smith. Thank you. Interest rates are continuing to rise
under this Administration.
Chairman Yarmuth. And second, just for point of
information. We did extend an invitation to Treasury Secretary
Yellen and she was unable to attend. But we did make the
invitation to her.
Now, I would like to once again, thank our witnesses for
being here this morning. The Committee has received your
written statements and they will be made part of the formal
hearing record. You each will have five minutes to give your
oral remarks. Dr. Coronado, you may begin when you are ready.
STATEMENTS OF JULIA CORONADO, FOUNDER AND PRESIDENT MACROPOLICY
PERSPECTIVES; VINCE WILLIAMS, MAYOR, UNION CITY, GEORGIA AND
PRESIDENT, NATIONAL LEAGUE OF CITIES; SHARON PARROTT,
PRESIDENT, CENTER ON BUDGET AND POLICY PRIORITIES; STEPHEN
MOORE, CHAIR, SAVE AMERICA COALITION, AMERICA FIRST POLICY
INSTITUTE, AND DISTINGUISHED FELLOW IN ECONOMICS, HERITAGE
FOUNDATION
STATEMENT OF JULIA CORONADO
Dr. Coronado.
[Muted]----
Mr. Peters. Can't hear her.
Dr. Coronado [continuing]. before the ARP's passage,
forecasters expected a solid GDP performance, but in the event,
real GDP grew 5.7 percent in 2021, the fastest pace since 1983.
And the unemployment rate fell to 3.9 percent, the fastest one
year decline on record.
It is worth revisiting why policy erred on the side of
generosity during the pandemic. The recovery from the Great
Recession of 2008 featured too little policy support and a
labor market that left millions of Americans on the sidelines
for years. It took more than six years for the labor market to
regain the 2007 level of employment. And only after that did
the labor force participation rate of prime aged workers, age
25 to 54 begin to recover. During the pandemic, prime age labor
force participation again fell sharply. But a decisive recovery
in both jobs and participation has been ongoing for the past 12
months. We are on track to exceed pre-pandemic levels of
employment and prime age participation in the next six months,
which would be the fastest labor market recovery in four
decades.
There is an extensive literature in economics on labor
market scarring. That is permanently lower earnings that result
when people experience long spells of unemployment or labor
force disengagement. Unemployment also adds to income
inequality. Unemployment for lower wage and non-white workers
rises more in a recession and falls more slowly in a recovery.
The disastrously slow labor market recovery from the Great
Recession led to a policy reorientation that prioritized speed
of the recovery.
A strong labor market and fiscal support has meant a
broader based and more inclusive recovery. Workers have had
more financial space to bide their time, change employers, and
find the right situation for themselves and their families.
Younger, non-white and lower wage workers hit harder by job
losses during the pandemic are seeing by far the biggest wage
gains and can obtain full-time jobs more readily when they want
them.
The financial benefits of supporting households has also
been broad based. Delinquencies on virtually every loan
category have fallen through the recession. The first time we
have ever seen an improvement in credit quality through a
downturn. Employers have had to adapt to this strong labor
market but have largely been able to do so. Business
profitability and productivity have risen strongly through the
pandemic and applications for new business formation have
soared to new highs.
It may sound jarring to describe the U.S. economy in such
glowing terms when inflation is soaring and there is rising
talk of a recession. But diagnosing the drivers of inflation is
key to developing an effective policy response. Excluding food
and energy and adjusting for differences in methodology, U.S.
core inflation did rise earlier and higher than other advanced
economies, which surely reflects in some part the stronger
policy response.
But all countries have seen core inflation that is 2 \1/2\
to 3 \1/2\ percentage points above pre-pandemic trends,
highlighting that pandemic disruptions including COVID-related
shutdowns and supply chain frictions are an important driver of
inflation that we are seeing. At the same time, the U.S. has
also experienced the strongest recovery in the world in terms
of real GDP growth.
The more recent spike in food and energy prices is tied
directly to the war in Ukraine and will act as a tax on U.S.
consumers. The Fed has been tightening monetary policy, which
should cool demand and inflationary pressures in coming months.
But lingering supply chain frictions and the vulnerability of
food and energy prices to the actions of despots who seek to
weaken western democracies and economies will not be addressed
through monetary policy and require a more structural response.
Viewing high inflation primarily through the lens of budget
deficits is also not likely to be helpful. The federal
government ran the largest April surplus in history this year.
And a strong economy is producing stronger than expected tax
receipts while the expiration of ARP programs has led to an 18
percent decline in outlays. Yet, supply chain frictions and war
inflation are still with us. At least a strong economy gives
consumers the best shot possible of weathering rising interest
rates and the war shock.
The pandemic has been a huge shock to the global economic
system. Strong policy support has led to a robust U.S.
recovery, but now is the time to address some of the structural
elements of this disruption. That will be key to not only
bringing inflation down but meeting the challenges of the
energy transition and preserving western style democracies.
Thank you. I yield back.
[The prepared statement of Julia Coronado follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Yarmuth. Thank you, Dr. Coronado, for that
statement. I now recognize Mayor Williams for five minutes. You
may begin when you are ready.
STATEMENT OF VINCE WILLIAMS
Mr. Williams. Thank you. Thank you, Chairman Yarmuth and
the Committee for allowing me this opportunity to be here to
talk to you and share with you some of the great things that
have happened since APRA, the passing of APRA, on behalf all
cites, towns, and villages across this nation.
Again, I am Vince Williams, Mayor of the city of Union
City, Georgia, and also the proud President of the National
League of Cities. Union City is a community of over 26,000
proud residents, 88 percent of whom are African American.
Before COVID, Union City was trending in the right direction by
nearly every measure. We were revitalizing neighborhoods
through immense new investment by businesses in our city and
had increased our local revenue by over 81 percent through
economic activity and job creation. Our finances are in order
and nothing about my city or any city suggested a bail-out.
Because the whole nation was set back by COVID-19, so was Union
City.
APRA local government grants have given all cities, towns,
and villages in our nation the ability to be part of a national
economic recovery from bottom up starting with our hardest hit
residents. It is not like past efforts when decisions were made
in a federal office far away from where problems truly
happened.
From the start, Union City followed the advice of public
health experts, as we still do today, and state and federal
rules. We knew there would be tradeoffs, but we never thought
we would have to go it alone. Pausing nearly every local
economy while ramping up response to a global health crisis
created the kinds of economic uncertainty that the federal
government is uniquely authorized to address.
For local governments, the public health crisis was
inseparable from the economic crisis. It laid bare long-
standing health disparities that underlie why losses have
happened in cities in such uneven ways. Households in lower
income communities are at greater risk of bad health outcomes,
which worsen the effects of COVID-19. This is evident across
metro Atlanta where lifespans vary by as much as two decades
based on your neighborhood or zip code.
Union city is investing in a greenway trail with ARPA
funds. Why? A greenway is a sought-after amenity. It will raise
the value of the community and encourage accessible, affordable
ways for our residents to be healthier. As a determinant of
health, our built environment must facilitate healthier
outcomes, or at least, not be an impediment, so that we will be
less susceptible to the next COVID wave, or the next pandemic.
And the injection of APRA funds gives us access to the
capital our city needs to put contractors and laborers to work.
Imagine the transformation. Today, there are two parks in Union
City. This project will connect everyone in the community with
a recreational system that gives families across the city the
opportunity to conveniently access outdoor recreation space.
My city is also spending to reduce food insecurities and to
upgrade wastewater and stormwater systems. Our municipal
workers in every department are our heroes. For many of them,
virtual work is not and was not an option. Imagine for a moment
your hometown government has just shut down. Who would fix the
busted water pipes flooding your streets in the middle of the
night? To acknowledge their work through the pandemic, the city
also offered premium pay of $3,000 to eligible employees. This
is not only a recognition of excellent work during tough times,
it is also an investment in maintaining a qualified and trained
work force for the future.
We should note the substantial contributions of local
governments to the private economy. Some cities had more than
30 percent of water and sewer residential and business
customers on a cutoff list for nonpayment. Many 90 days late or
more. Yet, local leaders made the painful but right decision to
maintain service and absorb losses. To not have done so would
have increased homelessness and joblessness and unhealthy
conditions.
City fiscal conditions are also a good indicator of how
well low and middle-income households are doing. When there is
opportunity for lower-income households and the middle-class is
growing, local tax revenue goes up. When the middle-class
experiences declines, so will local tax revenue. We call that
Main Street. The state and Local Fiscal Recovery Fund is a Main
Street program.
I am sure Members of Congress have questions regarding
specific expenditures in their districts. I will conclude by
encouraging you to first learn more about the context of such
expenditures by giving local leaders the courtesy of a phone
call or certainly a much-needed visit to explain what their
expenditure is all about.
Thank you, Chairman Yarmuth, and Members of the Committee.
I appreciated this time.
[The prepared statement of Vince Williams follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Yarmuth. Thank you, Mayor Williams. I now
recognize Ms. Parrott for five minutes for her opening
statement. And you can unmute your machine and begin.
STATEMENT OF SHARON PARROTT
Ms. Parrott. Thank you very much. Chairman Yarmuth, Ranking
Member Smith, Members of the Committee, thank you for the
opportunity to testify here today. I am Sharon Parrott,
President of the Center on Budget and Policy Priorities, a
nonpartisan research and policy institute here in Washington,
DC. I am here to discuss three lessons we can learn from the
overwhelmingly successful COVID relief efforts of the last few
years, including the 2021 American Rescue Plan, as well as the
measures enacted in 2020.
First, we saw that a timely, robust fiscal policy response
can greatly speed and strengthen an economic recovery. Relief
efforts during the pandemic spurred a remarkable recovery that
made the COVID recession the shortest on record and brought the
unemployment rate, which peaked at 14.7 percent in April 2020,
down to 3.6 percent today. Two years after the Great Recession
when the federal response was both historic and undersized,
unemployment was still at 9.9 percent. While the causes of the
two recessions were different, there is little question that
the policy response to the pandemic fostered a stronger and
swifter recovery.
Second, well designed relief measures can greatly reduce
the harm done by a recession or a crisis, preventing spikes in
serious forms of hardship. Relief measures drove poverty down
to a record low in 2020, after counting government assistance,
and prevented spikes in food insecurity and homelessness. While
annual poverty data are not yet available for 2021, one study
at Columbia University estimated that the American Rescue Plan
alone reduced annual poverty that year by more than 12 million
people, including 5.6 million children, a reduction in child
poverty of more than 50 percent.
Relief measures included both broad-based policies like
economic impact payments, and policies targeted to those facing
the greatest hardship like expanded food assistance, housing,
healthcare, and unemployment benefits, and extending the full
child tax credit to the lowest income children.
Absent relief measures, unemployment likely would have
spelled financial disaster for millions of people. Evictions
and the number of children facing food insecurity would have
soared. The ranks of the uninsured would have risen. Instead,
jobless workers got robust unemployment benefits that helped
families and the economy. Families got additional nutrition
assistance, including additional help when schools were closed.
Evictions were averted first through a moratorium, and then
through emergency rental assistance that has now helped more
than 5.7 million households. Medicaid expanded and in 2021,
Affordable Care Act marketplace premiums became far more
affordable, helping more people get and stay insured.
Childcare providers got help to stay in business and
families got more help too.
These targeted policies helped a broad swath of families
who fell on hard times. They were particularly important to
people hard hit by the pandemic itself who worked in industries
that saw large job losses and who came into the crisis with
fewer assets to lean on. This includes a disproportionate
number of people of color who often have seen their
opportunities shortchanged by structural racism and
discrimination in employment, housing, and education.
Of course, the relief effort wasn't perfect. Some families
experienced long delays in aid and policymakers allowed help to
lapse in the latter half of 2020, which needlessly increased
economic insecurity and contributed to a flagging recovery in
the latter part of 2020.
Now, it is important to note that large scale temporary
relief measures were needed in part because of weaknesses in
the nation's underlying economic and health security policies.
For example, our regular unemployment insurance system leaves
out a large share of unemployed workers and provides low
benefits to many who do qualify. Emergency temporary measures
were needed and they were difficult to implement because they
were built on a rickety foundation.
That brings me to my third lesson. Some of the temporary
relief measures proved effective at combatting problems that
long predated the pandemic and they point the way to policy
advances we should adopt on an ongoing basis. Examples include
supporting low-income children through an expanded child tax
credit that is fully available to the lowest income families,
making marketplace coverage more affordable, supporting workers
by expanding the EITC, and revamping the unemployment insurance
system, supporting both kids and families by providing access
to affordable, quality childcare and preventing housing
instability and homelessness by expanding rental assistance.
In sum, COVID relief efforts sharply reduced poverty and
hardship and spurred a strong and swift recovery. But shoring
up our ongoing economic and health security policies would both
improve wellbeing during normal economic times and make our
nation more resilient to future recessions and crises. Thank
you.
[The prepared statement of Sharon Parrott follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Yarmuth. Thank you, Ms. Parrott. I now recognize
Mr. Moore for five minutes. Unmute your mic and proceed.
Welcome.
STATEMENT OF STEPHEN MOORE
Mr. Moore. Thank you very much for the opportunity to
testify before this Committee. I am honored to be here and
thank you, Mr. Smith, for the invitation as well.
To say the least, the timing of this hearing is extremely
unfortunate, given what is happening with the American economy
as we speak. We have now $5 gasoline in this country and in
many states, we have $6 to $7 a gallon gasoline. It was $2.39
when Trump left office. We now have 9 percent inflation in the
U.S. And the numbers just came out this morning, unfortunately,
on the Producer Price Index numbers were up to 10 percent,
Producer Price Index. That, of course, means that consumer
prices are going to rise in the months ahead. We haven't peaked
on inflation. It is not transitory.
We have increased the national debt over the last two years
by $4 trillion, which is a disgrace. And most importantly, and
I hope you will all focus on this, by most estimates in the
last 14 months or so, the average family in America, the median
family income has dropped by $3,500 in real terms. Let me say
that again. A $3,500 reduction in real median income. Now, we
don't have the official numbers yet. We will get those in
September. But I track these numbers pretty closely. It will be
close to that. And that is because you have this huge hurdle of
8 \1/2\ percent inflation. That means nominal incomes have to
go up by at least 8 \1/2\ percent and wages have to go up by
that amount just to keep pace with inflation. You all know we
are at 5 percent wage growth. So, nowhere near.
And so, incidentally, under Trump and, look, I worked for
Donald Trump. I was one of his senior economic advisors. You
know, we cut taxes. We reduced regulations. We got government
off the back of our businesses. And one of the things we are
most proud of is that we saw over those four years, a $6,500
increase in median family income. That is huge. That is a huge
amount of economic progress. And incidentally, minorities saw
huge gains. Hispanics and Blacks saw--and we are really proud
of that, the gains that were made with Hispanics and Blacks.
So, frankly, to have a hearing today that is saying that
this economic strategy has been a success, is delusional and
dangerous. And when I talk to people outside the Beltway, they
think it is just further evidence that Washington is completely
out of touch, frankly, with the real problems that Americans
are facing in paying their bills.
So, there were three--we lived through three economic
crises in my lifetime. The economic crisis of the 1970's, when
we had the massive inflation and the stagflation that happened
when Reagan came into office. We had, of course, the financial
crisis of 2007 and 2008, and then, of course, we had the COVID
crisis. And it is so important that we learn the lessons of
what works and what doesn't work.
So, Reagan came in in the middle of what was arguably the
greatest crisis since the Great Depression. And what did Reagan
do? We did not have a massive spending stimulus. Reagan cut
taxes, reduced regulations, and we got control of the money
supply with Paul Volcker at the Fed. Something that should be
happening now. And we saw a ferocious recovery. What happened
in the 1980's was an economic miracle that no one thought was
possible. Mr. McClintock, the economic recovery was so strong,
it was like we added another California to the economy under
the Reagan years. So, obviously, that strategy worked.
Then we tried what happened under the Obama years. And Ms.
Coronado is right. We tried $200 billion of stimulus spending.
And it was a complete failure. We had the worst recovery from a
recession in modern times. It was a horrific recession. We were
effectively in a recession for five years. And the thing that
is so amazing is that the lesson that many on the left learned
was we didn't spend enough money. We didn't spend enough. So,
instead of doubling down and tripling down and we quadrupled
down. And instead of spending $250 billion, we spent a
trillion, or actually $2 trillion. And now we see the result of
this. It is economic wreckage, in my opinion.
Now, yes, the jobs market is strong right now. There is no
question about it. It is the best jobs market right now that I
have seen in my lifetime. But I got to tell you this, it does
not look good right now. I am very, very worried about a
recession. This could be very severe. And I think most
economists would agree with me.
So, we should learn the lessons of what has happened here.
This was not a success. And to call this a success is really
problematic because the first stage of any kind of recovery, if
you have an addiction, is to acknowledge you have a problem.
And to not acknowledge that we have a massive budget that is
out of control, that we have an economy that is teetering on a
recession, that Americans are suffering greatly in terms of
their purchasing power and their incomes, is problematic.
And so, let's learn the lessons. Let's get it right. We
should cut taxes going forward, not increase government
spending. Thank you, Mr. Chairman.
[The prepared statement of Stephen Moore follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Yarmuth. Thank you, Mr. Moore. We will now begin
our Q&A session. And as is my customary proceeding, I will
reserve by time until the end. So, I now recognize the
gentleman from Michigan, Mr. Kildee, for five minutes.
Mr. Kildee. Well, thank you, Mr. Chairman, for holding this
hearing and for the witnesses for your participation to discuss
the effect of the American Rescue Plan and how it impacted
working families.
It is important for us to remind ourselves that in the
first few months of the pandemic, 22 million people lost their
jobs, 22 million of our fellow Americans. And while our
unemployment rate is now much lower and our economic recovery
has gained most of these jobs back, it is important to remember
that the quick and decisive passage of the American Rescue
Plan, despite some of what may have been said, did help to save
our economy. The choice of doing nothing was not an acceptable
choice given the circumstances. Otherwise, we obviously would
have risked spiraling into what could have been another Great
Depression.
The pandemic also exposed weaknesses in our economy,
including our reliance on foreign supply chains, for critical
components in goods. And of course, because of the pandemic and
broken supply chains, and now Vladmir Putin's war in Ukraine, I
know a lot of families are experience higher costs because of
inflation. We acknowledge that.
But what my focus has been, and many of us have been
working on is lowering costs for working families, lowing costs
on gasoline, prescription drugs, groceries. And so, I am happy
to see that Congress will once again this week act on
legislation to fix supply chains and pass the Lower Food and
Fuel Costs Act to provide relief for families.
The title of today's hearing suggests the American Rescue
Plan focused on helping working families, not people at the
top. And provided meaningful support in the form of tax cuts
for working families. A million Michigan families with children
got a monthly tax cut. In my district alone, the middle-class
tax cut put millions of dollars back into the pockets of
hardworking Michigan families. For mothers like Cordelia, a
single working mom I represent. She has twin daughters in my
hometown of Flint. These tax cuts made a huge difference
helping her afford school supplies, school uniforms, shoes,
socks, coats, the basics, for her two daughters. That is just
story among millions. Millions of Michiganders and Americans
who were helped through this terrible period by those important
tax cuts for American families.
