Larry Kudlow: ‘More welfare without work’ is the ‘radical Democratic battle cry’

So far this year we have official estimates for economic growth and inflation for the first three quarters or nine months of 2022. The results are very poor.  

First, the economy has not grown. Through the third quarter, real GDP is essentially flat for the year. Second, the inflation rate has come in over 7%. So, a flat-line economy, with a 7%+ price increase. Those are numbers. They are factoids. That’s all there is. Now, there’s some evidence that inflation is slowing in the most recent figures, maybe to around 5% using a base rate the Federal Reserve follows.  But, then again, the Cleveland Fed has a median CPI that is still around 7%.  

As I’ve said before, the index of leading indicators is plunging, the M2 money supply growth has crashed actually from about 30% to near 0%, and the yield curve in the Treasury market between 3-month T-bills and 10-year bonds has inverted. Right? The short rates are above the long rates.

DEMOCRATS COULD ADD $500B IN NEW DEBT DURING FINAL WEEKS OF CONGRESSIONAL CONTROL

The likelihood of a recession in 2023 is very high. Now, all that might bring inflation down a recession, but it’s a very blunt and painful way to do it.  

So, we have this lame-duck Congress, which, unfortunately, may well embark on a lame-duck spending spree that, if enacted, will reverse what little inflation progress has been made.  As the Wall Street Journal editorializes today, federal spending has increased by roughly $5 trillion in the last two Biden years. That’s what put the pressure on the Federal Reserve to go on a money-printing binge.  The recent fiscal and monetary restraint may be badly broken. That’s my worry.

In their last gasp, House Democratic liberals are dealing for at least $150 billion in new spending for a so-called giant omnibus bill and that would wreak havoc on proper budget processes and end what little fiscal restraint currently exists.  It could well be more, including a $1.6 trillion child tax credit expansion which would provide parents with kids well over $100 billion a year with no work requirements. That’s right. More welfare without work, which has become the radical Democratic battle cry.  

Then there’s more COVID money and Ukrainian aid and maybe some tax extenders. All in, according to the WSJ editorial, non-defense spending would rise another 10% on top of last year’s 7% and defense spending would increase nearly 10% on top of last year’s 6%.  

This is not restraint. This will not restrain inflation. This will not provide any tax and regulatory supply-side incentives by reducing the burden of centrally planned big government. The rumor is the Republicans in the Senate are going to go along with this spending spree. Rumor is the GOP Senate leadership will make a deal on the so-called omnibus spending bill. This is at the heart of the inflationary fiscal breakdown that we have experienced in recent years.  

Four people will gather…