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LARRY KUDLOW: Federal spending under Joe Biden is almost a quarter of our economy

Let’s begin: Save America, stop the spending. House Republicans continue their quest, doing the Lord’s work, to reduce inflationary federal spending as the price to pay for an increase in the debt ceiling.   

$31 trillion of debt is surely enough. Federal spending under Joe Biden is now at 24% of GDP, almost a quarter of our economy. Isn’t that enough? Spending by federal, state and local governments is 44% of GDP, almost half the economy run by the government.   

That’s nothing if not big government socialism, and Joe Biden and his Democrats will do anything and say anything to avoid government spending reductions. So, here’s the president again on the hustings with the big lie.

PRESIDENT BIDEN: They want to cut your social security and Medicare. Now, this is the God’s truth. It’s almost unbelievable and beyond that, they’re actually threatening to have us default on the American debt.


President Joe Biden on Saturday urged major G20 energy producing countries with spare capacity to boost production to ensure a stronger global economic recovery as part of a broad effort to pressure OPEC and its partners to increase oil supply.  (AP Photo/Evan Vucci / AP Newsroom)

Biden keeps saying this, and so does Mr. Schumer and so does Mr. Jefferies, and it is completely untrue. OK, for the second night in a row, here’s the replay of what Speaker Kevin McCarthy said on this program.

LARRY KUDLOW: They’re saying you’re going to cut social security, you’re going to cut Medicare, and you’re going to default on the interest payments on the bonds.

KEVIN MCCARTHY: None of that is true.

I ask you, can Mr. McCarthy be any clearer? In a moment, we’re going to talk to House Majority Leader Steve Scalise. I’m going to ask him the very same question, but the point is: Mr. Biden and the Democrats will say anything.  

Frankly, it goes beyond cognitive dissonance. It’s just the kind of big lie that authoritarians or totalitarians have used forever to attempt to turn a lie into the truth through repetition. It’s a very sad state of affairs on their part.   

Now, Mr. Biden is out there today praising the GDP report for the fourth quarter. Well, if I were you, I wouldn’t, Mr. President.   

First, for the entire year 2022, real GDP increased by a miniscule 1%, the slowest since the financial meltdown in 2008–2009. I’m measuring, as economists do, fourth quarter over fourth quarter, like any business, it looks at year-end vs. year-end. On the same basis, the inflation rate registered 6.3%, the highest in 40 years.   

Essentially, skyrocketing inflation caused principally by: Joe Biden’s $2 trillion so-called Rescue Act in March of ’21, plus an unnecessary trillion-dollar Green New Deal infrastructure bill, plus an equally unnecessary semiconductor Intel Corp. bailout, plus another Green New Deal bailout totaling nearly $800 billion, plus the monstrosity $1.7 trillion omnibus bill. So, we’re talking over $6 trillion of spending and borrowing.  


Mr. Biden gets the bragging rights to that, even though he never mentions it and the people paying for his woke central-planning government policies are essentially middle-class, blue-collar working folks and others lower on the income scale. For example, today, Mr. Biden was trying to brag that real wages are going up — inflationary wages.

Well, if you do some proper counting, the reality is real wages for typical families have fallen 21 consecutive months, when properly measured on a 12-month, year-on-year basis ever since Biden’s first massive so-called rescue plan in 2021.  

In just the past year, in the December employment report, average hourly earnings for all employees increased 4.6% for the past 12 months. Meanwhile, consumer prices in December increased 6.5% for the past 12 months. 6.5 is higher than 4.6. So, Mr. Biden’s arithmetic is, shall we say, questionable.   


Finally, if you look under the hood of today’s GDP report, the basic core economy, which is consumer spending and business investment (C+I), was basically flat. All of the strength in the overall 2.9% number came from a huge inventory buildup, which is going to have to be reversed in the next quarter or two.  

So, I must say, unfortunately the economic outlook looks like negative GDP for the next quarter or two. Not good. Save America, stop the spending and, for heaven’s sake, tell the truth.   

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