So, Ms. Parrott, I wonder if you might, and you mentioned
it in your opening statement, but I wonder if you might go a
little further to describe how these important tax cuts helped
working families, their individual budgets, and also helped
boost the American economy.
Ms. Parrott. Yes, thank you for the question. The monthly
payments provided through the child tax credit provided a
lifeline to families in 2021. We have data that tell us what
families spent the money on. When we look at low-income
families for whom the increase was the largest because for the
first time, we ensured that low-income children got the same
child tax credit that middle income children received. When we
look at low-income children, we asked the question what did
they spend it on? We get the answer that I think most of us
would expect. They spent it on food. They spent it on rent.
They spent it on their mortgage. They spent it on school
supplies. They spent it on childcare. They spent it on all the
things that families need to care for their children. Many of
them used it for broadband access, which during the pandemic
was entirely essential for their children's schooling and for
their family's connection and interconnection to the economy.
Others paid down debt.
With the flexibility that came from monthly cash payments,
families made decisions that supported their children and the
needs of their families. They had the ability to make those
decisions for themselves.
We also have real time data that showed some of the
positive impacts that families felt. After the first round of
monthly payments, the share of adults with children reporting
that their family didn't have enough to eat in the past seven
days dropped significantly and rapidly according to data from
the Census Bureau. Just stop and think about that for a moment.
We provided a modest monthly child tax credit to families and
fewer kids were in families struggling to afford food here in
the United States of America.
More broadly, in 2021, among parents with incomes under
$25,000, the share doing at least OK financially and that is
how the question was worded in the survey, rose by 13 percent,
according to a report issued by the Federal Reserve. And
similarly, the share of parents across income levels who would
be able to pay for a $400 unexpected expense with cash rose
from 56 percent in 2020 to 64 percent in 2021.
Again, I want you to think about what it means for a family
to be able to absorb a $400 increased cost. A car breaks down,
a repair in the house is needed. For many of us, $400 doesn't
seem like a lot. And for these families, it made all the
difference to being able to absorb that kind of cost.
The last point I would just like to make is that helping
families with kids make ends meet has long-term positive
impacts. A large body of research finds that lifting children
out of poverty and preventing hardship yields important
dividends for children's and parents' emotional wellbeing.
Children's short and long-term health outcomes, and success in
reading in math, their school completion, their future earnings
prospects. In short, for the future wellbeing of the next
generation of adults.
That is why it is so important that we do these things not
only during crisis times, but in normal times to help our kids
have a chance to succeed. Thank you.
Mr. Kildee. Thank you so much. My time has expired. I,
again, thank the witnesses for their participation. And thank
you, Mr. Chairman, for this hearing. I yield back.
Chairman Yarmuth. The gentleman's time has expired. I now
yield 10 minutes to the Ranking Member, Mr. Smith.
Mr. Smith. Thank you, Mr. Chairman. Mr. Moore, a common
excuse that we hear from our Democrat colleagues over and over
when it comes to high inflation is that it is Putin's fault.
First, when inflation was an issue, Democrats and folks in the
Administration said it was temporary. It was transitional. They
said it was a high-class problem. Now they are saying it is
Putin's fault. So, what is your response when you hear
Democrats say that inflation is high because Putin invaded
Ukraine at the end of February 2022. Never mind the fact that
inflation had been rising since the American Rescue Plan was
passed and was already up by 7.5 percent before Putin ever
moved any forces.
Mr. Moore. So, a couple observations. First, the recovery
began in around June 2020. So, the second half of 2020, the
economy grew by about 20 percent. It was the fastest--so, this
idea that somehow the recovery began with the American Recovery
Act is just plainly false. The growth happened, the real
growth, happened in the second half of 2020.
And the thing that is kind of missed in all of this is that
what happened with the economy is we made a huge, huge mistake.
We shut down our economy. We shut down our businesses. We shut
down our restaurants. We shut down our churches. It was
catastrophic. And now we have the evidence that the health
benefits of that were de minimis. So, we got almost no health
benefits, but we did incredible damage to our economy.
Now, here is the interesting thing that happened. Starting
in around June 2020, most of the red states in America,
Florida, Tennessee, Texas, Utah, Iowa, Nebraska, Missouri,
those states opened up. Because one of the things that Trump
did that was really brilliant--and he made mistakes, anybody
would make a mistake in that kind of crisis. But he allowed
federalism to work. And he said we are going to let the states
decide their policy.
Now, Mr. McClintock, your state didn't do a very good job
of it. Your state was a disaster. And by the way, the death
rate when you adjust for age, was no higher in Florida than it
was in California. For the second half of 2020, Florida was
almost completely wide open and California, as you know, was
completely shut down. So, these problems in these--the problems
that you are all talking about were in the blue states in
America that made a bad point, bad decision on that.
Now, so we had a big recovery in the second half of 2020.
Do you know, Mr. Smith, what the inflation rate was the month
Trump left office? I know exactly.
Mr. Smith. 1.4?
Mr. Moore. 1.4 percent. So, how do you go from 1.4 percent
inflation to 8.6 percent inflation in 14 months? You can't
blame it on the recovery because we already had a ferocious
recovery----
Mr. Smith. We spent $2 trillion dollars.
Mr. Moore [continuing]. that was happening. It was clear--
now look, there were a lot of factors, but the match that lit
this forest fire was the $1.9 trillion. Plus, let's not forget,
then we passed a $1.1 trillion so-called infrastructure bill.
So, that is $3 trillion of spending. Now, let me just make one
other quick point.
Mr. Smith. OK. Let's make it quick.
Mr. Moore. OK.
Mr. Smith. Because I am running out of time.
Mr. Moore. The economists, there were 14 Nobel Prize
economists who said there would be no inflation. Mr. Chairman,
with all due respect, you said there would be no inflation.
Wrong, wrong, wrong, wrong. We now have--and inflation is the
cruelest tax of all. It is the one thing, you talk about
poverty, the thing that is going to drive millions and millions
of families into poverty is this high inflation rate.
Mr. Smith. So, I just want to say this. Another thing that
our colleagues they try to say over and over that inflation is
a global problem. And I just want to chat with you a little bit
about this. The U.S. economy is 25 percent of the entire
world's economy, 25 percent. So, 1/4 of the world's economy. It
is larger than the economies of Canada, France, Germany, Italy,
and the United Kingdom combined. So, when the U.S. decides to
spend $2 trillion, it is going to have a global impact when
they control 1/4 of the economy. What is your response given
that the inflation in the U.S. is actually higher than it is
everywhere?
Mr. Moore. It is a great question. And in my opinion, the
world is pretty dollar denominated. We are the world reserve
currency. I mean, Mr. Chairman, you have made that point many
times. So, this happened--the same thing happened in the 70's.
When we have inflation, inflation spreads around the world. So,
this is like reverse foreign aid. We are actually hurting all
of these other countries in the world because, you know, the
euro is indirectly tied to the dollar. So many other countries
basically peg their--China, for example, has essentially pegged
their yuan to the dollar.
So, we export inflation when we have inflation here. And
that explains why if we bring our inflation rate down, Mr.
Smith, I guarantee you the rest of the world will see a decline
in inflation as well.
Mr. Smith. So, despite the rosy commentary from the Biden
Administration and Democrats that you will hear today, here are
the facts. The economy shrank 1.5 percent in the first
quarter----
Mr. Moore. Right.
Mr. Smith [continuing]. this year. Labor force
participation is below what it was before the pandemic. The
largest Consumer Price Index has inflation up 8.6 percent.
Since President Biden took office, inflation is up 12.2
percent. The Fed has already increased interest rates twice
this year with another increase poised to take place tomorrow.
Real wages are down 4.2 percent since Joe Biden took office.
And gas is up 110 percent. And the 2021 deficit at $2.78
trillion was the second highest on record, $517 billion more
than CBO said it should have been. Why do you think--why do you
think our--what do you think our economy will look like? What
effects specifically did the American Rescue Plan have on
economic growth and inflation?
Mr. Moore. Well, look we had a--there was a huge stimulus
at the beginning of 2021. There is no question about it. And
that stimulus was not the American Recovery Act. I actually
think that was negative for the economy. The stimulus, Mr.
Smith, was Operation Warp Speed. We had a virus and that--I
mean a vaccine. And that vaccine allowed millions and millions
of more businesses to reopen their doors and allowed millions
and millions of Americans to go back to work. Look, I frankly
think that if Trump had been President over the last, we would
not be facing this situation. We would have a booming economy.
We lowered the poverty rate under Trump's policies to the
lowest level in recorded history for Blacks, Hispanics, women,
any group you want to talk about. You want to talk about
reducing poverty rates in this country, Trump did it.
Mr. Smith. Exactly. In your statement earlier, you made the
comment that we should cut taxes----
Mr. Moore. Mm-hmm.
Mr. Smith [continuing]. and it is quite interesting what
the Democrats keep trying to do over and over is to spin the
Build Back Better, the Build Back Broke bill. They keep
revitalizing it, which is over $1 trillion in tax increases.
Taxes on U.S. energy to increase gas prices. But yet, they want
to continue to spend money. So, would you say that passing the
Build Back Broke Act, as I refer to it, which would increase
taxes on Americans, increase taxes on U.S. energy, and also
increase government spending, do you think that is the solution
to our economy right now?
Mr. Moore. So, can I say something nice about a Democrat,
Mr. Smith? Because I am kind of a nonpartisan guy. I mean, Joe
Manchin saved this country. Joe Manchin saved this country. If
we had passed that--at that time that bill was, by many
estimates, $4 trillion. I mean, I shutter to think. You think,
you know, 8, 9, 10 percent inflation is bad. If we had passed
that bill, I think we would be--we are talking about inflation
rates that could have hit 15 percent.
Mr. Smith. Thank you. I want to ask Dr. Coronado, in
February 2021, you took to Twitter to dismiss concerns Dr.
Larry Summers raised about inflation and the American Rescue
Plan. You gave the concerns a thumbs down and said he was
invoking an inflation boogeyman. Later the same month, on
Twitter, you pushed around a tweet from a New York Times author
who said in his post that the fear of inflation has become a
greater threat to the American economy than inflation itself. A
month after that you said, people with terrible track records
forecasting who refuse to acknowledge and learn from their
mistakes do not deserve to be at the center of our--or set the
terms of policy discussions.
In fairness, you were not alone. The Biden Administration,
numerous Democrats, have similarly dismissed inflation. But
given what you know now, would you agree that dismissing
inflation concerns back in 2021 was a mistake?
Dr. Coronado. I also as a forecaster, and I make my living
as a forecaster, I have to acknowledge my mistakes. And so, I
definitely underestimated the persistence of the supply chain
issues. I would say part of that is just that the pandemic, we
all expected it to be short lived and go away. And in fact, it
didn't. And we are still dealing with supply chain shutdowns in
China today. So, that is a real problem and we have built that
into our thinking about inflation. If I think about the current
rate of inflation, I think it goes into three main buckets. One
is those pandemic-related frictions that have disrupted the
entire global economy. We were at an incredibly integrated
place of global supply chains and efficiency.
And that entire model has been disrupted by the pandemic.
That was exacerbated also by a shift to spending on goods over
services. That was unanticipated. I mean, we should have, in
retrospect, maybe anticipated that everybody was hunkered down
and not spending on services, which is more than 2/3 of
consumer spending. And so, they had a lot of spending power to
spend on goods and that strained global supply chains. My hope
is that supply friction that we have uncovered will see some
improvement in productivity and efficiency investment into
those supply chains to improve their resiliency as we go
forward.
The other bucket that is the dominant one right now is food
and energy prices. That is tied to the war in Ukraine. That is
not something that came from the American Rescue Plan or
anything that the Biden Administration done. That came from the
decision of Vladimir Putin to invade Ukraine. And so, we need
to be thinking about, again, ways we can address the supply
side of food and energy to give some relief to U.S. consumers.
Mr. Smith. I see that my time has expired. Food prices
continued to go up prior to invasion of Ukraine as well. They
have continued to increase but we have the data. Thank you.
Chairman Yarmuth. The gentleman's time has expired. Do you
want to finish your answer?
Dr. Coronado. Well, I mean, I would say it would be
certainly stimulating the U.S. economy was one contributor to
higher inflation relative to other countries. But what you
cited in my tweets and I still have that same frustration is we
got something for this stimulus. Very, very important outcomes.
We have gotten the strongest labor market in two generations.
And I live outside the Beltway. I see it all around me in all
kinds of people. And it is the working-class people that are
reaping the benefits of this strong labor market more than
anybody else. And that is the reality. I know the numbers too.
I live by them. And they are quite impressive.
Chairman Yarmuth. The gentleman's time has expired. I now
recognize the gentlewoman from California, Ms. Lee, for five
minutes.
Ms. Lee. Thank you very much, Mr. Chairman and our Ranking
Member for having this important hearing. And thank you to all
of our witnesses.
First of all, it seems like it is lost on Republicans that
one of the major outcomes of the Rescue Plan is we saved lives
and livelihoods. And if that is not important, I don't know
what is. People are alive because of that. People are surviving
and beginning to thrive because of the Rescue Plan. And that is
the bottom line.
And also, let me just say I very clearly remember
Reaganomics. The rich got richer and the poor got poorer. And
every time I see a homeless veteran I think of Reaganomics. And
so, I know what Reaganomics did especially for low-income
people and people of color.
Let me ask you, anyone can answer this. I would like to
hear from all of our witnesses. In terms of low-income
communities, the issues around income inequality and structural
racism, people were living on the edge before the pandemic.
People were barely surviving. And I know for people of color,
the structural racism and the issues around income inequality
is why.
And so, I am wondering now, the structural issues, the
institutional issues, the policy changes that are necessary so
that people don't fall back into those same old systems, did we
address any policy changes, any of the structural issues so
that people who have been living on the edge can move forward
now and not have to go through the same rigamarole that they
have had to go through because of their race or because of
their economic status?
Mr. Williams. Thank you. I will dive in. I have been Black
all my life. And my city certainly is predominantly African
American, as I stated, 88 percent. And what I do want to say is
I stick, you know, I must say this, I take issue with being
referred to as delusional. Because I work in my community day
in and day out. I am in the streets each and every day making
sure that families are moving toward being better, you know.
But one of the things I can say that we used and chose to
use the money in a deliberative fashion in my community with
seeking and making sure that our community had a voice in some
of the things that we would do to get the best bang for the
funding that we received. It is rare and unprecedented in my
lifetime that the federal government gave grants to every and
so many units of local governments.
At the same time, the city we knew there were critical
investments that had to be made to stabilize our community to
afford all of our members of the community. I don't operate
Republican or Democrat as a mayor. I don't have that luxury,
you know. So, I am a little concerned of the conversations that
we are having because it seems like I might be in the wrong
room.
But I do know what I have been focusing on is the uplift my
community and those communities that I serve. But also working
with the members of the National League of Cities that we serve
over 19,000 cities, towns, and villages which provides service
to over 200 million people and many of those are people of
color. So, certainly this has been a great opportunity and it
still is a great opportunity for us to do more. People are
getting back to work.
We have an unfortunate situation because of COVID-19
pandemic. Stressed supply chains have been big problem. And we
know that, you know. But I am very concerned that this
conversation is shifting in another direction. But, you know,
ma'am,----
Ms. Lee. Thank you.
Mr. Williams [continuing]. thank you and I hope that helps
you.
Ms. Lee. Thank you.
Mr. Williams. Thank you.
Ms. Lee. And, Ms. Parrott, can you also respond in terms of
not just providing more resources, but are we changing those
systems that are barriers for people of color and low-income
people?
Ms. Parrott. Yes, thanks for the question. I think that the
American Rescue Plan did a lot to push against the spike in
hardship that we would have seen that would have
disproportionately fallen on communities of color that have for
centuries faced systemic racism, which is why they came into
the crisis with fewer assets, lower income, more
vulnerabilities to both the virus itself and the economic
fallout.
But temporary measures can't solve permanent problems. And
one of the things that is, I think, important and exciting is
that we tested some things that worked that could push back in
a more systemic way and that really paint the way or pave a
path for the future.
I think of it as the need to invest in three areas. Our
kids, our workers, and our healthcare. And in each of those
areas, communities of color face systemic barriers that hold
them back in ways, and make them less likely to achieve their
full potential, and to thrive and to be able to chart their own
destiny, right?
So, we need to invest in our kids because when we invest in
our kids, when kids have more economic stability, when they go
to good quality schools, when they have adequate nutrition,
when those things happen, kids thrive and they can succeed. And
so, that is why I talk about expanding the child tax credit
permanently to make it fully available to kids who need it
most. It is why we need to invest in childcare so that families
can work and kids get the help they need to develop.
When we think about investing in workers, we know that in a
dynamic economy people lose jobs. But in the United States, a
temporary job loss can be an absolute financial crisis for a
family because our unemployment insurance system breathes,
builds, creates so much financial insecurity for people.
And the third thing I would say is healthcare. We have 2
million people in the United States, 2 million people who
should be getting Medicaid coverage that provides comprehensive
coverage including mental health coverage, acute, and long-term
care, they should be getting Medicaid and they aren't. And the
reason is because their states, like the state of Georgia, has
refused to adopt the Medicaid expansion. And that means that we
have of that 2 million people, 60 percent are people of color,
systematically left out of healthcare coverage that they need
to be able to thrive and support their families.
So, we know what we can do. We know it can make a
difference. And the question is whether we will take those
steps to get it done. Thank you.
Chairman Yarmuth. Thank you. The gentlewoman's time has
expired. I now recognize the gentleman from Mississippi, Mr.
Kelly, for five minutes.
Mr. Kelly. Thank you, Mr. Chairman. And naming an act
something does not and naming a hearing something. Saving lives
in the United States economy that is the name of this hearing.
Since 2021, since this American Rescue Plan passed, more people
died from COVID than did before. That is a fact. So, it is not
saving lives or explain to me how it saved lives. So, that is
just a misnomer from the get.
Our economy is not better today than it was in 2020. It is
worse. And I know that because I think in the army I spent a
long time and I am trying to say this in a nice way, don't pour
water down my back and tell me it is raining.
And my people in my district do not feel they are better
off today. They do not feel like they are safer because of this
American Rescue Plan. It is like scoring a touchdown in a
college football game, which is that is life where I live. You
score a touchdown and you go up seven to nothing. And you
celebrate the rest of the game even though the final score is
63 to 7. Yes, the American Rescue Plan had some benefits when
it first passed. But those benefits have long passed and the
actions and policies that we have done since then have added to
inflation.
