To protect the most vulnerable, the government should also make sure that a variety of its programs—food stamps, Medicaid, Medicare and Social Security—are “adequately indexed” to inflation, said Stiglitz, a Columbia University professor.
Lindsey, who now heads his own consulting firm, said in an interview that there are good economic and political reasons for a new round of stimulus checks. He reckons that the excess savings that many Americans socked away during the pandemic will be exhausted by the end of this year—eaten up by a decades-high inflation rate.
Lindsey Backs Checks
“There’s no lifeline coming, particularly no lifeline for 2023,” Lindsey said. “It’s political malpractice for the White House to not have put up a very simple bill that would send out—I’m just picking a number—$1,000 stimulus checks.”
Lindsey argued that would be less inflationary than the longer-term spending proposals put forward by Biden, which he maintained would end up as permanent fixtures boosting the budget deficit. The White House’s longer-term economic agenda includes items such as expanded child- and earned-income tax credits, but the legislation failed to pass the 50-50 Senate thanks to Manchin’s opposition.
The economic fallout from Russia’s invasion and the sanctions it’s triggered do look to have breathed new life into portions of Biden’s agenda, previously known as “Build Back Better”—especially those focused on boosting production of alternative energy sources.
Goldman Sachs Group Inc. analyst Alec Phillips said in a March 7 note that the odds of Congress approving a scaled-down package have risen as a result of the war in Ukraine, though he still thinks passage is unlikely.
If legislation does go ahead, it would focus on some $550 billion in renewable energy and climate-change provisions in the “Build Back Better” bill passed by the House of Representatives, and be paid for by higher corporate taxes and drug pricing changes, he said.
Laperriere said Congress could go even further, and combine “massive green energy subsidies” with measures to encourage the output of oil and gas.
“It’s not the base case, but a far-reaching energy policy change is becoming a real possibility,” he said.
—With assistance from Jennifer Jacobs.
This article was provided by Bloomberg News.