Parsons Banking Senate Testimony

Commissioner Josh Parsons testifies before the U.S. Senate Banking Committee on June 15, 2021.

Lancaster County Commissioner Josh Parsons on Tuesday urged Congress not to burden future generations with debt to pay for a big infrastructure proposal backed by President Joe Biden, especially, he said,  since large portions of coronavirus relief funds have yet to be spent.

“Please do not further bankrupt our country and take from our yet unborn grandchildren without waiting to use the existing massive amounts of money that have already been distributed to states and local governments,” he said, testifying by remote video before a hearing of the Senate Committee on Banking, Housing, and Urban Affairs.

Parsons was among a small group of elected officials invited to talk about the nation’s infrastructure needs and how to pay for them.

In his prepared remarks to the committee, Parsons highlighted Lancaster County’s good fiscal position and its large savings account, low taxes and good credit rating. While said he was concerned about the cost of the $2.2 trillion CARES Act passed last year, he said he believed it was necessary because of the economic shut down.

“Unlike the CARES Act, I do not think the so-called American Rescue Plan was necessary,” Parsons said, referring to Biden’s recently passes coronavirus relief plan, which allocated $106 million for Lancaster County. “This money is arriving after the COVID crisis is over. And now come proposals for even more money to be sent out through an infrastructure plan.”

During question portion of the hearing, Sen. Pat Toomey (R-Pa.), the senior Republican on the Banking Committee, used his time to point out that the relief funds Lancaster County has received in the past year equate to roughly two thirds of the county’s yearly budget, despite the fact that saw only a 3% decline in revenue during the pandemic.

“So the federal government, between the CARES Act and (The American Rescue Plan) have sent, what, 25 times the lost revenue, approximately,” Toomey said.

Inflation fears

The Senate is currently debating a infrastructure proposal from the Biden administration that, originally, totaled more than $2 trillion. Democrats said the spending would be paid for through increased taxes on corporations and the wealthy, but the price tag became a sticking point in the closely divided Senate. Currently, a bipartisan group of senators, including Banking Committee member Kyrsten Sinema (D-Ariz.), is trying to draft a compromise $1 trillion plan, though its prospects remain uncertain.

Republicans contend Biden’s infrastructure spending plan, combined with the large amounts already spent on coronavirus relief, would hurt the economy by exacerbating inflation. They point to rising gas and food prices as early signs of a larger problem, raising fears of rapid inflation similar to what happened during the 1970s.

An inflation indicator from May showed that inflation is up 5%, but officials from the Federal Reserve have maintained that the rise in inflation is temporary due to supply-chain issues and pent up demand as the economy reopens, according to recent reports from the Wall Street Journal.

Democrats, led by the White House, insist that the federal government’s spending on COVID-19 relief and infrastructure will not spark inflation, estimating that the recent monthly hikes will ease as the economy continues to recover.

Dr. Antonio Callari, A professor in economics at Franklin and Marshall college, said he agrees inflation will subside soon.

“It is temporary … because there is every expectation that when production cycles get back to normal that this will be a passing shock in price.”

Callari says that the conditions for chronic inflation, like the country experienced in the 1970s, are not in place. In that period, wages and prices rose in a self-reinforcing cycle that he attributed to strong labor unions arguing for higher wages.

“Labor is weak right now, so they are not the institutional conditions in place that could cause inflation to spike like in the 1970s,” he said.

He also said some of the social spending in Biden’s plan that is being criticized by Republicans could actually reduce inflation by helping people get back to and stay in job. The more people at work, the greater the supply of goods and services, and that expansion of supply would likely relieve price pressures, he said.

Federal help still wanted

Corey Woods, the Democratic mayor of Tempe, Arizona, said in his opening remarks to the committee that that despite investments made by the city, Tempe still faces a shortage of affordable housing.

“From 2015 to 2020, Tempe experienced an increase of over 900% in our unsheltered population,” he said.  Federal programs such as Community Development Block Grants, HOME Investment Partnership Programs and Emergency Solutions Grant funding have become essential components in delivering housing options to our most vulnerable populations.”

Biden’s infrastructure plan would allocate $213 billion for housing.

Daniel Horrigan, the Democratic mayor of Akron, Ohio, said infrastructure spending is key to   boosting his city’s troubled economy.

“We need a federal infrastructure framework that is geared toward legacy cities like Akron,” he said. “We need programs that can help leverage private capital for real estate development so that we can keep existing residents in their homes, attract new residents to our city, and create markets for retail and other small businesses that can serve and employ our residents.”

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