We can tout the work force. We can tout that unemployment
is the lowest and all that. But here is what I know. I can't go
to restaurants because they are closed because they can't find
workers to do the job. I think right now we are tone deaf to
the cries of the American people. Especially those people in my
district. We have $5 gas prices, record high, which happened
long before the Putin invasion.
I can point back to the 2020 budget where President Biden
said in his budget that he intended to raise gas prices on the
consumer. That is in his budget. Not my word, his word. Record
inflation, 8.6 percent last seen during the Carter
Administration. Supply chain issues that persist. The most
recent, the baby formula, which we have taken steps way too
late. Not when we were notified of the problem in the
Administration, but months after they finally made a effort to
do something that a problem that they knew was coming.
Grocery prices. Talk to your constituents or talk to your
people. It is amazing what little food you bring home in the
plastic bags from a grocery store for spending more money than
we did just months ago. It is appalling.
My people cannot afford to eat and live. They have to make
choices to feed their kids that they should not have to make.
Input costs for our farmers continue to rise, whether that is
diesel prices, whether that is fertilizer, tons of different
input prices continue to rise, which guess what, means a year
from now that the costs of those groceries are going to go even
higher.
A work force that is still disengaged because of us paying
people not to work in this plan. We still, our service industry
is especially impacted by this. And if you don't believe that
you can see that restaurants that close at lunch because they
don't have enough employees to open up and serve a meal to
people.
A border crisis that there has been no attempt, no attempt
to solve. Under President Trump, we had an increasing average
wage and now wages are stagnant or decreasing at best,
especially in light of an--celebrate, I think not. I think it
is time to reduce gas prices. Mr. Moore, what things can we do?
I don't really want to talk about the past and I definitely am
not celebrating. What things can we do to improve our economy
now?
Mr. Moore. Well, Mr. Chairman, first of all, you know, I
don't recall all these supply chain problems when Trump was
president. And it makes a big difference. I mean, look, Donald
Trump, love him or hate him, you know, I didn't always agree
with his antics and some of the things he said, you know, but
he was a businessman. He knew how to make things work. He knew
logistics. Who in this Administration knows anything about
business? I mean, Pete Buttigieg, Jennifer Granholm.
If we are concerned about the supply chain, why would the
first act of Joe Biden when he came into office was to kill a
pipeline. Pipelines are critical to the supply chain, right? It
is by far the most efficient way to transport our oil and gas.
Why would we take millions of acres of prime oil and gas lands
off of limits? Why would we do that?
The International Energy Administration estimated that we
would be right now at about 14 million barrels of oil a day if
we had continued with the Trump policies. You know where we are
at today? Eleven million. So, think about that. We have lost 3
million barrels of oil a day in production at $120 a barrel.
You are talking about almost a half a billion dollars a day, a
day that the United States is losing in terms of our GDP. That
is tragic. That is tragic.
So, we have got to end the war on American oil and gas. We
are all for a clean environment and we all want to deal with
climate change but shutting off American oil and gas was a
really bad idea.
I think we need to make the Trump tax cuts permanent. They
were a success. I mean, everything shows that they were a
success. We had the lowest poverty rate, the lowest
unemployment rate. We had record revenues on the corporate and
personal income tax. I mean, everything, you know, I helped
design that plan. So, I feel personally engaged with it. But
all the claims that we made worked.
And the other thing that is really critical that you just
said, Mr. Kelly, one of the big mistakes that we made under
Trump within the first, you know, year of COVID under Trump,
and then accelerated under Biden, was increasing unemployment
benefits. And if you look at our chart in my testimony on page
9. I don't know if you have it in front of you. We estimate
that if we, instead of increasing unemployment benefits which
pays people not to work, if we had done what Trump wanted to do
which was cancel the payroll tax, we would probably have about
4 million more Americans working today. Four million more
Americans.
So, let's incentivize people to work. Look, the heroes of
the American economy in 2020 and 2021 were the firefighters,
the policemen, the delivery people, the nurses, the people who
were working. Why didn't we reward them rather than the people
who were not working? It just didn't make any sense.
Mr. Kelly. Mr. Moore, my time has expired. I yield back.
Chairman Yarmuth. The gentleman's time has expired. I now
recognize the gentleman from California, Mr. Peters--no, I am
sorry, the gentlewoman from Texas, Ms. Jackson Lee, for five
minutes.
Ms. Jackson Lee. Thank you very much, Mr. Chairman. And
what an amazing amount of delusional presentation that we have
heard. And let me just quickly submit information into the
record. The tax bill or the tax debacle of President Trump at
the time, it ignored the stagnation of working-class wages and
exacerbated inequality. In addition, it weakened revenues at a
time when the nation needed to raise more revenues. It
encouraged rampant tax gaming and risks undermined the
integrity of the tax code.
In particular, down in Houston where I represent, and I ask
unanimous consent to submit a February 27, 2019, document into
the record, how Trump's----
Chairman Yarmuth. Without objection.
[Document submitted for the record follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Ms. Jackson Lee. In addition, Trump's tax cuts accelerated
gentrification and inequality in Houston. We also realized that
after two years, the Trump tax cut failed to deliver on GOP
promises. And, of course, our own committee recognized that the
tax law showers benefit on the wealthy, large corporations,
while abandoning the middle class and the Main Street
businesses.
We would not have survived. The American Rescue Plan
provided $8.2 million in American Rescue Plan dollars toward
the Texas healthcare work force, the very point that the
gentleman just previously made.
I am not going to sit here and tolerate a lopsided
presentation that suggests that we would have been in nirvana
if we had had the previous president here. We would have had 3
million dead Americans because we would not have had the
distribution of the vaccines and/or the testing. As a Member of
the U.S. Congress, I did about 85 testing sites and another 80
vaccinationsites with local health collaborators. Right now, we
are stuck. Why are we stuck? Because the bill that we passed in
the House on COVID testing is languishing in the Republican
strangled Senate. Even though Democrats want to do it.
I believe that we should recognize that we can work
together. We need to work together on improving the supply
chains. We need to work together on dealing with the question
of inflation. But I can assure you that if Joe Biden had not
been elected and the previous person had been elected, now
promoting the Big Lie, we would have been in an enormous
disaster. More people would have died. The moneys to move the
distribution of the vaccines and the testing protocol would not
have worked. And families would have been in the streets
carrying their belongings as we saw in Houston before those
dollars came with whole families taking baby carriages out.
This is an outrage that anyone would want to characterize
the American Rescue Plan as anything but a rescue plan. That is
what it was. It was a rescue plan. Mayor Vince Williams, I was
a board member of the National League of Cities. Let's here you
pound the table. Tell me what a lifeline, very quickly, because
I want to get another question in, that the American Rescue
Plan was for your cities that you represent.
Mr. Williams. Thank you, Representative. I appreciate that.
I do want folks to understand that when we think about a
lifeline for America's people, you know, this is about people
over politics. And we have got to make sure and you just made
the comment about working together. This is about everyday
Americans and it doesn't matter what district you are
representing. There are people hurting in all of our districts
and communities.
But, you know, I do want to touch on, you know, how the
American Rescue Plan further moved racial equity, if you will.
You know, my statement in my written testimony includes a focus
on the social determinants of health. Life expectancy is shaped
by many factors beyond an individual's control. And that is
what we are talking about. Those things that we can help people
with where they have no ability to control it. And that is
health disparities, access to internet, access to food
insecurities. Those are things we have got to focus on. And we
are really having a discussion about some partisan differences
that, look, I wasn't brought here for this. I was brought here
to talk about how ARPA assisted America's cities, towns, and
villages across this nation. And----
Ms. Jackson Lee. Thank you so very much.
Mr. Williams [continuing]. my main focus is about the
people who have been hurting. The people who have died as well.
And certainly, I mentioned in my commentary that our first
responders were our heroes. Certainly, the nurses in our
community. But when we talk about healthcare, my----
Ms. Jackson Lee. Thank you, Mayor.
Mr. Williams [continuing]. city doesn't have a hospital.
Ms. Jackson Lee. Ms. Parrott----
Mr. Williams. We have two urgent care facilities, you know,
so, certainly----
Ms. Jackson Lee. Mayor, please can I----
Mr. Williams [continuing]. hospital opportunities----
Ms. Jackson Lee.--ask a question----
Mr. Williams [continuing]. are needed.
Ms. Jackson Lee.--of Ms. Parrott, if I might----
Mr. Williams. Yes.
Ms. Jackson Lee.--ask her a question? Thank you, Mayor,
very much.
Mr. Williams. Thank you.
Ms. Jackson Lee. On what effect did the American Rescue
Plan had on poverty and if you can just restate the value of
the child tax credit in my waning moments. Mr. Chairman, if she
can answer that question. Ms. Parrott?
Chairman Yarmuth. She may answer.
Ms. Parrott. OK.
Ms. Jackson Lee. Thank you so much.
Ms. Parrott. Over the last 80 years or more it might be
difficult to think of a single piece of pre-pandemic
legislation that has been more effective than the Rescue Plan
at preventing poverty. Final poverty figures are not available
for 2021 yet, but researchers know enough about the Rescue Plan
to say several things.
First, the American Rescue Plan kept a huge number of
people above the poverty line in 2021. More than 12 million
people according to projections by Columbia University. This
includes 5.6 million children compared to what poverty would
have been without that legislation. The study found that the
Rescue Plan overall lowered poverty by nearly 1/3 and by more
than 1/2 for children compared, again, to where poverty would
have been without the plan.
A second study by the Urban Institute found larger
reductions in poverty. These and other projections suggest the
Rescue Plan may prove to be the single most effective law since
1935 for protecting people from poverty and hardship in a given
year.
But as I stated earlier, temporary measures help us see
what is possible, but can't solve a long-term underlying
problem. A key feature of the American Rescue Plan was making
the full child tax credit available to the lowest income
children. That has enormous positive effects on children, can
lower poverty, and improve their future trajectories. Thank
you.
Chairman Yarmuth. Thank you. The gentlewoman's time has
expired. I now recognize the gentleman from California, Mr.
McClintock, for five minutes.
Mr. McClintok. Thank you, Mr. Chairman. First, Mr. Moore,
you keep bashing California's socialist economy. But I need to
remind you that despite its problems, California is still one
of the best places in the country to build a successful small
business. All you have to do is start with a successful large
business.
Mr. Chairman, there are times when I wonder if the majority
is completely disconnected from reality. The American Rescue
Plan that spent and printed nearly $2 trillion that we didn't
have, that amounts to about $15,000 for every family in
America, unleased a wicked inflation that is now robbing
families of thousands of dollars of their earnings. It turns
out that all that free money that you sent out is pretty
expensive. And Americans are paying it back every day at the
grocery store, the gas station, the rents they pay, everywhere.
Government can't put a dollar into the economy without
first taking that same dollar out of the economy. Whenever
government gives you a dollar it has to take a dollar from you.
It does so through current taxes, which rob you of your current
earning power and suppresses productivity. It does so through
your future taxes by borrowing, which robs you of your future
earnings, and it does so through inflation, which ravages your
savings and purchasing power.
ARPA was financed through inflation and it is crushing
working families. And at the same time, you keep flooding the
labor market with cheap illegal labor assuring working
Americans will never recover. And the sad irony is they trusted
you. Even your own economists warned you this would happen.
Steve Rattner and Larry Summers, among others. And yet, you
listened to the socialists in your party instead and this is
what we have got. Before you passed ARPA, the CBO projected 2
percent inflation for 2022. We are now at 8.6 percent and
accelerating. It projected zero interest rate increases until
2024. We have had 1.25 so far. As much as two when the dust
settles at the Fed. And mortgage rates have doubled. CBO
projected 4.6 percent economic growth for 2021, 3 percent for
2022. Instead, we have had a 1 \1/2\ percent economic shrinkage
in the first quarter.
And you have the gall to tell us that ARPA is doing great
things for the economy and everybody is wonderful. Are you out
of your minds? I keep trying to warn you you cannot spin the
economy. Everybody knows precisely how they are doing. And when
you try to tell them otherwise, you sound foolish. And when you
keep trying, you sound delusional. You are not fooling anybody
but yourselves.
Now, Mr. Moore, we just heard about poverty. Didn't we
reach the lowest poverty rate in 60 years under the Trump
Administration?
Mr. Moore. In recorded history of the United States.
Mr. McClintok. How did communities of color fair in the
Trump economy?
Mr. Moore. So, we had the lowest Hispanic, Asian, and Black
poverty rate ever recorded in the history of the United States
after----
Mr. McClintok. How about wage growth?
Mr. Moore. Pardon me?
Mr. McClintok. How about wage growth?
Mr. Moore. Very strong. I mean, we had, according----
Mr. McClintok. The fastest wage growth.
Mr. Moore [continuing]. according to the Census Bureau data
does kind of the, you know, the critical research on this and
they found over the four years of Trump Administration roughly
$6,000 after inflation real income gain for the median income--
--
Mr. McClintok. And that was----
Mr. Moore [continuing]. that was for----
Mr. McClintok [continuing]. that was----
Mr. Moore [continuing]. people just in the middle.
Mr. McClintok. That was the fast wage growth in 40 years,
was it not?
Mr. Moore. Roughly, yes.
Mr. McClintok. And----
Mr. Moore. Wage growth was pretty good----
Mr. McClintok [continuing]. weren't the principal
beneficiaries----
Mr. Moore [continuing]. in the late Clinton Administration.
Mr. McClintok [continuing]. working class Americans? Wasn't
the income gap between rich and poor finally beginning to
shrink?
Mr. Moore. So, this is really the most important point. You
know, I think that--I think we would all agree on this panel
that one of the--one ways--one way that you should assess a
government policy is how it affects the least among us. You
know, and I think I agree with that.
Mr. McClintok. And how did it affect the economy?
Mr. Moore. How does it affect minorities? How does it
affect the lowest income people? So, if we accept that
criteria, we saw big gains for low-income people under Trump.
And here is the thing that is reason I said----
Mr. McClintok. What are we seeing now?
Mr. Moore [continuing]. the reason I said inflation is the
cruelest----
Mr. McClintok. What are seeing now and how are communities
of color doing now?
Mr. Moore. Well, see this is the thing. When I said
inflation is the cruelest tax, it is, sir, it is a--it is the
most regressive tax of all. Look, if you have 8 percent
inflation, I guarantee you Bill Gates doesn't care. I guarantee
you someone who is making more than $1 million doesn't care.
But----
Mr. McClintok. Well, let me just----
Mr. Moore [continuing]. people making $50,000----
Mr. McClintok. I have got----
Mr. Moore [continuing]. they get crushed.
Mr. McClintok. If they are making $50,000 doesn't an 8.6
percent inflation rate mean they just lost $4,300 of purchasing
power here?
Mr. Moore. Well, wages are up by 5. So, it is----
Mr. McClintok. But at $50,000, an 8.6 percent inflation
rate means reduced wages, of purchasing power of $4,300. Does
it not? If I set aside $100,000 toward my retirement, doesn't
that mean that the Democrats' inflation just took $8,600 of
purchasing power?
Mr. Moore. Well, except that wages are up by 5 percent. But
you know what is really down, sir, is savings. I don't
understand why Joe Biden keeps saying savings is up. We have
seen $11 trillion lost in the stock market in the last four
months. We do people have their savings? So, this is the
biggest evaporation of savings since the----
Mr. McClintok. If you have got $100,000 in your savings
account that you put toward your retirement, isn't it worth now
$8,600 less this year because of the Democrats' inflation?
Mr. Moore. Yes.
Mr. McClintok. Thank you.
Chairman Yarmuth. The gentleman's time has expired. I now
recognize the gentleman from California, Mr. Peters, for five
minutes.
Mr. Peters. Thank you, Mr. Chairman. You know, in San Diego
the American Rescue Plan has been a lifeline for my
constituents. federal funding has flowed to San Diego families,
students, hospitals, small businesses, restaurants, and
communities that were facing disaster at the beginning of this
pandemic. Since the day that the American Rescue Plan became
law, the number of San Diegans who are vaccinated has grown
five times. More than 75 percent of the county is now fully
vaccinated. I am proud that $95 million of relief went to live
venues.
And almost 17,000 PPP loans granted to small businesses in
my district. Our team has connected dozens of small business
owners with the Small Business Administration to secure
shuttered venues, operators' grants, restaurant relief grants,
paycheck protection loans like Mr. Lamb in Rancho Bernardo
whose salon received a $79,000 PPP. Mr. Buono from Little Italy
whose family restaurant received 124,000 PPP loan. We have also
disbursed over $200 million to more than 10,000 renters to
cover unpaid rent and utility bills. The fact is that these
have been great benefits and kept us out of much worse
problems. And that was what we were trying to do at the
beginning.
I would like to ask Dr. Coronado about the claim that we
have exported inflation. Would you respond to that notion? And
I don't know how, by the way, I don't know how that would have
affected the supply of chips and the demand for goods. But tell
me what the response to that is.
Dr. Coronado. Right. I think it is fair to say that, yes,
when American consumers spend it supports the global economy.
But it is very difficult to tie any of that directly to the
inflation we have seen. One of the things we saw here and
abroad was a shift to goods spending that was after, you know,
we have seen declining goods spending in advanced economies
since World War II.
It has been--we have become ever more service-oriented
economies. And, in fact, so much so that the infrastructure of
supply chains was underinvested in. And I think when we
suddenly shifted back to goods spending both here, and in
Europe, and in Canada, and in Australia, it strained these
global supply chains. And that has been revealed as a really
fundamental structural problem that bears some focus and some
investment. And that will help increase efficiency globally.
And ultimately what we want when we run into supply chain
constraints like these supply chain issues we are facing, is
that we invest in them and come out of this with better
efficiency and better productivity. So, I think what we are
seeing is very isolated focused inflation in areas that are
most impacted by the supply chains. That is a global
phenomenon.
And then there are differences across countries depending
on structures. And the other universal reality is the food and
energy price inflation that we see.
Mr. Peters. I mean, it is pretty preposterous to suggest
that Ukraine had nothing to do with that. I abhor that, you
know, this was not driven in large part by outside events
related to COVID.
Dr. Coronado. Yes.
Mr. Peters. One of the other benefits, I think, and maybe,
Dr. Coronado and Ms. Parrott could speak to this, was we put in
place temporary protection from evictions. I agree this should
be temporary and we should get back to business as normal. But
can you describe the economic benefit of keeping people in
their homes through this pandemic as we climb out of it?
Dr. Coronado. Yes, absolutely. There are so many--and I
will just speak briefly and then turn it over to Ms. Parrott.
There are so many interlinkages between the benefits that were
provided. Keeping people in their homes during a pandemic and
allowing them to pay the rent also meant that they were better
able to feed their families, which reduced distress. It meant
that they were more able to continue working and continue to
earn income. And it meant that that they were also more able to
pay their other financial responsibilities.
So, again, one of the points I made in my testimony is we
have never seen--we have record low delinquencies on all kinds
of loan categories. We have seen record low repossessions of
cars. These are meaningful benefits to working class families.
