Harvard Economist: Democrats ‘Still Have a Lot of Plans for Spending They Want to Institute’ 

On Tuesday’s broadcast of the Fox Business Network’s “Fox Business Tonight,” Professor of Economics at Harvard University and former International Monetary Fund Chief Economist Ken Rogoff discussed how the fiscal and economic picture will change based on the results of the 2022 election by stating while he doesn’t know how much Republicans can change because President Joe Biden can veto things, “if you have a big Democratic majority, they still have a lot of plans for spending they want to institute.”

Host Jackie DeAngelis asked, [relevant exchange begins around 2:40] “Kenneth, the Democrats like to say that the Republicans don’t have a plan…but the Republicans say the first thing that they would do would be to stop the spending and see what they could try to roll back or block possibly. We’ve got the Kraft Heinz CEO predicting that inflation will persist and more price increases are going to happen in 2023. Do you think if there’s a change in how we’re approaching our spending in this country, it will help?”

Rogoff responded, “Well, there’s certainly going to be a big difference between if the Democrats retain both houses and the Republicans get both houses. I think, as one of your reporters said the President has veto power, so I don’t know how much the Republicans are really going to be able to change. But, obviously, if you have a big Democratic majority, they still have a lot of plans for spending they want to institute. And I think we live in a different world than we did before the pandemic. There was this sense everything was a free lunch, interest rates were really low, inflation rates [were] really low. That world is gone. And I think we’re seeing it all around the world, that if you want to raise spending, you have to, to some degree, raise taxes to pay for it.”

He added, “I think there were certainly these broad transfers that were made that went on for too long. … [W]hat I mean by a free lunch is there was this idea when the progressives swept into power that you’d like to raise taxes on the wealthy, that was their idea, but if they couldn’t get that, it would still be pretty good just to go ahead and spend on social programs and try to do what you wanted. And I think a lot of the goals are laudable, in my opinion, but the world just doesn’t tolerate that like it did. And that’s part of why inflation’s gone up. And I think interest rates are going to stay up more than you think at the end of this, because global debts have gotten so high, defense spending needs to go up, green transition, it’s a long list.”

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