The Financial Associated Press (Shanghai, Editor Xiaoxiang), a well-known economist and former economic adviser to the Trump campaign, Stephen Moore (Stephen Moore) warned on Wednesday (July 28) that the US government’s excessive fiscal expenditures And the soaring scale of national debt may trigger a financial crisis in the next 18 months.
Moore said at the annual meeting of the American Legislative Exchange Committee (ALEC) in Salt Lake City, “For the United States, this is a period of very unstable economic trends. A debt hangover is coming. If we continue along the Biden administration hope Following the path we have taken, I believe there will be another financial crisis.”
Before his remarks, some bipartisan senators and the White House had just announced an infrastructure package including $550 billion in new federal spending. The Senate voted 67 to 32 to debate the spending plan, and 17 Republicans joined the Democrats.
Many conservatives, including Moore, believe that the vote on the bipartisan infrastructure bill is essentially a preview of the Biden administration’s larger $3.5 trillion social spending and tax package, which calls for tax increases and Increase spending on education, childcare, climate change, and expansion of medical insurance.
Moore said, “I think there will be a major correction sometime in the next 18 months.”
Improper resource allocation exacerbates risks
He pointed out that in addition to growing debt, large-scale improper allocation of resources also exacerbated risks. For example, generous federal benefits inhibit people’s motivation to work.
Many business owners across the United States have been complaining recently that their hiring positions are not attractive to job seekers in the face of unemployment benefits provided by the federal government. The supplementary unemployment benefits introduced during the pandemic are considered to be one of the key reasons for the severe labor shortage in the United States.
Moore said these plans run counter to the welfare reforms of the mid-1990s, which required welfare recipients to work in order to receive benefits.
Although Democrats continue to call for increased spending, according to a report released by the US Government Accountability Office (GAO) last week, there are still more than $1 trillion in federal relief assistance approved by Congress that has not been used. Moore asked, “Why don’t we use this $1 trillion on roads and highways, but approve another trillion in addition to the money we have already borrowed?”
Inflation may be accelerating
Moore also pointed out that inflation is accelerating due to the policies of Biden and the Federal Reserve. “People have placed great expectations on the idea that inflation will disappear, and kept praying silently. However, if we pass another $4 trillion spending bill, I can guarantee that inflation will rise.”
Moore also expressed his views on the federal government’s latest mask order. The US Centers for Disease Control and Prevention (CDC) said on July 27 that it will recommend that people who are vaccinated or not vaccinated should wear masks in high-spread areas.
Moore said that investors and business owners are already worried about the new round of blockade. “I think a lot of people are confused about the direction of all this. From an economic point of view, this may really cause this round of recovery to brake.”
Moore served as a campaign adviser to former US President Trump in 2016. Trump even nominated him to serve as a member of the Federal Reserve Board, but Moore finally chose to withdraw from the nomination amidst opposition. Moore is also one of the editors of the United States Legislative Exchange Commission publication “Rich States, Poor States” (Rich States, Poor States), which ranks each state annually according to the economic competitiveness of each state.
In addition to Moore, many well-known economists, including U.S. Treasury Secretary Summers during the Clinton era, have also strongly criticized the US government’s excessive stimulus plan and expressed concerns about the risk of overheating the economy and leading to hyperinflation. Economists also worry that the Fed may eventually wait too long before applying the brakes to control inflation.