So, the spillover--and I think one of the innovations of the
stimulus that we provided and the fiscal support we provided is
just giving people the money to make the decisions they need to
make for their families.
Mr. Peters. Right.
Dr. Coronado. So, you mentioned the rental assistance. That
was important and then you also had cash on hand to do what you
needed to do depending on the needs of your family.
Mr. Peters. We are going----
Dr. Coronado. And it just provided so many spillovers.
Mr. Peters. We are going to run out of time, but I just
wanted to address the notion that we didn't help the poorest
people. The child tax credit cut childhood poverty in half.
That should be extended. Also, the notion that the answer to
this problem is to extend the Trump tax cuts. Trump tax cuts
are in place today. This had nothing to do with----
Dr. Coronado. Yes.
Mr. Peters [continuing]. those as well. So, thank you. Mr.
Chairman, I yield back.
Chairman Yarmuth. The gentleman's time has expired. I now
recognize the gentleman from Pennsylvania, Mr. Smucker, for
five minutes.
Mr. Smucker. Thank you, Mr. Chairman. Just a few comments
and if I can submit a letter into the record, I would
appreciate it.
Chairman Yarmuth. Without objection.
[Letter submitted for the record follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Smucker. This is a letter, Mr. Chairman, to you that I
submitted, sent to you after a previous hearing when we talked
about the need for a hearing on inflation. And I still stand. I
think diving into what caused this inflation and what we in
Congress can do to combat that is a really good discussion to
have. I know we had some of that here today, but I would like
to see us do that further. So, that letter remains.
It is interesting to hear the Chairman's take on this,
talks about 2 percent wage increase, but completely ignores, or
almost ignores the real wage decrease that we have seen. And
Democrats know that this economy is not working for the
American people. That is why their dais has been empty most of
this hearing. It is difficult for them to defend what is
happening in the economy.
Mayor Williams, I would like to--I appreciate you being
here. Thank you for what you are doing in your community. You
are working to help to see that the needs of your constituents
are met. I want you to know that you are not the only one in
the room that is in that position. We all come here to Congress
to work. I ran for Congress to help to ensure that the poorest
among us can live their own American Dream.
And this is a real discussion about policies that make that
happen or will prevent that from happening. So, yes, maybe
sometimes it is political, but I want you to know that I think
every member on this dais agrees with you that we should have
policies that work.
The inflation in your community, does that affect your
constituents?
Mr. Williams. Yes, it does.
Mr. Smucker. The gas prices I am sure do. If there were--if
we agreed that the American Rescue Plan caused that, would it
have been worth it?
Mr. Williams. Yes. It would have been worth it.
Mr. Smucker. I can tell you--I can tell you that my
constituents don't believe that.
Mr. Williams. Yes.
Mr. Smucker. I don't know about yours. But mine do not.
Mr. Williams. Yes.
Mr. Smucker. They would prefer to have an economy that is
growing, an economy like you had before the pandemic when you
said Union City was trending in the right direction by nearly
every measure. That was not by accident. That was a result----
Mr. Williams. No it wasn't.
Mr. Smucker [continuing]. of work that you have done and of
work that had been done on the federal level that helped to
ensure that we had policies in place that allowed every
community to benefit. So, these are important issues that we
are talking about.
Mr. Moore, appreciate your testimony. I think we need a
better understanding of what causes inflation and maybe I want
to get back to the basics. And the testimony of--I am sorry,
Coronado, Dr. Coronado, she said U.S. core inflation rose
earlier and higher than other advanced economies after
inflation rose. This is her direct quote U.S. core inflation
rose earlier and higher than other advanced economies. I have a
chart that shows that. This is before Ukraine because there are
obviously supply chain issues, Ukraine issues that do have an
impact. But this was before that occurred.
This is OECD countries. So, countries comparable to the
U.S. The red is their inflation rate and look how the U.S.
inflation rate jumped just after the American Rescue Plan. Can
you tell me, Mr. Moore, how do governments cause inflation?
What causes inflation?
Mr. Moore. Well, if you just hold up--can you hold up that
chart one more time?
Mr. Smucker. Sure.
Mr. Moore. Because it is remarkable. Look at the end of,
you know, 2020. Look at where the--look at where the inflation
rate just goes straight up under Biden. We had 1.4 percent
inflation the month Trump left office. So, that is a pretty
remarkable malfeasance.
We hadn't had, Mr. Smucker, inflation for about 35 years in
this country, you know. One of the reasons the U.S. got so well
through the 1980's, 1990's, 2000's, and 2010's was we had very
low inflation. Our inflation rate ranged from 2 to 3, maybe
sometimes it would 4 percent, but we were in the sweet zone.
And, look, what you want from monetary policy is very simple.
You want a strong and stable currency.
And by the way, just as an aside, I am very concerned about
this idea that the Federal Reserve Board is going to get
involved in, you know, climate change issues and race issues
and so on. No. The Federal Reserve has to hold inflation down,
stop----
Mr. Smucker. Sure. OK. And I am sorry. I am out of time.
Mr. Moore. I am sorry.
Mr. Smucker. I would love to ask you some more questions.
But you know what I am concerned about is the impact on the
communities of Mayor Williams and other----
Mr. Moore. Yes.
Mr. Smucker [continuing]. communities across the country of
inflation that is not tailing off.
Mr. Moore. Right.
Mr. Smucker. That the Fed is going to have a very difficult
time dealing with that without causing a severe recession. So,
we have hard times ahead as a direct result of policies that
have been put in place by this Administration.
Mr. Moore. Mr. Smucker, I believe in the first two years of
the Biden Administration if we stay on the course we are on, we
will see all of the median income gains that happened under
Trump completely eliminated.
Mr. Smucker. I am out of time. Thank you.
Chairman Yarmuth. The gentleman's time has expired. I now
recognize the gentleman from Massachusetts, Mr. Moulton, for
five minutes. Is he on? Mr. Moulton? No. OK. We can't find Mr.
Moulton. I now yield five minutes to the gentleman from Nevada,
Mr. Horsford.
Mr. Horsford. Thank you very much, Mr. Chairman, for
holding this hearing. And thank you to our esteemed witnesses
for appearing before the Committee. I am actually glad that we
have your expertise and incite to highlight just how
fundamental the American Rescue Plan has been to our country's
pandemic recovery. When my constituents sent me here to
Congress, they expected me to deliver results. They sent me
here with the dual mission this past two years of crushing the
COVID pandemic and implementing an equitable recovery for
working Americans.
So, I am proud to say that I voted to pass the American
Rescue Plan in the moment that it was needed. Not one of my
colleagues, my Republican colleagues on the other side voted
for that bill. What was their plan to crush the pandemic? What
was their plan to help small businesses and entrepreneurs? What
was their plan to help lift 50 percent of families out of
poverty through the child tax credit? And what was their plan
to help state and local governments who have been at the
forefront of providing the response to crush the virus and to
help with our economic recovery?
When I talk to my mayors in my local governments, they tell
me they used that money for what? Public safety. The only ones
to defund law enforcement were the Republicans who voted no on
the American Rescue Plan. That is the facts.
Now, I didn't come here to defend every program. That is
not what I came to Congress to do. I came to make sure that the
federal programs that Congress approves and that the
Administration implements works for my constituents. And there
are areas that need to be improved. But when you don't even
have a plan to address how you would crush the pandemic or
ensure economic recovery that is equitable, I think that is a
major problem.
Now, by supporting America's entrepreneurs, the American
Rescue Plan ensured that our country would be ready to grow
when COVID was finally crushed. Would you agree, Dr. Coronado,
that the American Rescue Plan positioned our economy on the
path for growth by mitigating the worst impacts of the
pandemic? And could you please speak to how aggressive fiscal
policy may have lessoned the long-term scarring effects we
often see after severe downturns.
Dr. Coronado. Yes. Undeniably the American Rescue Plan and
the fiscal support helped the economy recover even through the
pandemic and now more as we move beyond it into the endemic
phase. And I think that you are putting your finger on the most
important aspect, which is the support to the labor market and
getting people back to work when they are able and ready to do
so. It did take, you know, we did lose participation and now
that is roaring back. It is roaring back.
Mr. Horsford. Yes.
Dr.. CORONADO. And that is because people now are able and
ready and they are actually able to come in and command higher
wages, and better situations, more full-time work.
Mr. Horsford. I agree.
Dr. Coronado. So, there is a lot of things about the labor
market that you highlight that, you know, last recovery we
didn't do that. And people were out of the labor force for
years, many years. We didn't see that recovery happen until
seven years into the expansion----
Mr. Horsford. And it is disproportionately----
Dr. Coronado [continuing]. in participation.
Mr. Horsford [continuing]. on women and people of color,
which I think----
Dr. Coronado. Absolutely.
Mr. Horsford [continuing]. also speaks to where is your
plan to help with an equitable recovery for every community?
Now, one of the challenges that I continue to hear from in
people in my district is the cost of living, affordable
housing, with the cost of rent on the rise. People do still
need help and that is why I applaud my home state of Nevada for
allocating funding from the American Rescue Plan, which will
now invest $500 million directly into affordable housing.
Now, those solutions can take many different forms. But,
Mayor Williams, will you please discuss the many ways in which
municipalities have used ARP funding to help constituents with
essentials, such as keeping food on the table or a roof over
their head.
Mr. Williams. Yes, sir. And thank you for that question.
That was something that was so important to my community.
Certainly, we had people who were at risk of evictions. We
certainly used the funding to be able to stave those evictions
off by helping with rental assistance. As well as mortgage
assistance and utility assistance. Something as meaningful as
being able to have your water service. Those are the things
that we focused on. But also, assisting folks with being able
to have money to go to the grocery store. Those were some of
the things we have been dealing with.
And now, this issue around access to internet. That was a
big one in my community because, you know, many of my families
had to drive their kids to the local McDonalds to sit on the
parking lot to be able to receive access to Wi-Fi. Those were
things we were focusing on to make sure that we assisted
families to be able to pay for their internet bill if they had
a service. But, you know, thanks to this affordable high-speed
internet service that is coming, many families will receive
that.
But the everyday support, but the everyday need to keep
families alive, those were the things we were focusing on in
our communities.
Mr. Horsford. Well, thank you for focusing----
Mr. Williams. Thank you.
Mr. Horsford [continuing]. on the American people. I yield
back.
Chairman Yarmuth. The gentleman's time has expired. I now
recognize the gentleman from Texas, Dr. Burgess, for five
minutes.
Dr. Burgess. I thank the Chairman. I do feel the necessity
in answering a couple of the questions that were just asked by
my colleague from Nevada. If you will recall, March 21 of 2020,
this Congress passed the CARES Act, the biggest single bill
that I have ever seen in my tenure in Congress, was well north
of $1 trillion. It was right at the beginning of the pandemic.
We thought it was necessary to be able to withstand some of the
blows that we were in line to receive from this terrible
disease that was visited upon us by another country.
But the damaging thing was not so much in just spending the
money. I will still argue that the money was necessary. The
damaging thing was we never went back and sort of looked at
what was necessary. For example, I am a physician. We put $150
billion in the Provider Relief Fund. Arguably a good thing. But
we really didn't know what the dollar figure was to put into
the Provider Relief Fund. We had no organized plan. I am also
on the Energy and Commerce Committee. We are the major
authorizing committee for healthcare expenditures. We never
once had a hearing, a single hearing before or after passing
that $1.1 trillion bill. We never had a single hearing of what
was actually necessary to help our healthcare sector who had
been delivered this terrible blow by the coronavirus.
And as a consequence, we had funds that were unspent that
were probably necessary somewhere else. And then in December,
we come back and add more money on that of that. So, I would
simply argue that the--Mr. Moore, I think, has pointed out that
by June 2020, things were starting to stabilize. And our CBO
Director, Mr. Swagel, has told us that the economy going into
the coronavirus, and I think Mr. Mayor, you have kind of
underscored this, going into the coronavirus, the economy was
actually doing pretty darn well. As Jack Kemp taught us, the
rising tide was lifting all boats. Then we were delivered this
terrible blow.
But honestly, to never go back and look at what we did,
what was necessary, if more is necessary, we can have that
discussion. But then here is the real damaging thing, we get to
February 2021, and we pass a $1.9 trillion bill that is
entirely partisan. It is passed under reconciliation.
Guaranteed that we are going to have----
VOICE. Will the gentleman yield?
Dr. Burgess. No, I will not. You can get your Chairman to
yield to. I am sure he will. Guaranteed that it was going to be
a partisan exercise and that no voices on the Republican side
would be heard. And yet, you can see just by the--just by the
attendance here today in this hearing, yes, on the Republican
side, we are terribly interested in what this bill was going to
do and what this bill did do.
And here is the other part of the problem. When you passed
that bill in February 2021, right, you are not a
prognosticator. You don't know what is going to happen in
August. But what if you have the most humiliating defeat that
the United States has ever encountered in the country of
Afghanistan and the leader absconds with all the money, and
then because we all know from President Reagan that weakness is
provocative. And then you see the invasion of Ukraine, which
anybody could have predicted because the Russian Army was
aggregated around the borders. What did you think was going to
happen?
So, what was your plan for this? Well, turns out there was
no plan. We were told by the same geniuses who couldn't predict
Afghanistan, we were told by those same folks that Ukraine
would fall in three days. Three days Kyiv would be under the
control of the Russians. Completely underestimating the fact
that Ukrainians have showed the past and shown again repeatedly
that they are willing to fight for their own homeland.
So, look, forgive me if I am skeptical about some of the
discourse that we have heard here this morning. It almost
sounds like we are stuck in a Charles Dickens novel. It is the
best of times. It is the worst of times. But, Mr. Moore, let me
just give you the last word here. You have been through all
this. You saw it from the inside of the administration. You saw
what was going to happen. You are bound to have had misgivings
as you saw what this Committee was going to do in February of
last year.
Mr. Moore. Well, let me just give you one example of the
kind of crazy spending priorities in this bill. So, we spent
more money under the American Recovery Act on subsidizing the
New York subway system than we did on therapies and treatments.
I mean, how lunatic is that, really? I mean, talk about a, you
know, misallocation of resources.
I urge you. I urge all of the members of this panel, we
spent $1.9 trillion. There was a front-page story in the New
York Times about three or four weeks ago, $140 billion, not a
$140 million, $140 billion was ripped off from the unemployment
benefit program. That didn't stimulate the American economy. It
stimulated economies in Africa and South America. Half of the
fraudsters didn't even live in the United States. So, can we
please do a thorough investigation of what happened in the
Medicaid funding? Unemployment insurance program, the food
stamp program. You mentioned the rental assistance program. The
fraud rates were 20 percent in a lot of these programs. A
private sector program has about a 2 percent fraud rate. We
cannot allow that to persist.
Dr. Burgess. We cannot allow. Thank you, Mr. Moore. Thank
you, Mr. Chairman. I will yield back.
Chairman Yarmuth. The gentleman's time has expired. I now
recognize the gentleman from Massachusetts, Mr. Moulton, for
five minutes.
Mr. Moulton. Thank you, Mr. Chairman. You know, I would
like to point out that in any piece of legislation, there are
going to be problems. There are going to be--there is going to
be fraud that needs to be investigated. But let's not lose the
bigger picture here. You know, Representative Smucker, my
colleague who just spoke, saw Lancaster, a city in his district
and his hometown, receive more than $36 million from the ARP to
prevent layoffs, to boost the local economy. Dr. Burgess'
district received more than $52 million in ARPA dollars. In
fact, Ranking Member Smith, Missouri received nearly $1
billion.
All of you have gone and talked about the investments that
you have made all over the country. In fact, it is amazing that
Republicans all across America can't seem to stop promoting the
benefits of the American Rescue Plan that they continue to
oppose.
In my home district in Lynn, Massachusetts, the largest
city, they have been able to make a generational investment to
improve the quality of the lives of residents through
affordable housing, food security, entrepreneurship, small
business assistance, work force development, including
childcare and digital access. Mental and behavioral health, so
critical in this pandemic, and environmental investments in
infrastructure, as well.
Mayor Williams, could you just talk briefly about your
city's experience with the pandemic and what would have been
the impact to your city's local economy if not for the American
Rescue Plan?
Mr. Williams. Thank you, sir. The economy in my city would
have certainly continued to do as many communities have, and
that is collapse. I do have to say the city of Union City was
one of the highest in the metro Atlanta area as it relates to
COVID. We had some of the highest case rates. And that is not
something to be proud of. You know, I mean, we are a
municipality of less than 30,000 individuals. But we were
always at the top when it came to COVID cases. But also, being
making sure that our individuals in our community had access to
healthcare. You know, the biggest problem we had was getting
people tested, getting people to physicians, or hospitals that
could treat them.
You know, so, those have been some of the biggest
challenges we had during the COVID, the early----
Mr. Moulton. OK. Thank you.
Mr. Williams [continuing]. stages of COVID. Thank you.
Mr. Moulton. Thank you very much. And let me just say that
just because many of my Republican colleagues are hypocritical
here about this Rescue Plan and the investments that have been
able to make in their communities as well, it doesn't mean they
are all wrong. I will agree as a Democrat that the ARP has
impacted the current inflation rate. But it is also important
to understand the broader context globally, as well as the
recession that we would have likely faced if not for this
legislation. I mean, inflation has been across the world,
primarily from pandemic disruptions, Russia's invasion of
Ukraine. I mean, even before the ARP passed, as Marc Goldwein
on the Committee for Responsible Budget noted, ``The seeds for
a high inflation environment were already planted.''
Right now, we are experiencing inflation with low
unemployment and high growth. And if not for global issues such
as the invasion of Ukraine, we wouldn't be seeing negative wage
growth. Dr. Coronado, is the American Rescue Plan responsible
for the 8.1 percent inflation rate in Europe?
Dr. Coronado. I am sorry. It is certainly worth, you know,
not the majority, not even close to the majority of the
inflation we are seeing right now.
Mr. Moulton. OK. Is the ARP responsible for the oil prices
set on the international market, for the price of oil, which is
set internationally?
Dr. Coronado. No, clearly not. Or the food prices.
Mr. Moulton. OK. Isn't it true that if the ARP wasn't
enacted, we would likely have entered into a global economic
recession with serious ramifications or a recession for America
with serious ramifications for the global economy?
Dr. Coronado. We were still in a very precarious situation,
yes. We had started to see positive economic growth in the U.S.
But the global recovery was far more fragile and remains more
fragile. And, yes, without the fiscal support, especially in
light of the repeated waves of COVID that were stressing
communities and public health----
Mr. Moulton. U.S. growth is set to surpass China for the
first time since 1976.
Dr. Coronado. Yes.
Mr. Moulton. Forecasts suggests U.S. GDP will grow by 2.8
percent this year compared with just 2 percent in China. Dr.
Coronado, did we see this during the Trump or even the Reagan
Administrations, U.S. growth path higher than China?
Dr. Coronado. No, we did not.
Mr. Moulton. Thank you, Mr. Chairman. I yield back.
