Simon Bridges writes:
Most New Zealanders may not have heard of Joe Manchin. But 74-year-old Joe is a United States senator from West Virginia who has recently become one of the most important people in the world’s most powerful democracy.
The reason is that, in an evenly divided senate of 100, Manchin’s fellow Democrat, President Joe Biden, needs his support to pass the sweeping $2 trillion (yes, trillion) Build Back Better plan.
Actually it is worse than that. The BBB plan will really cost closer to $5 trillion, or around $15,000 per US resident, if you ignore the accounting tricks.
Manchin, though, on the eve of Christmas, decided to vote against the bill. His view is that the US already has high inflation, that inflation is hurting workers and families in his state, and that all the spending in the proposal would simply fuel that inflation.
Currently, inflation in the US is 6.8 per cent, the highest it has been since 1982. In New Zealand, it isn’t that high, at 4.9 per cent, but again, if you take out one-off GST increases, it’s the highest we’ve seen it since the 1980s, and well above the global rate for 2021 of 3.5 per cent.
Yep inflation in NZ is at a 30 year high.
Finance Minister Grant Robertson has taken government spending up 40 per cent since National was in office, and has signalled a staggering $128 billion spendup this year, some 68 per cent higher. National accepts we needed to borrow and spend more at the height of the Covid crisis, and public spending is important for things like transport, health, education, and police.
But you can have too much of a good thing for too long, and the quality of the spending by Grant Robertson has been pretty loose. Now, in a tight economy, with supply chain and labour constraints, public spending is just competing with others for goods, services, and staff, and driving inflation higher.
The quality of much of the spending is abysmal, and every family pays for it through both inflation and increased debt.