Buttigieg Backs Pelosi's Bizarre Argument Government Spending Reduces National Debt, Inflation


Transportation Secretary Pete Buttigieg doubled-down on House Speaker Nancy Pelosi’s nonsensical claim that more government spending reduces the national debt and is not inflationary.

CNBC host Joe Kernen questioned Buttigieg Tuesday after reading Pelosi’s statement made last week during a House Democrat retreat in Philadelphia.

“When we’re having this discussion, it’s important to dispel some of those who say, well it’s the government spending. No, it isn’t. The government spending is doing the exact reverse, reducing the national debt. It is not inflationary,” she said.

Kernen asked the transportation secretary if he could square that statement with logic.

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Buttigieg waded right in.

“If you look at our fiscal policy, it is true,” he said. “The deficit has gone down, and down by a remarkable amount.”

Talk about a red herring.

Do you find Buttigieg's argument convincing?

The deficit has not come down because the federal government is spending more money; it’s because the last major COVID spending bill was passed in March 2021 — the $1.9 trillion American Rescue Plan.

Most Democrats wanted to pass President Joe Biden’s nearly $2 trillion Build Back Better proposal in the fall, but Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona blocked it, citing inflation and the nation’s unprecedented deficit spending.

The deficit was $3.1 trillion in 2020, $2.8 trillion in 2021 and through the first five months of fiscal year 2020, $475 billion.  That figure is less than half the amount at the same point in fiscal year 2021, so progress at least.

Buttigieg then shifted to discuss inflation.

“Some of the investments that we make help with inflation. I mean that’s definitely true with the infrastructure investments, right, because we know how infrastructure is related to supply chain, supply chain is related to inflation,” he said.

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Well, that’s a pretty big stretch since most of those projects will likely take years to complete, and we were not experiencing high inflation in 2019 when the economy was humming.

Buttigieg then said inflation is also due to the incredible growth the economy has seen under the Biden administration.

“It’s a fiscal policy success that our economy is growing, and growing in a better way than, I think, most any other developed country,” he said, arguing the nation could have fallen into a recession.

“It sounds like she’s saying ‘we’re going to spend our way out of debt,’ and obviously no one that has a credit card bill thinks that the answer is to spend more,” Kernen responded.

Experts say there are multiple reasons for the inflation rate hitting 7.9 percent in February, the highest since 1982, but the unprecedented levels of government spending are definitely a contributing factor.

In a November piece for The New York Times, former Obama administration Treasury Department official Steven Rattner identified the Democrats’ $1.9 trillion American Rescue Plan, passed in March 2021, as the “original sin” leading to the current high inflation rate.

“[The Democrats] can’t say they weren’t warned — notably by Larry Summers, a former Treasury secretary and my former boss in the Obama administration, and less notably by many others, including me,” he wrote.

“We worried that shoveling an unprecedented amount of spending into an economy already on the road to recovery would mean too much money chasing too few goods,” Rattner explained.

The unemployment rate had fallen from a pandemic high of 14.7 percent in April 2020 to 6.2 percent in February 2021, the month before passage of the American Rescue Plan.

So the economy was well on its way to recovery.

Rattner claimed the problem with the American Rescue Plan was that it was creating even more of a demand while many workers still sat on the sidelines receiving government benefits.

“The bill — almost completely unfunded — sought to counter the effects of the Covid pandemic by focusing on demand-side stimulus rather than on investment,” Rattner wrote.

“That has contributed materially to today’s inflation levels.”

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