One year ago on Friday, Joe Biden signed the $1.9 trillion American Rescue Plan. It was passed in Congress without a single Republican vote.
At the time, most critics thought that passing the law would drive up inflation and weaken the economy. But the economy came roaring back after the $1.9 trillion was pumped into it — a big chunk of that in the form of stimulus checks for individual Americans and their families — and the government spent hundreds of billions of dollars on pandemic-related programs, extended unemployment compensation, and low-interest loans for small businesses.
As it turns out, tens of billions of dollars earmarked for unemployment compensation were stolen and tens of billions more were given to large, public companies.
In fact, there has been no accounting of where money from the American Rescue Plan went, how much was stolen, and how much simply disappeared.
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Nonetheless, dumping that much cash into the economy couldn’t help but lead to growth.
“I haven’t yet met a piece of legislation that I consider perfect. Again, you’ve got to recall that this was done in a hurry,” said Sen. Angus King, an independent from Maine who caucuses with Democrats. “Given the timing and the state of the economy and the emergency, it was better to err on the side of overspending, if you will, in some areas, rather than take a chance on not doing enough.”
Last year, the economy grew at its best annual rate since 1984, after shrinking dramatically the year before because of the pandemic, when job losses hit records. The economy added 6.7 million jobs in 2021, more than any year on record. President Biden, Treasury Secretary Janet Yellen and other administration officials are fanning out across the U.S. this week to draw attention to the role of the American Rescue Plan in that performance.
Were all those jobs “created” as a result of government spending money? Or were the jobs always there and simply refilled by people laid off at the beginning of the pandemic?
In fact, there are still 2.1 million fewer jobs than there were in February 2020, just prior to the pandemic.
Americans’ confidence in the economy has dropped to its lowest level since April 2020, at the height of pandemic lockdowns, according to a recent Gallup poll. Republicans, who are considered likely to win control of the House later this year, have been quick to blame the legislation for the rise in inflation. The criticism has frustrated Democrats, who passed the rescue law without any GOP support, and many in the party hope to use the bill as a political asset as they try to maintain their control of Congress in the midterm elections.
Going on a $4 trillion spending binge is not likely to convince anyone except little children and liberals that the overspending didn’t at least contribute to inflation. The more Democrats insist that their massive spending — which included an unknown amount lost to waste, fraud, and abuse — helped pull America back from the brink of catastrophe, the fewer people will believe them.
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