President Joe Biden cheered the news of upper than expected GDP growth and slammed Republican plans to impose a national sales tax in a speech Thursday at a steamfitters union hall in Springfield, Va., his first major economic speech of the brand new 12 months.
“I’m undecided the news might have been any higher – economic growth is up stronger than experts expected, 2.9%,” Biden said, referencing a report released earlier Thursday by the Commerce Department. “I do not think it’s unfair to say that that is all evidence that Biden economic plan is definitely working.”
Biden spent much of the second half of 2022 asking Americans to bear with him through historically high gas prices and inflation. In previous speeches, he’s acknowledged the economic pain many Americans are feeling, while pointing to strong economic reports that show his policies are finally taking hold.
Data from the past month has been positive: the U.S. is at its lowest unemployment rate in 50 years and, over the past two years, job growth has been at its strongest rate ever, although that is partially resulting from the historic drop in the course of the 2020 pandemic lockdowns. Though consumer prices are still higher than they were a 12 months ago, Biden has pointed to a decelerate within the pace at which they’re rising.
The general consumer price index, a standard measure of inflation, dropped 0.1% in December from the prior month, marking the biggest month-over-month decrease since April 2020.
Biden warned laws proposed by House Republicans would reverse that progress and inflict more pain on the economy.
“MAGA Republicans within the House of Representatives are threatening to destroy this economy, this progress. Look, this ain’t your father’s Republican Party. It’s a special breed of cat,” Biden said.
He cited a Republican proposal to eliminate the IRS and national income tax and implement a 30% national sales tax. Republican House Speaker Kevin McCarthy promised the bill’s backers he would put the laws as much as a vote as a part of his deal to secure support for his speakership. McCarthy on Tuesday told reporters he doesn’t support the bill.
“They need to impose a 30% national sales tax on all the things from food, clothing, school supplies, housing cards, the entire deal – 30%,” Biden said. “They need to eliminate the income tax system because guess what? That is the only way that millionaires and billionaires need to pay any taxes.”
The bill is dead on arrival without McCarthy’s support and has no probability of passing the Democratic-majority Senate. Still, Biden vowed to veto if it made it to his desk.
“Why why? This nation has undergone an excessive amount of, we have come too far to let that occur. Not on my watch. I’ll veto whatever they send me,” he said.
Biden’s speech also comes as Republicans in Congress prepare for a standoff with the White House on the debt ceiling. The White House has repeatedly said Congress should robotically lift it because it’s routinely done for years, adding that it’s going to not allow Republicans to carry it hostage to get other policies through. House Republicans have threatened to withhold support unless measures are implemented to chop spending, a position that they ignored in the course of the Trump administration and former Republican presidents.
The debt ceiling is the legal limit set by Congress of how much the federal government can borrow. It covers federal programs which have already been authorized by Congress, not recent spending. Failing to lift the debt ceiling may lead the U.S. to default on its bond payments, potentially causing catastrophic effects on the economy.
The last time the U.S. was near defaulting on its debt in 2011, the move caused Standard & Poor’s to issue its first ever downgrade of the federal government’s credit standing. The environment then was just like the situation currently playing out where a newly-elected Republican majority refused to lift the debt ceiling under a Democratic president.
A Moody’s Analytics report from September 2021 said a default on Treasury bonds could throw the U.S. economy right into a tailspin as bad because the Great Recession. Moody’s projected a 4% GDP decline and the lack of nearly 6 million jobs if the U.S. defaulted.
The U.S. hit its $34.1 trillion debt limit last week. Treasury Secretary Janet Yellen said the agency has began taking “extraordinary measures,” like suspending some investments in federal employees retirement funds, to maintain the U.S. from missing its debt payments.
