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Tags: joe lavorgna | economy | inflation | spending bills

Joe LaVorgna to Newsmax: Steep Spending Bills Could Make Inflation Permanent

By    |   Wednesday, 14 July 2021 08:25 AM EDT

Joe LaVorgna, a chief economist of the White House's National Economic Council under former President Donald Trump said on Newsmax Wednesday that additional spending through multi-trillion-dollar federal bills could make inflation a permanent fixture, and instead, leaders should allow the economy to recover. 

"Just leave the economy alone," LaVorgna told Newsmax's "Wake Up America." "It's in very good health. As more supply comes online, those price increases will come down. People will be going back to work with unemployment benefits run out, and they can send their kids to school in September." 

However, he said he's worried that spending bills could make the economy and inflation worse, not better. 

"These price gains are largely what I would call a post-pandemic price level adjustment," LaVorgna said "Where I get worried about these prices becoming more permanent and not being temporary is the news we got last night of a $3.5 trillion stimulus bill."

When that is combined with the infrastructure deal announced a few weeks ago, "you could have upward of $4.1 trillion of additional spending," he continued. "That really poses a significant long-term inflation risk beyond what we're just seeing now, which I would argue was at the moment, more temporary."

Some of the inflation readings, he added, are acting "like a tax hike" while depressing living standards, especially for lower-and middle-income households, LaVorgna said. 

However, the White House last year expected the post-pandemic inflation, he said 

"These price gains largely reflect the fact that when I was in the White House, we were talking about a V-shaped recovery and that strong momentum carrying over into this year," said LaVorgna. 

He also responded to Senate Majority Leader Mitch McConnell's comments that an infrastructure bill the Democrats want to force through the Senate through reconciliation "would make our current inflationary mess look like small potatoes."

"To Mitch Mcconnell's point about spending, this actually is a more bipartisan issue than what may seem to be the case," said LaVorgna. "Larry Summers, who as you know, the former Treasury secretary, the head of the NEC (National Economic Council), he has said numerous times that a big fiscal impulse, a significant increase in federal spending in an environment where labor slack is declining, where the economy is growing rapidly, does run the risk of inflation because the economy would be operating above its potential rate."

But if the proposed spending bills passed, he warned, "my view on inflation will change. It's very likely we will get inflation ingrained in the system and what would be a temporary post-pandemic increase in prices becoming more permanent."

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Sandy Fitzgerald

Sandy Fitzgerald has more than three decades in journalism and serves as a general assignment writer for Newsmax covering news, media, and politics. 

© 2024 Newsmax. All rights reserved.


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Joe LaVorgna, a chief economist of the White House's National Economic Council under former President Donald Trump said on Newsmax Wednesday that additional spending through multi-trillion-dollar federal bills...
joe lavorgna, economy, inflation, spending bills
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2021-25-14
Wednesday, 14 July 2021 08:25 AM
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