Chairman Yarmuth. The gentleman's time has expired. I now
recognize the gentlewoman from Colorado, Ms. Boebert, for five
minutes.
Mrs. Boebert. Thank you, Mr. Chairman. And thank you to the
witnesses who showed up. I would have loved to have seen some
members from the Biden Administration from the Executive here
today to speak on this. But today, the House Budget Committee
will be playing along with Speaker Pelosi's con game of titling
a bill something magnificent and then loading it with a bunch
of liberal wish list items. And then claiming success on that
legislation. And, you know, I would probably actually be a yes
vote on a lot more legislation that we see in the House of
Representatives if the language in the bill actually matched
the title.
It has been just over a year since Joe Biden signed the $2
trillion so-called American Rescue Plan into law that
incentivizes lockdowns. Paid workers to stay home. Gave
stimulus checks to government employees who are at no risk of
losing their jobs. And really fueled the fire of inflation this
crisis that American families are now paying the price for.
American families are paying the price for bad policy.
And this chart that I have here it shows exactly what that
bill did for the cost of goods and services. You see that
there.
You cannot force millions of Americans out of the work
force and then allow them to go back to work and call that job
creation. You cannot treat the American people like your own
personal slush fund. It has been said before but one day you
will run out of other people's money to spend.
Since the passage of this blue state bailout, the Biden
White House has claimed the ``the economy is in a better place
than it has been historically.'' Well, I am curious, is it the
highest inflation of my lifetime? The highest gas prices in
American history? Or a shrinking GDP that would cause Jen
Psaki's replacement to make such an outrageous claim?
Under President Trump, which I would like to pause and just
say, happy birthday to my all-time favorite president. But gas
prices were less than half of what they are today. GDP had
positive growth. And moms and dads had formula to feed their
babies. I miss and the American people miss the Trump economy.
Not only was the so-called American Rescue Plan entirely
unnecessary, but it was riddled with swampy deals for Biden's
political allies in blue states and did not include commonsense
protections to mitigate fraud.
Less than 9 percent of this $2 trillion sham went to
anything COVID-related. Now, the average American family is
paying the price for these failed policies. And that price is
$5,200 per year. Heck, if you are a senior living on fixed
income, Joe Biden's economy it is a death sentence.
Mr. Moore, I have a question for you, if you don't mind.
With just a brief answer, if you were advising Joe Biden on how
to make our economy as weak as possible, what would you tell
him to change?
Mr. Moore. I am sorry. To make it as strong as possible?
Mrs. Boebert. As weak. If you were advising him, make
America's economy weak, what would you have him change?
Mr. Moore. Well, I would do pretty much what we have done.
I mean, this idea that somehow we are in a recovery right now,
I just looked at the numbers, the latest numbers for the GDP
forecast for the second quarter, there is a 0.9 percent. We had
1.5 percent in the first quarter. So, if you put those numbers
together, for the first half of 2021, we have had negative
growth. What recovery are you all talking about? There is no
recovery in the economy. We are negative. We are negative for
the first half of the year after spending $1.9 trillion.
Mrs. Boebert. Yes. Mr. Moore, thank you so much for laying
that out. Actually, I would love to give a copy of Trumponomics
to everyone here on the Budget Committee. I think that would be
something that everyone would----
Mr. Moore. I have got copies available.
Mrs. Boebert [continuing]. really finish it. There you go.
We will get you some signed copies over there.
Mr. Mayor Vince Williams, can you please tell me what bird
sanctuaries, a beachside 800 room luxury hotel, pickle ball
courts, ski resorts, and Halloween festivals have in common?
Mr. Williams. I have no idea. I don't have either of those
in my city.
Mrs. Boebert. Well, your city is paying for them, Mr.
Williams. Mayor Williams, each of these non-COVID health-
related projects was paid for by state and local governments
with COVID-19 aid. Washington politics--Washington politicians
are addicted to spending. We don't have a revenue problem. We
have a spending problem. And this addiction, like the American
Rescue Plan is causing, it is similar to parmesan cheese and
Hunter Biden. Thanks, and I yield back.
Chairman Yarmuth. The gentlewoman's time has expired. I now
recognize the gentleman from New York, Mr. Jeffries, for five
minutes.
Mr. Jeffries. I thank the distinguished hair of the Budget
Committee. To the extent that there is a public policy problem
in Washington, DC, Exhibit A was the GOP tax scam. That is the
Republican singular signature piece of legislative
accomplishment relative to the economy that occurred during the
prior Administration. Eighty-three percent of the benefits went
to the wealthiest 1 percent saddling our country with
approximately $2 trillion worth of unnecessary debt simply to
subsidize the live styles of the rich and shameless. That is
problematic economics.
I am thankful that we have a president who leaned in to
lifting up the economy for every day Americans beginning with
the American Rescue Plan. A few questions for you, Dr.
Coronado. Thank you for your presence here. I thank all of the
witnesses for testifying here today.
The unemployment rate in January 2021, when President Biden
left office was approximately 6.3 percent. Is that correct?
Dr. Coronado. That is right.
Mr. Jeffries. And today, with the American Rescue Plan in
effect, under President Biden's leadership, the unemployment
rate has dropped to 3.6 percent. Is that correct?
Dr. Coronado. That is where it is, yes.
Mr. Jeffries. And that means that millions of Americans are
actually back to work being able to provide for their families.
Is that correct?
Dr. Coronado. That is right. We have been creating millions
of jobs a year.
Mr. Jeffries. And approximately how many jobs have actually
been created since President Biden came into office in January
2021?
Dr. Coronado. I have don't have that number but it is
several million.
Mr. Jeffries. Yes, I believe the number is 8.7 million jobs
since----
Dr. Coronado. Yes. That sounds about right.
Mr. Jeffries [continuing]. President Bident came into
office. And that is a record in American Presidential history--
--
Dr. Coronado. That is a record.
Mr. Jeffries [continuing]. for a similar period of time.
That is a significant development. And that is meaningful
progress for the American people. Is it fair to say that the
American Rescue Plan was able to head off a wave of evictions
as well as a foreclosure crisis that could have devastated
American families all across this country?
Dr. Coronado. Absolutely. Absolutely.
Mr. Jeffries. Now, the American Rescue Plan, which was a
necessary intervention at a time when the economy was on the
brink of collapse. Absent that level of intervention, what are
the possibilities--there are some economists who express grave
concerns that at the time, we could lapse into perhaps a great
recession. Was that a reasonable concern at the time, absent
the type of intervention that occurred relative to the American
Rescue Plan?
Dr. Coronado. Yes. I mean, we were in the deepest recession
since the Great Depression during the middle of the pandemic.
And had we not provided the various waves of fiscal support we
would not have had a quick recovery. In fact, most economists
of all institutions and of all stripes were expecting a very
prolonged and painful and difficult recovery before that fiscal
support was provided. And you would have had a lot more lasting
disconnect from the labor force, more failures of businesses,
more people losing their homes. Much as we saw immediately
after the housing crash in the Great Recession.
A lot of the thinking was that the recovery would look like
that and that was very halting and slow. And the main
difference is the fiscal approach that was taken during this
episode that to err on the side of supporting people, giving
them both targeted interventions like rent support and health
support, as well as just cash to determine what they needed to
spend that cash on has led to a variety of benefits, including,
you know, best credit, best wage gains, best credit scores,
best wage gains for lower-income households that we have ever
seen.
Mr. Jeffries. Thank you. And, certainly, there are issues
that we need to continue to work on and we are doing that as
Democrats in terms of lowering costs for everyday Americans.
But the American Rescue Plan was absolutely necessary and
decisive in trying to put us into a better space both on the
economic side and as it relates to the public health crisis.
Less than 2 million Americans fully vaccinated when President
Biden took office. Now, there are more than 225 million
Americans fully vaccinated, giving us the opportunity to march
toward normalcy.
I thank you, Mr. Chairman. I thank the witnesses for their
presence. And I yield back.
Chairman Yarmuth. The gentleman's time has expired. I now
recognize the gentleman from Virginia, Mr. Good, for five
minutes.
Mr. Good. Thank you very much, Mr. Chairman. Mr. Moore, I
don't think you can potentially overestimate how important your
presence is here today to try to educate the Democrat majority
on basic economics, basic budget principles. Just to refer to
something that was said by the previous speaker, you cannot
give tax cuts to those who don't pay taxes. That, of course,
would be welfare basically. You are paying people beyond what
they earn. Because it was said, hey, the Tax Cuts and Jobs Act,
you know, most of the benefits were to higher income earners.
Speaking of revenues from the tax cuts, what was the impact
from the 2017 Tax Cuts and Jobs Act? What happened to tax
revenues when those--when tax rates were reduced, what happened
to overall revenues?
Mr. Moore. So, one of the kind of it is important for
people to understand exactly what we did. Because I helped
design that with Larry Kudlow and Art Laffer and, obviously,
Trump was heavily engaged in this. But the whole idea was we
had the highest business taxes in the world. You know, that
just doesn't make America competitive. We all want to create
jobs, right? You know, the United States having a business tax
rate that was in some cases 20 percentage points higher than
all the countries we were competing with. As I used to say to
Donald Trump, that is a Head Start program for every program we
are competing with.
So, we brought that rate down from virtually the highest in
the world. By the way, think about that. Five years ago, the
United States had the highest business tax rate in the world
and we cut it to below the average. And we saw enormous gains,
you know, as mentioned. Lowest unemployment rate, lowest
poverty rate for every group. The idea that 83 percent of the
benefits went to the top 1 percent is just fallacious. We saw
gains throughout the economy.
And there was just a piece in the Wall Street Journal about
two weeks ago, sir. I will get that for the record. That showed
low and behold, guess what has happened to corporate tax
receipts in the last two years? They have gone way up. So,
there was--and I didn't even expect this. I thought we would
see a revenue loss, but I just thought it would be good for the
economy. But we actually saw a gain in corporate tax revenues
even though we lowered the rates. Pretty amazing.
Mr. Good. Wonderful job. And thank you for confirming that.
You know, I submit that the majority party here if you could
demonstrate that cutting taxes on higher income earners would
grow the pie, increase revenue for the government, the
government could do more things, they would be against it just
because they don't think it is right to cut taxes for people
who make too much and because they believe that it is unfair,
if you will.
It is incredible, frankly, that the Dem majority would hold
a hearing to defend the ARP, the American so-called Rescue
Plan, and their disastrous economic policies. Democrats have
two choices. They can admit failure, apologize, and change
course. Or they can do what they are doing, which is double
down, lie about the impact of their spending programs, their
economic programs, and try to fool the American people.
As we know, less than 9 percent of the massive $2 trillion
in the ARP was actually directed to combat the China virus. The
rest of it was wasted. That is what the federal government does
best, of course. And it actually increased inflation, decreased
job growth, increased welfare, and dependency. Of course,
massively increased the deficit.
Can you point to--do you think that--and I know you feel
like you are on repeat, but repetition is the key to learning.
Hopefully, the other side is listening to this. Can you point
to how the ARP has helped or hindered the job recovery over the
last year? It is amazing they crushed the economy. They
eliminate more jobs. They make it impossible for employers to
operate their businesses for people to go to work. They fire
workers for not getting a vaccine.
So, they crushed the economy, eliminate millions of jobs
like has never happened in the history of the country. And now
they want credit because they say they created jobs. federal
government didn't create any jobs. All they can do is create an
environment as you did during the Trump Administration that
facilities or allows businesses to do that. But do you think
that the American Rescue Plan helped or hindered America's job
recovery over the last year? The ARP itself, did it help or
hinder the job recovery over the last year?
Mr. Moore. Sorry, is that for me?
Mr. Good. That is to you. Yes, sir.
Mr. Moore. If you look at figure 5 in my testimony, this is
really important about what happened with the American economy.
Starting in late 2020, the red states opened up their
economies. They didn't need any fiscal help. They opened up
their businesses. They opened the restaurants, their stores,
their churches, their playgrounds, their blah, blah, blah.
There were no negative health effects to that.
And if you look at this chart, you see the 10--there is now
roughly 10 states, sir, that are actually above the employment
level they had before pandemic. Guess what? Every single one of
them is a red state that opened up their economy.
I will read to you. Utah, Idaho, Montana, Texas, Florida,
North Carolina, Georgia, Tennessee, Arizona, Arkansas, South
Dakota. There is one actually blue state, Colorado. They
handled it pretty well. Look at the states at the bottom. New
York, New Jersey, Pennsylvania, these states kept their--the
way we should have stimulated the economy was by getting these
blue states to open up their businesses. They refused to do it
and that is why they needed trillions of dollars from the
federal government.
Mr. Good. The Democrats' policies did not crush the virus.
They crushed the economy. And the state with the highest per
average age in the country, Florida, was aggressive in opening
up----
Mr. Moore. Exactly right.
Mr. Good [continuing]. and, of course, we did not have a
negative impact on Florida in terms of the China virus----
Mr. Moore. That is exactly right.
Mr. Good [continuing]. impact. So, thank you, Mr. Moore. I
yield back.
Chairman Yarmuth. The gentleman's time has expired. I now
recognize the gentlewoman from California, Ms. Chu, for five
minutes.
Ms. Chu. Ms. Parrott, as a Member of the Ways and Means
Committee, I want to draw attention to something we worked on
as an aspect of the American Rescue Plan that made a
considerable impact on the lives of working Americans. The
American Rescue Plan increased affordability of health
coverage, enhancing the advanced premium tax credit for the ACA
plans. And this ensured that working families could continue to
access health insurance throughout the pandemic. And included
eliminating the so-called cliff that families who made just
over the subsidy cutoff, which is $110,000 per year for a
family of four.
Can you talk about the impact of these affordability
measures? And with these important tax credits set to expire at
the end of this year, could you discuss who would be most
likely to see their monthly premiums go up?
Ms. Parrott. Yes, thanks so much for the question. The
Rescue Plan reduced or eliminated premium costs for most
marketplace enrollees and helped spur record marketplace
enrollment. If these enhancements had not--if these
enhancements are not extended, the large majority of the 14 \1/
2\ million people who signed up for marketplace coverage this
year, will either lose coverage or pay significantly more in
premiums in 2023. According to estimates by both the Urban
Institute and HHS, about 3 million people would lose coverage
and become uninsured. Over 10 million additional people would
remain insured but see their premium subsidies reduced or
eliminated entirely, according to HHS estimates.
These premium costs increase would make coverage much less
affordable at a time when people are struggling with increased
costs for food, housing, and other basics. For example, the
Urban Institute estimates that subsidized marketplace enrollees
with incomes between 150 and 400 percent of poverty, which is
hard to know what that means, so, let me break it down. About
$20,000 to $54,000 for an individual would pay over $1,000 more
per person in annual premiums. A 60-year-old couple making
$75,000 would see annual marketplace premium costs more than
triple, rising from about $6,400 to more than $22,000.
The premium spikes may also coincide with the end of the
federal public health emergency when millions of Medicaid
enrollees made no longer eligible for Medicaid coverage, will
need to secure coverage in the marketplace, making those
premium tax credits incredibly important for assuring that they
seamlessly are able to access coverage. The expiration of those
premium tax credits would drive up the rate of uninsured, which
we have actually made progress in driving down the rate of
uninsured over the last year because of both the Medicaid
continuous coverage provision, as well as the expansion in
premium tax credits.
Ms. Chu. Well, Ms. Parrott, let me ask about--and thank you
for that answer. Another thing that I think was very, very
beneficial. We, in the Ways and Means Committee are proud of
the tax credits that we enhanced like the child tax credit. And
there was another tax credit that had a major positive impact,
not only in the finances of struggling businesses, but on our
ability to fight the pandemic. The American Rescue Plan created
paid family and sick leave tax credits that reimbursed
employers who offered their workers paid time off because of
the COVID pandemic. And to be eligible, businesses needed to
give employees paid leave to quarantine, get a vaccine, find a
test, or care for a family member or child.
Can you talk about the impact that this paid leave had on
both employers who claimed the credits and workers who were
able to take the time they needed to care for themselves and
their families without losing their jobs or their paycheck? And
what lessons can we learn from these credits as Democrats work
to pass a national comprehensive paid leave plan?
Ms. Parrott. Yes. You know, paid leave is a really good
example of a place where because of our underlying policies, we
tried, with some success, to sort of fix things for purposes of
the crisis. So, we added some temporary paid leave measures.
And for those who were able to benefit, I think those measures
were quite helpful, both in stabilizing families' incomes when
they needed to take time off and helping employers and
employees stay connected.
But the real--and you talked about this at the end of your
question--the reality is that the United States stands alone
among most wealthy nations in the world in not having paid
family, some kind of paid family medical leave program for
workers. And because of that, when people are unable to work
because they need to care for their own illness or an illness
in their family or welcome a new child into their household,
too often they are forced to separate from their jobs. That is
bad for the economy and it is bad for families.
And so, you know, trying to shoehorn something during the
pandemic provided some help to some people, and that is really
important. But the real path forward is getting to a place
where all workers have access to paid family medical leave when
they need it.
Ms. Chu. Thank you.
Chairman Yarmuth. Thank you. The----
Ms. Chu. I yield back.
Chairman Yarmuth. Yes. The gentlewoman's time has expired.
I now recognize the gentleman from California, Mr. Obernolte,
for five minutes.
Mr. Obernolte. Thank you, Mr. Chair. Dr. Coronado, in your
testimony you said something I completely agree with. You said
that diagnosing the drivers of inflation is key to crafting a
response to it. And you have answered a couple of questions
about this already. And I was interested when in explaining why
the United States has a substantially higher inflation rate
than other countries, you said that you thought that deficit
government spending, including the American Rescue Plan, was
not even close to being the predominant cause.
Several weeks ago, the San Francisco branch of the Federal
Reserve issued a report in which they were investigating why
the United States has a higher interest rate--higher inflation
rate than other countries. And they reached the opposite
conclusion. They concluded that deficit government spending
here, in particular, the American Rescue Plan, was the
predominant cause of why inflation was higher here than in
other countries. Have you read that report? And do you disagree
with it?
Dr. Coronado. I am familiar with that report. And since the
data that was used for that report, we have seen a pretty
marked acceleration in core inflation across other countries.
So, in some senses, that finding is stale.
Mr. Obernolte. OK.
Dr. Coronado. That now that gap----
Mr. Obernolte. OK. Well, it sounds like the they are
talking apples and oranges here. They were talking about why
last year the----
Dr. Coronado. Right.
Mr. Obernolte [continuing]. United States had higher
inflation than other countries.
Dr. Coronado. Correct.
Mr. Obernolte. You are saying it doesn't matter now because
everyone has high inflation.
Dr. Coronado. Well, we have----
Mr. Obernolte. I am talking about why----
Dr. Coronado. We have to keep----
Mr. Obernolte [continuing]. why we got out ahead.
