(CNS News) – Senator Ted Cruz (R-Tex.) said the Biden administration’s “wrong-headed economic policies” are driving inflation and causing a recession.
At the U.S. Capitol on July 28, CNS News asked Cruz, “The economy has contracted for two straight quarters now. What is causing that contraction?”
Cruz said, “What it is is a recession and what is causing it is Joe Biden and Kamala Harris’ wrong-headed economic policies: out of control spending, out of control debt, regulations that are killing jobs, a relentless war on American energy, all of which is driving record inflation -- the highest inflation in four decades -- and all of which is killing jobs and hurting working men and women all across the country.”
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, Cruz said, “If it passes, it will make it all worse. Ironically, they’re calling the bill the ‘End Inflation’ bill, and their solution to inflation is to spend hundreds of billions more and jack up taxes.”
“That’s the equivalent of throwing gasoline on a raging fire,” said the senator. “They should rename it the ‘Let’s Add Even Higher Inflation’ bill -- that’s what their bill would do.”
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.