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

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

First, the economy is not growing. In the third quarter, real GDP was flat this year. Second, the rate of inflation has reached more than 7%. Therefore, the economy is flat-line, with an increase in price of 7% +. Those are the numbers. It’s factoids. That’s all there is. Now, there is evidence that inflation is decreasing in recent numbers, perhaps to about 5% using the base rate followed by the Federal Reserve. But, after all, the Cleveland Fed has average CPI already around 7%.

As I mentioned before, the leading indicators are declining, the growth of the M2 money supply has actually fallen from around 30% to close to 0%, and the yield curve in the Treasury market is between 3 month T-bills and 10 – annual bonds are reversed. Right? Short rates are higher than long rates.


The chances of a recession in 2023 are very high. Now, all of that can reduce inflation, but it’s a very obvious and painful way to do it.

So, we have this lame-duck Congress that, unfortunately, may initiate lame-duck spending that, if implemented, will reverse the little inflationary progress that has been made. As the Wall Street Journal reports today, federal spending has increased by nearly $5 trillion over the past two years of Biden’s tenure. That’s what put pressure on the Federal Reserve to go on a money printing binge. The latest financial restrictions can be badly broken. That is my concern.

In their last term, the House Democratic liberals are facing at least 150 billion dollars in new spending for what is called the big omnibus and that will destroy the proper budgeting processes and eliminate what little financial restraints there are now. It could be more, including a $1.6 trillion tax credit extension that would provide parents of children with more than $100 billion a year without having to work. That’s right. More welfare without work, which has become a rallying cry for Democrats.

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So there is more money for COVID and aid for Ukraine and maybe tax extensions. All in all, according to the WSJ editorial, non-defense spending will rise another 10% over 7% last year and defense spending will rise nearly 10% over 6% last year.

This is not restraint. This will not prevent inflation. This will not provide any tax incentives and supply side control by reducing the burden of the proposed central government. Rumors are Republicans in the Senate will go along with this spending spree. Rumors are that GOP Senate leaders will make a deal on the so-called omnibus spending bill. This is at the heart of the currency collapse we have experienced in recent years.

Four people will get together in a room and make a deal that covers two thousand pages, maybe two trillion dollars of new spending and no one will know exactly what is in that package until it is voted on and printed and then, it will take. months, if not years, to know what is there. There will never be any oversight or monitoring of how taxpayer money is spent by a small, selfish minority of leaders who have little interest in public welfare and economic prosperity.

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There is no budget resolution for next year. There are no committee meetings for the 12 appropriations laws. There is no empirical evidence to debate the merits of policies or spending levels. In other words, there is no regular order. And the Democrats, along with a coalition of Republicans, will try to do this in the lame-duck session before the public wakes up to financial ruin and the possibility of higher inflation, higher real wages, higher grocery and energy bills. and the Great Depression.


Inflation (stock / Stock)

This is not the way to conduct economic policy. It’s a $6 billion budget and growing and it’s time for someone – someone, maybe the Republicans – to put an end to this fiscal madness and get back to proper policy and budget-oriented programs. I’m just saying it’s a big problem folks and I want to warn you about it. Hats off to the editor of the Journal, it’s something we talked about a lot on this show and that’s my thing.

This article is adapted from Larry Kudlow’s opening statement in the December 1, 2022, edition of “Kudlow.”


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