(CNS News) – Senator Roy Blunt (R-Mo.) said that “bad energy policies and too much government spending” are causing the current economic contraction because people “don’t have a sense of what the future will look like.”
On July 28, CNS News asked Blunt, “The economy has contracted for two straight quarters now. What is causing that contraction?”
Blunt replied, “Well, bad energy policies and too much government spending in 2021. No surprise, it’s in an economy where people don’t know, don’t have a sense of what the future looks like and where inflation is using all the money that they might have used for other things -- whether that’s a business thinking about growing or a family that’s thinking about going out to dinner. This is what happens.”
When questioned about the economic impact of the Inflation Reduction Act, which would spend an estimated $680 billion over the next 10 years on climate change and energy, the IRS, and Obamacare, Blunt said the effect would be “in a negative way. I’m sure this will hurt even more. I don’t know if that will be obvious by November, but it will certainly be obvious by sometime next year.”
Data from the Bureau of Economic Analysis indicate that the United States’ Gross Domestic Product (GDP), the total value of the U.S. economy, has shrunk for two consecutive quarters. In the first quarter of this year, the economy shrank by 1.6% while in the second quarter it shrank by 0.9%.
As of the end of June, prices are rising at a rate of 9.1% annually. The last time inflation was that high was in 1981, when inflation surpassed 11%.
“A recession is a significant, widespread, and prolonged downturn in economic activity,” according to Investopedia. Since they typically last for at least six months, “one popular rule of thumb is that two consecutive quarters of decline in a country's Gross Domestic Product (GDP) constitute a recession.”
However, a recession is not officially declared until the National Bureau of Economic Research’s (NBER) Business Cycle Dating Committee identifies the current state of the economy as being in recession. The NBER explains that the committee evaluates the economy holistically based on a variety of factors, but that GDP, consumer spending, and employment numbers are weighed heavily in their decisions.
The NBER has so far declined to declare an official recession.
Last week, Senator Joe Manchin (D-W. Va.) and Senate Majority Leader Chuck Schumer (D-N.Y.) reached an agreement on a contentious spending bill (Inflation Reduction Act) that can be passed by the Senate with a simple majority, rather than the 60-vote supermajority typically needed to pass legislation.
According to Politico, the legislation includes “roughly $370 billion in energy and climate spending, $300 billion in deficit reduction, three years of subsidies for Affordable Care Act premiums, prescription drug reform and significant tax changes.”
The fate of the deal is not clear yet as Senator Kyrsten Sinema (D-Ariz.), a centrist and occasional holdout on Democratic priorities, has not given comment on the bill.