Washington, D.C. – In case you missed it, U.S.
Senator Pat Toomey (R-Pa.) joined David Westin on Bloomberg TV this afternoon
to discuss how the American economy is recovering well from the COVID-19
pandemic, but that the proposed tax increases by the Biden administration and
misguided fiscal policy could threaten a return to the pre-pandemic economy.
During the interview, Senator Toomey said:
“I think we have a very, very
strong recovery underway. You’ve seen all the upward revisions in the economic
growth forecast, now the consensus is probably 7 percent real growth for 2021.
We’ve got all kinds of good news. The employment front is good, we’re going to
see wage growth. This is really coming together well.
“But there are some looming
threats out there that I think some folks in this town are underestimating.
Some of them may be more medium-term, like the tremendous damage the Biden tax
increases will do if they indeed go ahead and inflict those tax increases that
they have threatened. But I’m also concerned about inflation. We are testing
the limits of how much money you can create and pump into the economy and
expect prices to remain stable. So I’m concerned.”
Senator Toomey also sounded the alarm regarding possible
“What we’ve witnessed is an absolutely
unprecedented scale of money creation. Literally, M2 has grown in the last year
more than at any time since World War II. It’s up 25 percent. Here we have an
economy, think about this, we have an economy that the Fed believes is going
grow at more than 6 percent. I guessing consensus is probably over 7 [percent]
at this point. But the Fed believes it’s going to grow at more than 6 percent.
In addition to keeping interest rates at zero, they’re nevertheless, pumping in
$1.4 trillion cash by buying securities. Is that like the normal thing you do
when the economy is growing at 6 percent? I mean this is unprecedented. And by
the way, I would argue that all the warning signs are blinking, at least
yellow, you’ve got asset prices at very high levels, obviously equity prices,
you are starting to see all kinds of weird spikes and bubbly kind of activity,
commodities prices have been strong, bitcoin’s gone through the roof. At some
point, you’ve got to be a little concerned. And I’m concerned that what the Fed
has told us, what they insist, is that they will be behind the curve if inflation
starts to run – they’re going to let it run – and then they’re going to try and
catch up to it and I am a little concerned about that.”