Rep. Kevin Brady: Biden's economic report card deserves an "inflation-adjusted" F grade

House Ways & Means Committee Ranking Member and Representative Kevin Brady (R) of Texas, spoke with Yahoo Finance's Adam Shapiro and Seana Smith to discuss the Biden administration's handling of taxes, inflation, and infrastructure.

Video Transcript

ADAM SHAPIRO: I want to start on this issue of infrastructure. And I realize this is going on in the Senate with a bipartisan effort to try and get a bill, but the issue that seems to be holding things up is paying for it. And one thing that Democrats have proposed is, perhaps, raising taxes to do that. So if you could be part of that negotiation, how would you steer it?

KEVIN BRADY: Yes, so I would separate infrastructure from this massive $3.5 trillion social spending plan. I think that is the real roadblock to infrastructure. I'm pretty confident we can find common ground, both on infrastructure and how to pay for it. But obviously, Speaker Pelosi continues to link the two. As long as that's the case, I think there's going to be problems.

SEANA SMITH: And, congressman, it's Seana here. It's great to see you again. The economy is expanding, it's expanding rapidly-- I know you may argue with a few areas of it or where it could improve at least. But I guess if we do see higher taxes, I guess how much of a threat is that to the expansion that we're seeing in the economy today?

KEVIN BRADY: Yeah, I think it's pretty significant. But I would say this-- look, there are some pretty troubling signs. 2021 ought to be a blowout year. You've got trillions of COVID stimulus, reopening communities, you've got life-saving vaccines. But right now, job growth is slowing-- about 1.4 million fewer jobs in the first half of this year than the last half of 2020.

Secondly, economic growth is slowing down. New CBO projections show about 30% slower economic growth after we get through this sugar high. Economic optimism is down. Real wages are down and have been every month this year. The only thing seemingly going up are rising prices.

And so you're seeing this inflation driven by massive government spending, and the president paying people more to stay home than to work. And so for that reason at this six-month point, on this economic report card, we would give him an inflation-adjusted F.

ADAM SHAPIRO: Representative, I realize that less than 60% of Americans have some kind of tie to the stock market. The previous president would cheer when the stock market hit highs. And here's what the current president, President Biden, had to say about the stock market.

JOE BIDEN: The stock market is higher than it has been in all of history, even when it down this month-- even down this month. Now, I don't look at the stock market as a means by which to judge the economy like my predecessor did, but he'd be very-- he'd be talking to you every day for the last five months about how the stock market's so high-- higher than any time in history.

ADAM SHAPIRO: How do you respond to what President Biden is now saying about the stock market and its relation to the economy?

KEVIN BRADY: You know, I think he seems to have flip-flopped. And some days he's sort of claiming credit for the stock market surges, and others not. I think the importance of the stock market really is for families whose retirement is tied up in the success of these companies. It is very much a big deal.

I think the bigger measurement back home for families is, you know, what can I buy with my family budget? And right now, there-- if this inflation keeps going, they will have about a 4% real cut in their paychecks by the end of this year. We know Main Street businesses are struggling to find workers. It's dragging the economy down as well.

But to the earlier question, I think these tax increases that ultimately land on small businesses, families, local investors I think overall will drive US jobs overseas in a significant way. I think that and the attack on American-made energy all are, frankly, unforced economic errors that are slowing this economy down in a significant way.

SEANA SMITH: Congressman, you mentioned inflation, and I want to dig a little bit deeper into that because we did just get that pretty big jump-- 5.4% jump last week in terms of inflation. Now, the president-- we've heard Fed chair Jay Powell say that they continue to think that this pressure will be transitory, and that the higher inflation isn't here to stay.

It sounds like you might be a little bit more worried about this. How big of a concern is this for you going forward?

KEVIN BRADY: You know, it's a big concern, and not just for me. We just saw in new surveys here in the last 48 hours that show about nine out of 10 Americans are very worried about rising prices, the impact on their purchasing power. They see this massive government spending as part of that problem.

And in the same survey, about seven out of 10 Americans are worried about what these impending tax increases will mean for local businesses and the economy as a whole. So you know, I know the White House first denied there would be significant inflation, now they're saying it's transitory. But my worry is consumer sentiment and expectations continue to lengthen, and not just them but the business community as well.

And so we don't want inflation, and we want a very strong recovery. But I think the policies of the president are driving some of these troubling issues.

ADAM SHAPIRO: When you talk about inflation, I mean, some of us-- I measure it through the price of a can of black beans used to be $1.29, it's now $1.59. And I realize that may sound funny in some ways, but to people on fixed incomes, that $0.30 increase is a lot if you put food on the table. So when you hear the Democrats proposing this $3.5 trillion in reconciliation, what would the impact be if that were to go through, do you think, on prices?

KEVIN BRADY: You know, one significant would be the short answer. And, secondly, look, the time for emergency spending is over. The time for never-ending government checks, as the president proposes, is over. It really is time to get back to a normal fiscal house where we focus on the investments on infrastructure, on productivity, on education rather than really what I think is a pretty misguided dramatic expansion of government at this point. I think if Americans see another $3.5 trillion of spending go out the door, you know, there's no question it's going to reinforce their belief that inflation will be much longer than the White House hopes it will be.

SEANA SMITH: Congressman Kevin Brady, thanks so much for taking the time. Always great to speak with you.