Dr. Coronado. We have to keep learning about from the
incoming data and what we are seeing is that there is a
considerable rise in inflation across countries. As you saw
some of these charts that have been presented, there is not--
there sometimes is a lag between when things happen. And what
we have seen is that a lot of this supply chain inflation,
other countries because their recoveries were delayed, the U.S.
recovery was strong and early. Other recoveries was delayed so,
as that spending came forward, you did start to see that supply
chain inflation take hold too.
So, I am not one to say it had no impact. There is an
impact. And there is also a benefit. There is a cost and a
benefit----
Mr. Obernolte. Right.
Dr. Coronado [continuing]. to providing very strong
support. So, I am not saying there is no impact or that there
isn't a meaningful cause in the wedge. The wedge that I
estimate now is, you know, maybe a percentage point.
Mr. Obernolte. Well, let's talk about it worldwide then.
Dr. Coronado. Mm-hmm.
Mr. Obernolte. So, you know, the WTO has been looking at
this same issue.
Dr. Coronado. Mm-hmm.
Mr. Obernolte. You know, from a worldwide perspective, not
just a U.S. centric perspective.
Dr. Coronado. Mm-hmm.
Mr. Obernolte. And Robert Koopman, who is the chief
economist at the WTO, has estimated that between, he says, 2/3
and 3/4 of supply shortages worldwide are a result of excess
demand resulting from government spending. So, do you agree or
disagree with that?
Dr. Coronado. So, there is more--I put more weight on the
first part of that and less on the second part of that. So,
remember, a very key development in the pandemic globally was
the shift to goods spending over services spending. So, that is
unprecedented. We have not seen that kind of shift in consumer
spending in our lifetimes ever since, actually, the last time
we saw this kind of shift was World War II.
Mr. Obernolte. Sure, but the WTO is saying that that is a
result of all of this excess money being injected into
worldwide economies.
Dr. Coronado. So, that is the part that I take more issue
with.
Mr. Obernolte. OK. Well, I mean, so, you disagree with the
Federal Reserve. You disagree with the WTO. The CBO, well, you
know, we are not going to get into that.
Dr. Coronado. The Federal Reserve is a big system with
hundreds of economists all of which have an opinion. So, you
know, there are different--there are--I agree with the Federal
Reserve and disagree with the Federal Reserve----
Mr. Obernolte. Right.
Dr. Coronado [continuing]. depending on the analysts we are
talking about.
Mr. Obernolte. Yes. I understand. But, I mean, I think
that--and this isn't a question. You know, I don't think it is
an exaggeration to say the majority of economists now would
acknowledge that government spending has played a substantial
role, if not the predominant role, in catalyzing the growth of
inflation.
This leads me to my last question, which I will go to Ms.
Parrott. And this is, you know, it has been an interesting
hearing. We have got these two ideas and tension, which is what
Dr. Coronado was just talking about. You know, the fact that
the American Rescue Plan undoubtedly catalyzed this round of
inflation. We can argue about how much. But undoubtedly
contributed to it, if not caused it. And you have testified
that the American Rescue Plan was, what you said, the most
substantial antipoverty legislation since 1935.
So, you know, here is the question. Was it worth it? Was
this round of inflation that is leading the interest rate
hikes. The Fed is meeting today. You know, was it worth that,
you know, had that result for the good that the legislation
did?
Ms. Parrott. So, I think you set up a false counterfactual.
So, right, the American Rescue Plan helped strengthen the
recovery, reduced unemployment, lots more people working. I
agree with Dr. Coronado. I think it is--I wouldn't say that it
had no effect on inflation. But I do think we would be facing
high inflation today regardless of whether we had the American
Rescue Plan. But I also think that in the absence of the
American Rescue Plan, we would have had more kids in poverty.
We would have seen a spike in evictions. We would have seen a
lot of people struggling.
And so, I am not going to speak to a false counterfactual
that I don't think is accurate. But I will say is that the
American Rescue Plan made an enormous difference in the lives
of tens of millions of people and in communities across the
country.
Mr. Obernolte. All right. Well, I see that I am out of
time. It is interesting discussion. But here is, you know, what
really, really depresses me about this argument is that, you
know, you also have to consider the effects of inflation on the
impoverished here in America. And it has been said that
inflation is one of the most regressive taxes because it
disproportionately affects the people who can least afford to
pay for it. And, you know, we are in a situation now where----
Chairman Yarmuth. The gentleman's time has----
Mr. Obernolte. Yes, sir.
Chairman Yarmuth [continuing]. long expired.
Mr. Obernolte. All right. OK. Well, thank you,----
Chairman Yarmuth. Yes.
Mr. Obernolte [continuing]. for the--thank you, Mr.
Chairman, for the extra time.
Chairman Yarmuth. All right. The gentleman's time has
expired. I now recognize the gentlewoman from the U.S. Virgin
Islands, Ms. Plaskett, for five minutes.
Ms. Plaskett. Thank you, Mr. Chairman, for this hearing.
Thank you for the ability to question the witnesses. I find it
so interesting and specious that one of the witnesses say that
we should take advice from Donald Trump, who before coming to
the presidency, was a failed businessman. Who had companies
that went bankrupt. That is who we are supposed to take
business advice from?
The most recent hearings have shown that not only is he a
failed businessman, but he is a con artist, who created a slush
fund off of the backs of American people through his attempt to
overthrow our government through January 6. So, will I take
advice from someone like that? I think not. And I think our
country is better off without having him as the leader of our
country at this point.
You know, we have had a lot of discussions about child tax
credit and the American Rescue Plan and what it has or has not
done. For people living and families living in the U.S. Virgin
Islands, by extending the child tax credit to the territories
and providing that funding, there has been an enormous
uplifting of children that are living in poverty.
Ms. Parrott, would you explain to us how the Medicaid
provisions and the reconciliation bill passed by the House
Democrats in November 2021 would improve access to healthcare
and equity for low-income Americans living in the territories?
Ms. Parrott. Yes, thank you for your question. This issue
doesn't always get the attention that it deserves. The Medicaid
provisions in the 2021 House Reconciliation bill ensures that
people in U.S. territories can continue to get the healthcare
they need by increasing Medicaid funding to the territories,
which unlike states, receive capped federal funding for
Medicaid that can and sometimes does run out. The bill passed
by the House included a permanent increase to the block grants
as well as the--as well as an increase in the federal
government's share of Medicaid funding for the territories.
Now, I want to be clear. The bill did not provide full
parity with State Medicaid programs because it would continue
to provide annual allotments of federal funds rather than the
kind of open-ended funding stream that states receive to meet
their residents' healthcare. Ultimately, parity is what people
in the territories need and deserve. But the amount of the
House-passed allotments along with the realistic growth factor
based on actual Medicaid costs and the increase in the federal
government's share of their Medicaid costs, would provide the
stable and adequate funding the territories need to bring them
closer to what states provide by increasing eligibility
benefits and provider payments. This is a key, core equity
issue. And I thank you for the question.
Ms. Plaskett. Thank you. You know, we are talking about
children. We also, of course, have to then talk about working
parents. One of my colleagues talked about not being able to go
to restaurants. But we know from many working families the
ability to have proper childcare is still not there. The
pandemic has affected childcare. Has affected those children
who are not vaccinated. Who families do not feel safe bringing
them or do not have the support for them to go back to work.
Not all of us has had the luxury of working from home. Many of
us have had to go to work in some instances and had to find
childcare.
Childcare providers were also hit very hard. Many closed or
could not keep talented staff who were struggling through the
pandemic as well. Again, Ms. Parrott, how has the childcare and
development block grant helped working parents afford their
childcare?
Ms. Parrott. So, the childcare development block grant,
which sometimes we wrongly shorthand as CCDBG, which is hard to
say and remember, provides funding to states that allows them
to provide subsidies to parents with low earnings to cover the
cost of childcare. And it also does a lot to actually improve
the quality of childcare for all children.
CCDBG provides critical but underfunded support to state
childcare programs. And most families eligible, most families
eligible for childcare assistance don't get it because of
inadequate resources.
During the pandemic as you mention, many childcare
providers closed or reduced their capacity. And when parents
were ready to come back to work, many couldn't find childcare
or they couldn't afford it. When families can't access quality
affordable childcare, they are left with really quite terrible
choices. Stop working or reduce hours, which is often
impossible to do and make ends meet. Or use more informal,
lower quality care. The American Rescue Plan provided $39
billion in additional childcare funding, including funding for
CCDBG, as well as funding for stabilization grants.
This was incredibly important. It helped shore up the
childcare providers. It helped people stay in business or
expand capacity. It also expanded help to families. Raising
eligibility thresholds, reducing co-pays, and also, increased
compensation for childcare workers who I think along with those
municipal workers that Mayor Williams talked about, are true
heroes----
Ms. Plaskett. Thank you.
Ms. Parrott [continuing]. of this time period.
Ms. Plaskett. I have run of time. But, you know, if my
colleagues who I understand are so concerned with the life a
child, let's make sure that we do that throughout the child's
life, even after they are born. And I yield back.
Chairman Yarmuth. The gentlewoman's time has expired. I now
recognize the gentleman from Florida, Mr. Donalds, for five
minutes.
Mr. Donalds. Thanks, Mr. Chairman. Witnesses, panelists,
thanks for being here. I find it interesting that we are
talking about the American Rescue Plan since it just didn't
work, guys. I mean, come on, we got a--I am a finance guy by
trade. I just got to Capitol Hill.
Couple things. I know the witnesses have said previously
that the benefits of the American Rescue Plan have been the
potential evictions of people not having enough money to pay
rents, decrease in child poverty, and those are like the big
two. Well, we will come back to that. Give me a second. We will
get there.
But it is without question that the American Rescue Plan
has led to inflation. Every economist basically has said this.
I mean, look, if you want to talk about inflation, you have a
lot of money going to people. Right, wrong, or indifferent,
money went to people. They didn't have to earn it. Which means
productivity in the economy is actually down. So, people have
money, but productivity is down.
But when people take that money to go spend it, I mean,
yes, Doctor, this is kind of how this works. When they take the
money to go spend it in an economy where productivity is down
because there is not enough supply of goods and services
available, prices then go up in response. Because productivity
is down but everybody has got money. That is how we get to
inflation.
The job market. Let's talk about that one real briefly.
Yes, coming out of the time when the American economy was shut
down by government policy because of COVID-19, the job market
suffered major hits. But it is virtually without question that
in the red states that had opened up--I am the gentleman from
Florida, I know--the job market actually responded quite well
to businesses being able to open up and operate. It was in blue
states that the job market did not respond as well. Well, we
all knew up here on Capitol Hill that if you just, you know,
opened up, the businesses would come back. Look no further than
right here in D.C. Muriel Bowser's policies basically wrecked
the restaurant market here in D.C. Most people could not go to
work in D.C. There was no traffic coming into D.C. And the
second she alleviated COVID-19 policies businesses started
opening up again. People started going back to work, et cetera.
So, I don't think we needed about $2 trillion to recover
jobs in the United States. I think what we really needed was
just sound, you know, local government policy or state
government policy to just open up economies. Because the states
that did that that is what happened.
I want to speak to inflation, specifically. Because this is
where we are now. The trip down memory lane was cool. One thing
I will say about the states and local governments is that when
the American Rescue plan came through, I know myself and
several of the members were looking for an Excel spreadsheet
about what states and localities actually needed and what they
perceived were going to be the shortfalls in their budget.
There was a funding formula that was created, but there was no
spreadsheet about, OK, New York needs this. Mayor Williams,
your city needs X. Los Angeles needs Y. Miami, Florida needs Z.
There was no spreadsheet and no allocation. There was no back
and forth that actually rose to a number. It was a funding
formula. And they just picked a number out of the air and said
we are going to spend X amount of money to state and local
governments. So, when state and local governments have money to
spend, I am not quite sure what they are going to spend on.
Some figured it out. Some did it. You have a glut of money
sitting out there in the economy that gets spent in reckless
means.
And I am going to bring this back to the productivity
point. People were not working to the degree that they need to
work in an economy like ours. Which means product is not
available for purchase to the degree of the amount of money
that is out there to purchase. Which means prices go up. Mayor
Williams, you said earlier that your constituents would still
say that the American Rescue Plan is still a good thing in
spite of the inflation that has been created in the United
States. Do you think your constituents would actually chose
paying $65 per fill up or the American Rescue Plan?
Mr. Williams. Thank you for that question. I am not going
to play that game. You know, I mean----
Mr. Donalds. Well, I am going to----
Mr. Williams [continuing]. this is----
Mr. Donalds [continuing]. reclaim----
Mr. Williams. This is----
Mr. Donalds [continuing]. reclaim my time right there.
Mr. Williams. Yes, reclaim your time.
Mr. Donalds. They are having to--they are going to have to
fill up. It is $65 bucks, man. Look, I got a sedan, it----
Mr. Williams. I know how much it is.
Mr. Donalds. It was $57.
Mr. Williams. I, sir, I know how much it is. I just got a
text from my daughter yesterday.
Mr. Donalds. I know how much it is too.
Mr. Williams. She spent $65----
Mr. Donalds. Which one would----
Mr. Williams. She spent $75----
Mr. Donalds [continuing]. your daughter prefer?
Mr. Williams [continuing]. to fill her tank up. You know,
but----
Mr. Donalds. And what is better----
Mr. Williams. But, you know, the American Rescue Plan saved
human lives. So, I am not going to equate the price of gas----
Mr. Donalds. I am going to reclaim my time.
Mr. Williams [continuing]. over a human life.
Mr. Donalds. Let's talk about human lives. Let's talk about
this. The COVID-19 vaccinations were basically ready for
distribution around January 2021. That is when they were ready
for deployment. They were deployed out in a systematic fashion.
If you look at the deployment rate per day of COVID-19
vaccines, there was no change in the rate per day between the
Trump Administration and the Biden Administration. There was no
change.
As a matter of fact, the Biden Administration was slow in
vaccine deployment. They had to actually drop the FEMA sites
that were doing because it was most inefficient way. They
actually had to follow the Ron DeSantis model, which was
actually giving it to pharmacies so they can deploy the
vaccines in a much more efficient manner. Thanks, Mr. Chairman.
This was fun. I yield back.
Chairman Yarmuth. The gentleman's time has expired. I now
recognize the gentleman from New Jersey, Mr. Sires, for five
minutes.
Mr. Sires. Thank you, Mr. Chairman, for holding this
hearing today. You know, I can agree with my colleague, Stacey
Plaskett when people refer to Donald Trump as an economist and
take his advice to run the economy, they should all return to
New Jersey and how he ran the Trump casinos to the ground. And
how he left people holding the bag because he refused to pay
for the work. And his attitude was, well, take me to court.
This is how he made his money, abusing from the little guy.
But, Dr. Coronado, I am here to talk a little bit about the
recovery and from the pandemic that supposedly or did occur
more swiftly than many forecasted. Is there an explanation why
we missed the forecast, Dr. Coronado?
Dr. Coronado. Yes, I mean, we had never provided as much
support in as direct a fashion as we have. There is always some
uncertainty around what we call the fiscal multiplier, how much
bang for your buck did you get. And I think one of the things
we are learning is that providing direct support to households
gives you a big bang for your buck.
Mr. Sires. Yes, I always get a kick because there is always
looking backward and attacking some of the things that
basically maybe not have gone as swiftly, as smoothly as could
have gone. And it makes for a great political point. But can
you also tell me the role of the Rescue Plan in spurring the
recovery?
Dr. Coronado. Yes,----
Mr. Sires. If it wasn't for that, what would have happened?
Dr. Coronado. Yes, absolutely. So, when you give people the
money that they need to pay their rent, to buy their food, to
pay for all the needs and even some things that are not
necessities, that money is revenue to some business. And then
that business then hires employees. And again, we had
tremendous profitability and productivity over the past year
and so, you know, from a macroeconomic standpoint, these--just
the money going into the economy is going to create that kind
of activity, profits, jobs, incomes.
It is a positive feedback loop. That is, in fact, the
definition of a recession versus an expansion is taking the
economy out of a negative feedback loop where job losses and
uncertainty begets more job losses and uncertainty and putting
it into a positive feedback loop. Where spending creates jobs,
creates more spending, creates more jobs. And that is, in fact,
what the American Rescue Plan, that is the dynamic it helped
foster.
Mr. Sires. Thank you. Mayor Williams, as a former mayor, I
understand how impactful state and federal funding are to
starting and maintaining a city's program and services. I can
tell you that in my district many of the mayors were starting
to panic during the pandemic because they didn't know if help
was coming or not. They didn't realize they weren't getting the
amount of money coming in as they thought they were getting.
Can you talk a little bit about how your town prioritized the
funding it received from the American Rescue Plan?
Mr. Williams. Thank you, Representative. Certainly, how we
prioritized the use of the funding in our city was certainly
first and foremost to our first responders, police and fire and
public services or public works. Those folks who had to be in
work. They could not work from home. So, certainly, that was
important to us. But also, I spoke earlier about the rental
assistance, mortgage assistance, utility assistance. But also,
assisting families with food insecurities.
We had families because schools were shut down, there were
families whose kids were going to school and we know this for a
fact, that when kids are going to school, usually that meal
that they get at school is the only meal that they have. So, we
wanted to make sure that we took care of that. But not just
have one meal a day, three meals a day throughout the week. And
we did that and still are doing that to make sure that our
families are secure as it relates to food and other necessities
such as Wi-Fi, and all of those types of things that keeps a
community's quality of life flowing.
But also, people deserve that. This is about, you know, our
piece of the promise for all of American citizens. You know,
so, we have got to make sure that we keep that focus first and
foremost. Thank you.
Mr. Sires. Thank you. You know, one of the things that I am
most proud of in my community is how they handled this,
especially the lunch programs for kids. If it wasn't for the
lunch programs that we had, a lot of kids would have gone
hungry. I see that my time is up. Thank you, Chairman.
Chairman Yarmuth. The gentleman's time has expired. I now
recognize the gentleman from Wisconsin, Mr. Grothman, for five
minutes.
Mr. Grothman. Thank you. First of all, a general comment
because some of these things just really irritate me. It
bothers me that we have people before me today who find it so
easy to print so much money. Because when you do that and
create inflation, you are just destroying the people on fixed
incomes on pensions, which eventually will really rip into
people who have savings for their whole life. They rely on that
savings. They think it is going to be there when they retire.
All of a sudden the value of the dollar falls. And for you it
is just like no big deal. It is my money. It is my pension. I
can do with it whatever I want because I am part of the
government. And you have hurt people so much through this
inflation.
I think for the first time since I have been in politics
there is genuine fear back home as you have driven not just the
cost of gas, but the cost of housing through the roof. I think
the amount of inflation, the official numbers are way
understated. And you really may have taken big steps toward
destroying the American Dream.
I think as far as talking about people who couldn't work
during the pandemic, when I go home at night, I go by three
cheese plants. Big cheese plants. And I saw those people
because they were considered required working or necessary
working. They were--those plants were the parking lots were
filled even if I went home at midnight. There were people
working three shifts around the clock and they didn't have a
problem doing it. And to this day, I believe a lot of the
government people who ordered people at home, ordered people at
home unnecessarily. Because all those working people who
provide our food, they were out there working all the time. And
people shouldn't have ordered all these other people to stay at
home.
