Brooks: We’re Debating Spending $3.5 Trillion and Boosting Demand While There Are Supply Chain Issues Because Demand Outpaces Supply

On Friday’s “PBS NewsHour,” New York Times columnist David Brooks argued that if the $3.5 trillion reconciliation bill passes, it will increase demand, and because the supply chain problems are due to demand outpacing supply, there is a risk that the reconciliation bill will “create even more inflation.”

Brooks said the economic problems are a “pretty significant” headache for Biden.

He added, “The worrying thing for me is the inflation rate is much higher than many economists said. And it’s in real estate. It’s — rental is going up. Housing costs are just skyrocketing. And when you have rents going up and you have wages going up as fast as they are, then that leads to long-term inflation. And the worry, for me, this whole supply chain problem is caused by supply and demand. There’s incredible amounts of demand. Because people were locked down for a year-and-a-half, and there’s not so much supply because the factories were shut and the ports were shut. And we now have huge demand. We’re about probably, possibly, to spend another $3.5 trillion, pour that into the economy. That’s going to further increase demand and possibly further increase inflationary pressures. And so, for the people trying to pass this reconciliation bill and the infrastructure bill, it has to be a bit of concern that they’re about to create even more inflation. And so, I’m not sure Biden is to blame, but it does have some policy effects on how we talk about these gigantic bills.”

Brooks later stated that inflation worries “are an argument for phasing in a lot of the things they want to do and make it a little slower, so you don’t get this big burst of demand.”

Follow Ian Hanchett on Twitter @IanHanchett

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