As Washington prepares to pass a trillion-dollar infrastructure bill, economists are concerned as to where the money will come from to pay for it.
Guy Williams, president of Gulf Coast Bank and Trust, told Newell Normand on WWL Radio that federal spending is lapping the incoming funds from taxes.
“Through thick and thin, we’ve only collected 17.5% of GDP in taxes from 1940 forward,” Williams said. “We’re now spending about 40% of GDP.
So that’s a giant gap that’s going to have to be made up somehow. It’s unlikely that the very richest and most sophisticated taxpayers are going to sit still and be taxed enough to make up that gap. So there’s a real fear that inflation is not just real, but it’s going to be permanent.”
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Williams said that the nation is reaching historic levels of owed money.
“We’re now at the point where we have more federal debt than we did at the end of World War II,” Williams said. “A lot of economists that look at this say right now it doesn’t seem to matter, but we don’t know what the future will bring.”
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Williams said the United States benefitted from being the only in-tact big economy, since only the Pearl Harbor bombing negatively impacted America from a fighting standpoint on home soil, a much different situation than the economies abroad.
“We had an in-tact infrastructure, and we got to rebuild the world,” Williams said. And the debt the U.S. accrued was easily paid off by the jobs created.
He also pointed out that neither side of the political aisle wants to compromise their core values, which makes paying for the bill an even bigger mountain to climb.
“The challenge with fully funding is you really have two choices. You can either raise taxes or cut spending elsewhere, and nobody wants to do either one,” Williams said. “On the Republican side, there tends to be a tremendous resistance to raising taxes. On the Democratic side, cutting any spending just seems like a terrible idea. So they swept the closets. They found a few dollars that were not spent elsewhere that they are redeploying.”
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