Now, I will comment a little. Around the time that this
debacle, and I will mention, I should say debacles, because not
only this bill that we are looking at today, but that
infrastructure bill was another complete debacle, another over
a trillion dollars just put into the economy like it wasn't
going to hurt anything. But we will give Mr. Moore a question
here. One of the things I noticed over time and it is maybe one
of the reasons why I am afraid we are going to have a poor
America is the over time lowering labor rate participation of
men. I don't care if we take men across the board, men aged 25
to 55. There has over a period of years, been a dramatic
decrease in the labor participation rate there. I am not sure
how much is kind of this anti-man thing that is out there. I
don't know much is across the board unemployment benefits. But
could you comment on the reduction in the percentage of men
working both over the last 10 years and over the last 30 years?
Mr. Moore. Look, economics really isn't very complicated,
Mr. Grothman. If you pay people not to work they won't work.
And if you increase the rewards to working, you will get more
work. It is not complicated. This is just a law of economics.
And that is why I mentioned earlier in my testimony. I will go
back to that. We should have cut the payroll tax. We shouldn't
have expanded all these programs. I mean, this idea that all we
have to do is give people money. I mean, one of the previous
witnesses saying, oh, we gave people money for healthcare. We
gave money for their food. We gave money for people money for
the rent. We gave, I mean, wouldn't it be a wonderful world if
we could solve all our economic problems by just giving people
money?
Mr. Grothman. I think it----
Mr. Moore. I mean, it would be a wonderful thing.
Mr. Grothman. Yes.
Mr. Moore. I wish that worked.
Mr. Grothman. I think you are hitting on something that
should be obvious. Larry Summers,----
Mr. Moore. Yes.
Mr. Grothman [continuing]. one of Obama's top advisors said
at the time, I think this is a least responsible economic
policy in 40 years. I think more recently Steve Rattner, a
Democrat, the $1.9 trillion American Rescue Plan passed in the
early days of the Biden Administration will go down in history
as----
Mr. Moore. Mm-hmm.
Mr. Grothman [continuing]. as an extraordinary policy
mistake. And I think that is what happens when we have people
who think that the reason America is a great, vibrant economy
and the envy of the rest of the world probably almost since we
were founded, is because we believe in freedom, OK? And we
believe in people making their own wealth and finding a job and
earning their own money. And there are other people who think
wealth comes from the government either printing money or
taxing money or going deeper into debt.
And obviously, those people right now are running the show.
Everything any lobbyist could think of or any cool idea that
one of the squad could think of wound up in these bills and now
here we sit. I think the only way, I will ask you, the only
reasonable way to get rid of the inflation look how we got rid
of inflation in the 1980's, it wasn't good, although we
eventually did get rid of it. And it is something we have got
to get rid of to get America back on the straight and narrow.
And I don't know whether we have elected officials anymore who
have the integrity to say no to the people back home or whether
they think they run for reelection putting on their campaign
literature look at all the money I took from the public and
spread out for everybody under the sun.
Like I said, I think of all those hardworking people in my
district who were working third shift through this thing
without complaining a bit. And nevertheless, we had politicians
ordering people to stay at home. And after they ordered them to
stay at home, they pretended like it was something beyond their
control. It is just unbelievable.
Mr. Moore. Well, Mr. Grothman, at the peak of the--when we
were paying people $600 a week unemployment benefits, plus
rental assistance, plus expanded food stamps, plus Medicaid,
plus the $300 child per credit, Casey Mulligan of the
University of Chicago and I did a study that found that you
could--you had families in many states with two parents and two
kids that could make $80 to $100,000 in government benefits and
not work a single hour. And the reason I mention that, you know
who that is unfair to? The people that you are talking about.
The people working double shifts and sometimes triple shifts,
working 50 hours a week, and they are making less money than
people on--look, I am for a safety net.
Mr. Grothman. Nobody gives a damn about the working man
nowadays.
Mr. Moore. Yes.
Mr. Grothman. Nobody cares about the working man.
Chairman Yarmuth. The gentleman's time has expired.
Mr. Grothman. Oh, by the way. Just other comment, part of
that free spending happened a little bit under our buddy Trump
too, you got to admit.
Mr. Moore. It did, yes. The CARES Act.
Mr. Grothman. OK.
Chairman Yarmuth. The gentleman's time has expired. I now
recognize the gentlewoman from Washington, Ms. Jayapal, for
five minutes.
Ms. Jayapal. Well, thank you, Mr. Chairman. That was very
instructive that last five minutes. Let me just take on several
points. The other side puts money out too. Let's be really
clear. That is the $2 trillion tax cut that Donald Trump passed
with Republican votes. And that is a tax cut that went to the
top 10 percent of the country. And that is if you are generous
it went to the top 10 percent. So, don't tell me that we
don't--that you don't like to give out free money because you
are giving it out all the time.
Let's look at, if you want to look at a debacle. How about
the debacle of what is happening right now with oil and gas
companies profiteering and the profits of these corporations
going up massively even as working people across this country
cannot afford their gas at the pump. This is profiteering and
it is not just by those oil companies. Look at the food
companies. Look at the agriculture companies. You are seeing
people profiteering right now and those are the people that our
colleagues on the other side of the aisle want to help.
The difference here is that Democrats want to help regular,
working people, folks who are struggling across the country
just to make ends meet. That is what Democrats are about. And
that is why when you look at the American Rescue Plan, it was
an unmitigated success and it was an unmitigated success for
the right group of people. For the 90 percent of Americans who
desperately need the help. Not for the top 10 percent that the
Republicans are always trying to deliver freebees for.
No, the reality is our economy was devastated by the
pandemic. Unemployment was at its lowest levels in over half a
century. But President Biden and Democrats acted boldly to
deliver a relief package that met the scale of the crisis. And
thanks to the American Rescue Plan, the U.S. economy has
rebounded faster than anyone predicted. It helped people stay
in their homes. We have cut hunger by 25 percent. We have cut
child poverty in half. We have helped wages to rise.
Unemployment is down to 3.6 percent, a level that the
Congressional Budget Office did not predict we would reach for
the entire decade. A level, by the way, that is the lowest
level of unemployment in over half a century.
So, you want to talk about a debacle, talk about the
economy under Donald Trump that rewarded only the richest
people and the Republican tax cut of several years ago. You
want to talk about success for working people, talk about the
American Rescue Plan.
Now, let me get back to my questions. After just 2 \1/2\
years, we have returned the U.S. labor market back to its pre-
pandemic strength. And our recovery has been much more
equitable in stark contrast to the response to the Great
Recession. Dr. Coronado, can you elaborate on why it was so
important to go big and provide meaningful relief quickly and
how this response contrasts to the Great Recession?
Dr. Coronado. Yes. So, there is a lot of research that
shows when people are unemployed for an extended period of time
or out of the labor force for an extended period of time, it
leaves a permanent imprint on their earnings capacity. So,
their wages. The wages that they return to the labor force at
are lower and the growth is slower. And they are more prone to
spells of unemployment down the road. There is lots of evidence
of this.
Which is why speed is important. It is important not just
to restore the economy but to bring people back in. There has
been a lot of talk of people being on the sidelines. That has
been turning around with great force. People were on the
sidelines for a lot of reasons because of childcare problems,
because of health concerns, even after the lockdowns were
lifted. So, it was a complex and difficult situation for many
families. That is now beginning to heal. And we are seeing the
labor force participation of prime age people. We are on track
to exceed the pre-pandemic levels in the next six months. So,
there is no problem with people's willingness to work. They
want to.
And now, as you noted, the structure of the benefits is
going to disproportionately to lower wage workers who have had
decades and decades of underperformance. We have seen widening
income inequality since the 1980's. And for the first time
since then, we are seeing actually wage gains much stronger,
twice the pace, for the lowest quintile of workers as it is for
the top quintile of workers.
Ms. Jayapal. Let's talk about----
Dr. Coronado. And just----
Ms. Jayapal [continuing]. that.
Dr. Coronado. I just want to clarify one other point of red
versus blue states since I live in a red state. The cities are
blue and we definitely took advantage of all the American
Rescue Plan programs. Our mayor heartily engaged in providing
assistance to renters to keep them and we are a service sector
city. We got hit. I am in Austin. We got hit really hard and we
bounced back really fast in large part because a lot of these
programs kept people going.
Ms. Jayapal. Well, I am going to ask you a quick question
because my last colleague went over time. So, I know----
Chairman Yarmuth. Your time is up.
Ms. Jayapal [continuing]. my time's expired. But really
quickly, Mr. Chairman.
Chairman Yarmuth. Be quick.
Ms. Jayapal. The last part of the U.S. response was
necessary because of holes in our existing supports. What could
we do differently so that the help that people need during a
crisis are in place automatically, Dr. Coronado?
Dr. Coronado. Yes. So, again, I think one of the things
that these programs did expose were some of the creakiness of
the infrastructure in terms of getting money to people. I think
we actually did incredibly well. But the IRS is stretched to
breaking point in terms of its ability. We could do--the
unemployment insurance systems at the state level experienced a
lot of technical difficulties in administering these programs.
So, I think that there is a lot that can be done in terms
of modernizing the digital infrastructure both at the IRS and
at the unemployment insurance system to bring it up to date and
make sure that we can get money to people quickly. Identify who
is eligible, get the money quickly. That would certainly
facilitate the efficiency of these programs.
Ms. Jayapal. Thank you.
Chairman Yarmuth. The gentlewoman's time has expired.
Ms. Jayapal. Mr. Chairman, I yield back.
Chairman Yarmuth. I now recognize the gentleman from
Georgia, Mr. Carter, for five minutes.
Mr. Carter. Thank you, Mr. Chairman. And thank all of you
for being here today. I appreciate your attendance here.
Particularly you, Mayor Williams, a fellow Georgian. Thank you.
And just full disclosure, I was a mayor in another life as
well. So, I appreciate your service and appreciate you being
here from the great County of Fulton and the great city of
Union City. I am very familiar with it.
Mr. Mayor, I wanted to ask you. You have had great praise
for the American Rescue fund and for the funds that it brought
to our state. And I say our state because it is your state, my
state, the state of Georgia. But I haven't heard you say a
whole lot about the fact that the state of Georgia under our
Governor Brian Kemp that we were one of the first to reopen.
And that we were one of the ones who really never closed down
completely. And I just want to ask you, with all due respect,
how do you differentiate between the impact of the state
reopening, allowing people to get back to work and to school
and the impact of the American Rescue Plan? I mean, how do you
differentiate between those two?
Mr. Williams. Well, thank you. And, certainly, no, I had
not spoken about Georgia and certainly our great Governor Brian
Kemp. And Georgia is a blue state now for those who don't know
that.
Mr. Carter. I beg your pardon?
Mr. Williams. Well, the----
Mr. Carter. I am talking Georgia in the southeast.
Mr. Williams. Yes, yes. But anyway, you know, yes, we are
talking about Georgia in its entirety. But I did want to
certainly say that Georgia was one of the first states to stay
open. But it was a challenge for most of the communities in
Georgia who had struggles with people who were not essential
workers. People who didn't have public transit access. There
were a number of factors as to why a lot of the folks that were
employed and needed to get to work, couldn't get to work. But
also, a lot of the jobs were shut down because of the pandemic.
Certainly, the state was still open, but a lot of people
couldn't work.
So, you know, there were a lot of variables in that,
Congressman. But we have to be focused on how do we get people
to work in an open environment? Many of us were afraid because
we didn't have the necessary healthcare, the necessary testing
that needed to be done to get people to work. But also, our
schools were shut down. That was a big fight, as you know, in
Georgia about schools being open, being closed. So, that was a
big challenge.
Mr. Carter. Well, Mr. Mayor, again, and I don't mean to be
confrontational here. But I am afraid that we are--we certainly
disagree with red and blue. But nevertheless, I am afraid we
disagree with which one really, I mean, which one had the most
impact and the most benefit here? I mean, opening early didn't
cause the inflation that we are experiencing right now. It
didn't cause the high need for employees that we are
experiencing right now.
I know in your city alone, I believe I have got the figures
here that according to Indeed.com, a job search engine, there
are 6,730 open restaurant jobs within 25 miles of Union City,
Georgia. And, you know, all this money that was pumped into the
economy and particularly by the American Rescue Plan, which in
my opinion, was not necessary.
Now, there were programs that were necessary. Programs that
I voted for. The CARES Act, PPP programs, EIDL, all of those
were important. And they helped these people out as you
indicate. But the American Rescue Plan has resulted in the high
inflation and the need for employees that we have right now. We
have simply got too many dollars chasing after too fewer
products right now. But opening up the economy that is what
helped us in the state of Georgia recover from this.
Mr. Williams. All due respect, you mentioned the CARES Act.
The CARES Act did not help cities like my city. There were only
36, 37 big cities that received CARES Act funds, you know. The
CARES Act funding went to the county, Fulton County.
Mr. Carter. OK. Well,----
Mr. Williams. Now, certainly that was a challenge we had in
having discussions with the county.
Mr. Carter. But Fulton County had the ability to have it
designated to you as well in the city.
Mr. Williams. Well, let me tell you that was a huge----
Mr. Carter. I understand.
Mr. Williams. OK. Well, then----
Mr. Carter. I am familiar with Fulton County
Mr. Williams [continuing]. OK.
Mr. Carter. Enough said. But when we talk about the
American Rescue Plan, all I have heard you say is that you were
able to finish a greenway trail. I mean, what that is----
Mr. Williams. Not finish. Not finish.
Mr. Carter. Not finish.
Mr. Williams. No, I didn't say finish.
Mr. Carter. It is still not finished?
Mr. Williams. Yes, I didn't say finish a greenway trail. It
has allowed us to be able to move forward with the creation and
implementation of a greenway trail. It is helping us to be able
to create recreational outlets for our community. We are not
finished with it.
Mr. Carter. Well, certainly that is important. I get it.
Mr. Williams. Yes.
Mr. Carter. I was a mayor too.
Mr. Williams. Yes.
Mr. Carter. And I understand that recreational trails are
important to the life of the community. But I would submit that
it is not important enough to where the federal government
needs to be sending dollars down there that is going to result
in inflation. And what we see now in the need of employees and
businesses struggling like they are struggling in my district
in the First congressional District along the coast of Georgia.
Chairman Yarmuth. The gentleman's time has expired.
Mr. Carter. Mr. Chairman, thank you, and I yield back.
Chairman Yarmuth. I now recognize the gentleman from
Virginia, Mr. Cline, for five minutes.
Mr. Cline. Well, thank you, Mr. Chairman. I want to thank
you for holding this hearing on the so-called American Rescue
Plan. It is something we have been asking to do for quite a
while. The hearing has provided us with the opportunity to
highlight some of the most disastrous impacts of the plan on
the American economy and on American families, as well as the
devastating inflation that has resulted. In fact, over the last
15 months, the economic outlook has also deteriorated in many
aspects of society. The federal deficit in 2021 was $2.78
trillion, the second highest deficit in American history. And
$517 billion more than CBO projected. So far this year, the
Federal Reserve has already increased interest rates twice by
1/4 of a point in March and 1/2 point in May. I expect it to
increase rates again later this week.
Prior to ARPA, CBO projected no rate increases until 2024.
The S&P 500 is down 16 percent from its peak. Productivity fell
at 7.3 percent annual pace last quarter. The largest decrease
in 75 years. Labor force participation remains below what it
was prior to the COVID-19 pandemic. Gas prices are above $5 a
gallon, up 109 percent since Biden became President. Real wages
have declined by 4.2 percent since Biden became President. And
the federal debt has increased by almost $3 trillion and is on
track to increase by another $16 trillion under the President's
budget proposal, reaching the highest level in American history
as a percentage of the economy.
And what is even more egregious is much of the funding from
this American Rescue Plan was lost due to fraud, unemployment
insurance fraud. The government has confirmed at least $163
billion, which with third-party estimates as high as $400
billion. All of this because architects of the American Rescue
Plan, congressional Democrats and the Administration refused to
include guardrails such as identity verification, which would
protect the funding.
It is clear that much of the taxpayer funded spending from
the Rescue Plan was spent on policies that actually reduced
labor force participation and spent on things completely
unrelated to combatting COVID-19.
I want to ask Mr. Moore, as I said, interest rates are
rising. You say GDP will grow at less than a point in the
second quarter. In your opinion, what does the next six months
look like for the American consumer?
Mr. Moore. Look, I think this is a really dangerous time
for the U.S. economy. We are at, you know, I am kind of in
agreement with one of the--Jamie Dimon who said last week that
it just feels like we are on the beach and tsunami is coming.
And hey, look, I hope I am wrong. The last thing--I have lived
through six recessions during my lifetime, deep recessions. And
they were extraordinarily painful and they caused incredible
pain and suffering. So, I pray. I pray. I pray that we can
skate around this. But, Mr. Cline, what has bothered me,
frankly, about this hearing is the ``it is not our fault'' is
not an economic strategy, right. To just say it is not our
fault.
You know, I have been in economics for 35 years. I never
even heard the term supply chain problems until Joe Biden came
into office. Where did this idea of supply chain problems come?
We had under Reagan, we had, when we had the massive recovery,
we had an 18-month period where the economy grew by 12 percent.
There were no supply chain problems. Inflation rate fell. It
didn't grow. Economic growth is associated with lower
inflation. When you produce more goods and services, the
inflation rate goes down. It doesn't go up. If the economy
produces more apples, what happens to the price of apples?
So, I think what worries me right now, sir, is what is the
solution? When Joe Biden says we should pass the Build Back
Better bill and add another $2 or $3 trillion to the debt, it
scares the hell out of me. You know, if that is the solution,
more and more spending, more price controls. We had price
controls in the 1970's, Mr. Cline, and it was a disaster. That
is what led to gas lines and kind of the collapse of the
economy.
So, very worried about things. I think what we ought to do
is call for an immediate 10 or 15 percent across the board cut
in every government program. They have had 30 percent
increases. Let's get government spending down quickly to help
solve this inflation problem. Make the tax cuts permanent. And
let's suspend all this, you know, green energy stuff for a
while. And produce what produces 70 percent of our energy,
which is oil, gas, coal, nuclear power.
Mr. Cline. Thank you. I want to note that our colleague,
Ms. Jayapal, who is not on right now, was talking about the
pre-pandemic economy, and how it was going. And it was going
quite well due to the tax cuts that were passed by the Trump
Administration by the Republican Congress prior to the
pandemic. So, I would hope that we would adopt some of the
policies that you are recommending and we can save this economy
from sliding into a recession. I yield back.
Chairman Yarmuth. The gentleman yields back. I now yield
five minutes to the gentleman from Iowa, Mr. Feenstra.
