Rep. Kevin Brady (R-Tx.), Ranking Member to the House Ways & Means Committee, joins Yahoo Finance Live for "The Biden Presidency: Year One" special to discuss the the state of the economy, job market, and labor shortage, the infrastructure bill, and communication between parties on issues.
Video Transcript
[THEME MUSIC]
ADAM SHAPIRO: And the latest CPI reading, when we talk about inflation, shows it was up a whopping 7% over the last year, and many are laying the blame squarely on President Joe Biden. Now, this comes as the White House continues to make the case for its Build Back Better plan, which some people say will drive inflation higher.
So joining us now is Texas Congressman and House Ways and Means Committee ranking member, Kevin Brady. It's good to see you. And I just want to quote the title of a note that you put out to your constituency is that President Biden's first year America's economy was poised for greatness in 2021, how did Biden bungle it this badly? Where would you like to begin because we just had a member of the DNC defending this first year.
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KEVIN BRADY: Yeah, so we obviously have pretty, pretty significant differences with your previous guest here, and here's why. So look, the bounce back from 2020, which was a tough year. So the economic rebound beat expectations, was very strong coming into 2021. The other advantages was life saving vaccines. There were trillions of dollars of bipartisan COVID relief coursing through the economy and major regions of the country were finally reopening.
So 2021 should have been a banner year. But what got delivered was the president fell short of expectations each of the 3/4. And I predict a fourth when those numbers come in. He's about 1.1 million jobs short of his promises from the COVID stimulus in March. Inflation has wiped out three years of wage gains for average Americans. That's crushing.
And we've still got a serious worker shortage that is really damaging mainstream businesses in a big way. Economic optimism has really plunged, both from small businesses and families here over the last year. And so, right now, every poll seems to show that Americans are questioning the president's ability to lead on the economy. And I think there's good reason for it.
AKIKO FUJITA: Let's talk about the worker shortage specifically. I mean, if we're talking about unemployment at 3.9%, no question businesses have said, look, we just can't find the workers there, despite the incentives in place. But you're talking about 3.9%, near full employment. So what do you think the Biden administration is doing wrong? What more can they do or should they do to improve the labor market, given where things stand?
KEVIN BRADY: Yeah, that's a great question. Unfortunately, 3.9% is low for the wrong reasons. It's because we've got between 2 and 4 million people who've left the workforce voluntarily. That's not a good sign. As we've talked before, there were a number of provisions in the COVID stimulus that discouraged Americans from reconnecting to work, including a new revamped child credit. A tax credit that, for the first time, no longer required Americans to have earnings at all.
That, our local business told us, became another barrier after those very lavish federal unemployment benefits. The ACA subsidies, the Affordable Care Act subsidies, were equally untied to work and went up to a half a million dollars or more. That become another barrier, if made permanent, experts had predicted that that could incentivize about two million Americans to exit the workforce permanently.
And so I think they made this worker shortage worse. We are still rebounding from it, and just as inflation, they initially denied it, then dismissed it, now blame it on the Fed. But the policies the president and Congress in this one party rule, worsened inflation as well. And what I'm worried about right now is we have the makings of a wage price spiral that is very tough to tame, and usually ends badly. And no one in either party wants to see that happen.
ADAM SHAPIRO: When we talk about inflation one of the things that Republicans have pointed to is the tremendous amount of spending. You just alluded to the $1.9 trillion relief bill that was passed at the beginning of the administration, but then there's the $1.2 trillion infrastructure bill. And I think it was only 13 Republicans in the House actually voted in favor of it.
Some called it socialist liberal spending. And I'm thinking of a colleague of yours from Texas who's now touting the fact that some of this money is going to be used to build projects in her district. What do you say to Republicans who voted against infrastructure, calling it socialist spending, but are now saying, woo hoo, we got some money, let's go.
KEVIN BRADY: Yes, so I would note in that case, in Fort Worth, that Congresswoman Kay Granger had already passed earlier in a Republican majority funding for that project as well. And so it has a long record of delivering there. And secondly, I think as Republicans, we're kind of familiar with this as we saw Democrats, every one of them who voted against giving seniors a prescription drug program, take credit for those medicines, lifesaving medicines for our seniors. So this is unfortunately, not unusual.
And I think at the end of the day, Republicans in the House were I mean, overwhelmingly willing to work on a bipartisan infrastructure bill. We weren't asked to do that at all. And in the House, unlike the Senate, it was tied directly to $2 trillion of tax hikes, which obviously, is crippling the economy in America, landed on small businesses and job creators, and I think would have driven a lot of jobs overseas. So unlike the Senate, the roads and the higher taxes on small businesses were tied together.
AKIKO FUJITA: Congressman, really quickly, we heard the president yesterday step up his attacks against Republicans, saying it really is all about obstruction. But there's not a unifying message here that Republicans take to voters. What do you say when people say, what do the Republicans stand for come midterms?
KEVIN BRADY: Yeah, well one, we would be happy to work with this president on a number of issues, including trade, making America medically independent from China in a number of areas. I think there's work on retirement security and making America more internationally competitive as well. But we haven't had a single invitation to sit down, from this president or Speaker Pelosi in the House to do exactly that.
And so I disagree with his claim that no one will work with him. He's been very clear, he's not very interested. And certainly, Speaker Pelosi is not as well. I think our message will be that we have to have a country that doesn't lurch from crisis to crisis. That we have to resolve the crisis on the border, which for our states like Texas is just so damaging.
We have to address this crime wave in a significant way. We've got to address inflation and the worker shortage or we'll never see the strong economic growth we had pre-COVID, which I'm convinced we can restore. But it won't be from higher taxes and huge government spending. I think it's going to be smart spending, a trimmer budget, and frankly, continuing to reduce taxes on job creators.
AKIKO FUJITA: Well, Congressman Kevin Brady, we always appreciate you joining us here on Yahoo Finance. Thanks so much for the time today.