Mr. Feenstra. Thank you. Thank you, Chairman Yarmuth. And
thank you, Ranking Member Smith. It is a pleasure to talk about
this topic today. I appreciate the testimoneys of each one of
you concerning the American Rescue Plan and whether or not it
was successful and talk about the implications of it.
My past, I taught business and economics at a university.
And I quickly pulled out my public finance book, right? Because
I wanted to clarify economics and, Mr. Moore, you noted that
economics is really not complicated. It is not complicated. It
is really about consumer satisfaction and how you get there.
And the book, you know, the first five sentences of the book it
talks about injecting cash into a system inherently creates
inflation. It automatically does, right?
So, that is what happened. That is factual, right? We do
have inflation, runaway inflation, which is factual. Whether
Mrs. Yellen says that, Mr. Powell says that. I mean, this is
fact. So, now when you look at the economics piece of it, it
also deals with utility. So, as economists when we look at
utility, that means consumer satisfaction.
So, what happened with the American Rescue Plan, we
injected all this money. Did we create consumer satisfaction?
Well, let's think about that. When gas is up 48 percent, eggs
are up 33 percent, utilities up 30 percent, milk up 16, meat up
12, oh, and by the way, we are sitting here less than 24 hours
after the S&P 500 closed in a bear market dropping 20 percent
in the last six months, threatening retirements of millions of
seniors who have left the labor market. Do you think they are
satisfied? No.
I mean, this is why there is so much anger in America right
now. People are furious because they have to make a decision.
They have to make this decision. Rational person, a rational
person sitting around the table with their family has to make
this decision, do I work more? Economics. Do I have to get more
money? Or do I have cut going to the grocery store? Do I got to
cut the pop? Or do I have to cut the meal for my kids?
This is real. This is what Americans are facing. So, you
can talk about the American Rescue Plan how glorious it. And
yet, you have mom and dad sitting at the kitchen table trying
to understand that they have to cut. Or does somebody have to
get a second or third job? And the same thing with businesses.
The businesses have seen dramatic inputs going up going all
right, now what do we do? And this is scary stuff.
You know, the chief economists of the World Trade
Organization estimates that between 2/3 or 3/4 of the supply
shortages are a result of excess demand, money put in the
system, resulting from government spending. So, we look at all
this stuff, and this is, again, chief economists of the World
Trade Organization saying this. This isn't Randy Feenstra. This
is an expert.
It is caused by all this money that is going into the
system. More importantly, and it was just noted by
Representative Cline, that it would be something if we were all
collaboratively sitting in this room today figuring out a plan
to mitigate inflation. But, no, no, no, no, we are doing that.
What we are doing is we are trying to revive Build Back Better.
We are asking the President to forgive student loans. And we
are also asking for more COVID dollars. Don't we understand the
train wreck that is already happening? And it was just noted
that is their storm clouds on the horizon? No. it is a matter
of a hurricane and we are not sure if it is going to be a
hurricane of a strength of 2, 3, 4, or 5. And it is scary
because I think it could be a 5. This is how catastrophic this
is going to be.
Because you know how you--how you resolve the problems, and
the Feds get it. They are going up a .75 percent or a .75 basis
points this week, maybe even more. Because they understand the
only way you fight inflation is increasing your interest rates.
And when you increase your interest rates, right? Think about
what happens. That slows down the economy. You create a
recession and all of a sudden a year from now we are going to
talk about extended high unemployment because work forces are
going--businesses are going to have to lay off people because
less people are buying product. Again, it is not necessarily
me. It is economics. It is written about over and over and over
again.
I am scared. The country is scared. And yet, we are talking
about spending more. Thank you. I yield back.
Chairman Yarmuth. The gentleman's time has expired. I now
yield five minutes to the gentleman from Ohio, Mr. Carey. And
give him time to sit down.
Mr. Carey. Thank you, Mr. Chairman, Ranker. So, in June
2021, the EPA announced that $50 million from the American
Rescue Plan would go to fund environmental justice initiatives.
This money from a law that was supposedly meant for COVID
relief, went to environmental climate-related programs across
the country. For example, some of the money went to the city of
Milwaukee for ``outreach and education through a healthy people
homes and neighborhood campaign.'' Last month, you guys, the
Center of Budget and Policy Priorities, put out a report that
called for flexible recovery funds because it offers states a
tool to advance environmental justice. Congressional Democrats
and the Biden Administration's federal guidance for state and
local dollars use was purposely vague so they could be used to
advance their green new deal.
In addition, $30 billion, with a B, was allotted through
the American Rescue Plan for mass transit system improvements
to reduce emissions. Not sure how that falls in line with
COVID. So, it is obviously that the American Rescue Plan looked
to fund the Administration's new green deal, doling out
billions of dollars, taxpayer dollars, with little guidance on
how those dollars should be used. So, my question to you, Mr.
Moore, how do you think this money allotted for climate change
has contributed to the runaway inflation that we are now
seeing?
Mr. Moore. Well, you know, there is no question that
climate change funding was a huge part, especially of the $1.1
trillion, well, I call it the green new deal bill, but they
call it infrastructure bill. Look, when you raise energy
prices, which is what we have been doing as we try--I mean,
look, Biden's been very clear on this. He wants to go to zero
on oil and gas development in the United States by 2030. So,
the high--when you think about it, I mean, the high oil and gas
prices is something the Biden Administration wants. They don't
want people to use oil and gas. So, a good way to do that is to
raise the price of it.
But my point is, when energy prices go up, the gas price--I
will tell you, I have a friend who, you know, for example, just
give you one story. My friend owns restaurants. The kind of
middle income like Denny's and Red Lobsters and so on. And he
said, Steve, I can tell you what my sales the next week in my
store will be based on what the gas price is today. In other
words, when--I think a lot of people don't realize that
Americans, 70 percent of Americans are living paycheck to
paycheck. And if the gas price goes up, I am just using this
one example, he said, you know, they won't have the money to go
to Red Lobster. They have to take the family to McDonalds or
something like this.
So, this is why all this talk about inequality, inflation
is the ultimate regressive tax that hurts the people at the
bottom. That is why it is so inexcusable that we are allowing
this to continue to go on and pretending that somehow we are
helping the lowest income people. When, in fact, we are doing
great damage to their living standards. And incidentally, I
will make this prediction, and Mr. Chairman, if I am wrong, I
will eat my words. But in six months, we are going to see a
huge increase in the poverty rate in this country, huge.
Because people's incomes can't keep pace with a 9 percent
inflation rate. They just can't.
Mr. Carey. Thank you, Mr. Moore. I will tell you, I think
we all know the term energy poverty. And I think what we are
going to see as you mentioned----
Mr. Moore. Absolutely.
Mr. Carey [continuing]. in the next six months we could see
that. Again, I think, what were some of the things, and we only
have a minute unfortunately, but you know, we are going to see
probably gas go up to $6 a gallon.
Mr. Moore. I hope not.
Mr. Carey. The cost of obviously, domestic oil and gas
recovery it is going up as everything else is. What do you
think the Rescue Plan should have been focused on with domestic
energy?
Mr. Moore. Drill, drill, drill, drill. Use everything we
got, all of the above American strategy. I mean, I talked to
Trump many times about this. It was basically, I used to say we
can be energy independent with the right strategy. He said I
want America to be energy dominant. We should be. We have more
oil and gas and coal than any other country in the world. We
have 300 years' worth of natural gas. We have 250 years' worth
of oil. We have 600 years' worth of coal. We have the cleanest
energy in the world. It makes no sense that we have shut down
so much of our energy supply. I find it tragic.
Mr. Carey. Thank you, Mr. Moore. Mr. Chairman, I yield
back.
Chairman Yarmuth. The gentleman yields back. I now yield
myself 10 minutes. And thank you all for your patience. I am
the last questioner so we will get out of here.
Ms. Boebert mentioned this is Donald Trump's birthday and
wished him happy birthday. I want to acknowledge that today is
National Bourbon Day and coming from Kentucky, I think that is
an important thing to get on the record. And I will be
celebrating appropriately later in the day.
Mr. Williams, Mayor Williams, thanks for being here. And
you are more than the Mayor of Union City. You are representing
the League of Cities across the country. How many of the mayors
that you are familiar with think the American Rescue Plan was a
bad deal?
Mr. Williams. I know no mayors that think the American
Rescue Plan was a bad deal.
Chairman Yarmuth. And that is Republicans, Democrats,----
Mr. Williams. It is Republicans----
Chairman Yarmuth [continuing]. and nonparties.
Mr. Williams [continuing]. and Democrats. We are a
nonpartisan organization. So, I have no mayors that have
reached out and said I think this is a bad deal because we
worked in consort with a lot of your committee members and
certainly with the Biden Administration to craft this
legislation to make sure that cities did get direct funding.
Chairman Yarmuth. And one of the complaints about the CARES
Act was that there was not enough flexibility offered, that the
guidelines were too strict. And therefore, when we were
crafting----
Mr. Williams. Exactly.
Chairman Yarmuth [continuing]. this legislation, that is
what we wanted to do was to give the cities and states and
counties more flexibility in the use. And, obviously, that
doesn't guarantee that everybody will use them for the best
possible purpose. But the Ranking Member mentioned a list of
things. The ones he mentioned, and I know he said there were
more that he didn't mention, didn't amount to $2 billion, which
means that is less than .1 percent of the total investments
made under the American Rescue Plan.
So, there were a lot of things that were done really well.
In my state, and I have a letter which I ask unanimous consent
to enter into the record. Without objection.
[Letter submitted for the record follows:]
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This is from the Governor of the Commonwealth of Kentucky
talking about all the ways in which they have used, not all of
them but some of the prominent ways and you mentioned of them,
water systems, broadband. We made a considerable investment in
schools, both remediation of schools so they are safer, but
also, construction of schools. And the point I raise there is
not all of the benefits of the American Rescue Plan have been
realized. There are many that will be realized as time goes on
because of these important investments.
Mr. Williams. You are exactly right. And it was, you know,
mentioned during my conversation with Member Carter, the
greenway trail, for example. Those things take time. You know,
certainly this is something that we are engaged in now and
developing that resource through our community. But, you know,
one of the great things that I do see have happened with this
ARPA plan is that I am noticing and have noticed, not just in
Georgia, in my city, but around the country that elected
officials at all levels have begun to somewhat work together in
consort when it comes to the needs of people.
It just concerns me that we still have a lot of this back
and forth with a lot of our federal members who chose not to
support it. And that is fine. That is your right. But when you
think about the needs of the people of this nation, it is
imperative that every person that has been sent to Washington
to serve their communities, their districts, that they do the
right thing when it comes to saving lives.
Chairman Yarmuth. I totally agree. You know, we know that
funding helps states and localities. We have survived the
pandemic and make investments that are evidence based and
community supported. I ask unanimous consent to enter a letter
from Results for America into the record, which makes that
case. Without objection.
[Letter submitted for the record follows:]
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Now, I am going to--one question. It was this Fed report,
the San Francisco Fed Report was referenced earlier. Didn't the
Fed issue a report within the last six months that said they
had estimated that the American Rescue Plan accounted for less
than 1 percent of the total inflation, like .6 or .7 percent?
Dr. Coronado. So, I would have to look and I am not
familiar with that report. But there are numerous reports from,
you know, there are 12 regional Federal Reserves.
Chairman Yarmuth. Right.
Dr. Coronado. Each has a research staff. All of them are
doing research on these things. So, if it is of use, I could
gather the various reports and provide you with those
references.
Chairman Yarmuth. OK. That would be appreciated. There is a
recent one now that I would like to mention and enter into the
record.
This is from Moody's Analytics. This is decomposing
consumer price inflation year over year change through May 22
on seasonally adjusted CPI, a total of 8.5 percent. That number
has been mentioned frequently. Russian invasion of Ukraine.
Direct impact of higher commodity prices, 2.8 percent. Indirect
impact of higher commodity prices, .7 percent. So, according to
this, 3.5 percent, or almost half, actually, of the 8.5 they
say is directly or indirectly attributed to the Russian
invasion. Stressed supply chains, 1.5 percent. Labor shortages,
.1 percent. Reopening effect .4 percent. Energy regulation,
zero. American Rescue Plan, .1 percent. So, I am sure there are
people who will come up with different numbers, but these
numbers are pretty revealing as well.
And I want to turn to inflation for a minute because we
hear a lot about gas prices. Mr. Moore, do you know what gas
prices, the price of a barrel of oil was in January before the
Russian invasion when Russia actually aggregating troops
nearby? Do you know what it was a barrel?
Mr. Moore. Sorry, January 2021?
Chairman Yarmuth. 2022.
Mr. Moore. 1922, I mean. I don't know, $3. I don't know,
$3, $3.50, I don't know.
Chairman Yarmuth. No, not a gallon. Oil, a barrel of oil.
Mr. Moore. Oh, the oil price.
Chairman Yarmuth. On the market, yes.
Mr. Moore. Well, I know that the month that Trump left
office the oil price was about $60 to $65 a barrel. I don't
know what it was in----
Chairman Yarmuth. It was in the low 80's.
Mr. Moore. Wait, are you talking about January 2021?
Chairman Yarmuth. 2022.
Mr. Moore. Oh, 1922, yes. OK.
Chairman Yarmuth. Yes, just----
Mr. Moore. In the low $80's.
Chairman Yarmuth [continuing]. just weeks before the
invasion,----
Mr. Moore. Right.
Chairman Yarmuth [continuing]. a barrel of oil was $80 to
$85----
Mr. Moore. Mm-hmm.
Chairman Yarmuth [continuing]. a barrel. And it is now $120
a barrel. It is a pretty compelling evidentiary case that the
invasion dramatically raised the increase in oil prices. And
everybody wants to say, well, we ought to have an all-in
policy. You just said that. What are we going to do? Are we
going to tell the oil companies to drill more? You think they
will listen to us? You mentioned 11 million gallons a day. Does
anybody else in the world produce as much as we do?
Mr. Moore. Sorry, does--I couldn't hear you.
Chairman Yarmuth. Does any other country in the world
produce as much oil as we do?
Mr. Moore. We are slightly now below--we were the number
one producer when Trump left office. And we are now we have
fallen below Saudi Arabia and Russia.
Chairman Yarmuth. I don't think so. I think Saudi Arabia is
8.5 million barrels a day.
Mr. Moore. I think Saudi Arabia's higher than our----
Chairman Yarmuth. Which is----
Mr. Moore [continuing]. we are. But my point is when the
price goes from $80 a barrel to $120 a barrel, we should be
producing 15 or 20 million. I mean, we should----
Chairman Yarmuth. And isn't it the case that the reason
they are not producing more when they have 9 million acres of
leases that they are not using right now in the United States
that they make too much money at $120 a barrel. Why would they
go out and explore for oil? By the way, which is not going to
do anything today, tomorrow, or next month to alleviate the
crisis because it takes a long time to find oil and build that
capacity. And just like the Keystone Pipeline you mentioned,
how long will it take for that to be completed?
Mr. Moore. Well, we have said that for 10 years.
Chairman Yarmuth. Right.
Mr. Moore. I mean, we would have it completed if we hadn't
continued----
Chairman Yarmuth. Well----
Mr. Moore [continuing]. to stop it. But, look, my point is
that when the price of oil goes up, production goes up. I mean,
these companies are incredibly sensitive to the price of----
Chairman Yarmuth. Well, apparently it is not.
Mr. Moore [continuing]. they make--every additional dollar
is an additional dollar of profit for them.
Dr. Coronado. Their investors are demanding that they don't
respond with drilling and investing.
Chairman Yarmuth. And they know that electric cars are
coming, an increasing factor. And to make a long-term
investment now in drilling for more oil is something that in
their economic interests and shareholder interests are
something they are not going to do.
Mr. Moore. But, sir, the President says he wants to--he
said he wanted to destroy the oil and gas industry.
Chairman Yarmuth. He doesn't control the oil companies----
Mr. Moore. He doesn't want oil and gas development.
Chairman Yarmuth. He doesn't control the oil companies.
Mr. Moore. What is that?
Chairman Yarmuth. He doesn't control the oil companies. He
doesn't control Shell.
Mr. Moore. They just took----
Chairman Yarmuth. He doesn't control Exxon Mobil.
Mr. Moore. They just took hundreds of thousands of acres--
--
Chairman Yarmuth. He doesn't control----
Mr. Moore [continuing]. off limits. They just did two weeks
ago in the middle of an----
Chairman Yarmuth. There are 9 million acres already under
lease that they have. What more property----
Mr. Moore. When you talk----
Chairman Yarmuth [continuing]. do they need?
Mr. Moore. When you talk to the people in the oil industry,
you cannot have a red-light, green-light, red-light, green-
light policy. You are talking about billions of dollars
investment. You can't say, oh, you can drill, you can't drill,
you can, you can't.
Chairman Yarmuth. Nobody----
Mr. Moore. There is so much uncertainty.
Chairman Yarmuth [continuing]. nobody----
Mr. Moore. They are not going to do that.
Chairman Yarmuth. Nobody has said you can't drill--that
they can't drill. One other question before I conclude and my
time will be up. And just to try and set the record straight.
You were talking about the corporate tax rate lowering it under
the Republican tax plan, which----
Mr. Moore. Right.
Chairman Yarmuth [continuing]. you were part of it. And how
corporate tax revenues increased. What was the rate that
corporations were paying before we lowered the tax rate from 35
to 21?
Mr. Moore. Our statutory rate when you count the federal
rate and the state and local, were at 40 percent.
Chairman Yarmuth. What was the effective rate that
corporations----
Mr. Moore. So, what we did--the effective rate was much
lower. Our plan, our plan----
Chairman Yarmuth. It was much lower than 21 percent----
Mr. Moore. This is----
Chairman Yarmuth [continuing]. wasn't it?
Mr. Moore. This is the essence of a bad policy, right? We
had the highest tax rate in the world and we weren't raising
much revenue from it. So, we cut the rate and we are actually
getting more revenue from it. Isn't that a better----
Chairman Yarmuth. But they weren't paying 21 percent on
average to begin with, were they?
Mr. Moore. They weren't.
Chairman Yarmuth. Yes.
Mr. Moore. A lot of companies were paying zero.
Chairman Yarmuth. They weren't, exactly.
Mr. Moore. The wind and solar industry have never paid a
penny----
Chairman Yarmuth. Exactly, so how can claim----
Mr. Moore [continuing]. of----
Chairman Yarmuth [continuing]. I don't understand how you
can claim effectiveness on that basis. But that is probably an
argument for another time.
Anyway, my time is up and we are going to have a vote in a
minute. And I--what is that? Oh, they have called votes. So, we
have a vote. Anyway, once again, thanks to all the witnesses.
We truly appreciate your responses, your testimony, and I am
sure this argument and debate will not conclude. But we have
had a vibrant and animated discussion and I appreciate that.
With that, if there is no further business, the hearing is
adjourned.
[Whereupon, at 1:48 p.m., the Committee was adjourned.]
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