Fox Business Network host Larry Kudlow warned Monday of the unintended consequences of stimulus payments and high government spending.
KUDLOW: These big stimulus packages passed last December and January are, in fact, temporarily helping the economy to rise up, and we are seeing it in the first quarter. But here's something that I don't like, and I have to credit my good friend DJ Nordquist. She was our World Bank executive director, former CEA [Council of Economic Advisers] staff director. She sent a memo to Kevin Hassett, Larry Lindsey, and myself to show that unfortunately these "stimmies" are actually stimulating China as much or more than the U.S.
China's GDP [went] up 18% in Q1, led by exports rising 38%, those are exports to the U.S. It's a new record. Meanwhile, US retail sales jumped 14% in the first quarter.
So let's walk through this. Congress, in its wisdom, shelled nearly $3 trillion in "stimmies". The "stimmies" lead in part to surging consumer spending, and unfortunately, surging consumer spending went to buying all kinds of goods and gadgets, including Apple's iPhone. All this led to massive China growth and exports and a larger U.S. trade deficit with China than ever before.
This is not what folks bargained for. This is major unintended consequences. Do we really want to help China this way? Do we really want to stimulate China? I don't think so, and I think from the standpoint of way too much government spending, which is bad on the merits, and rising taxes to pay for it, which is bad on the merits, our Chinese stimulus packages are very, very bad, Right? Don't they use the money to buy military weapons aimed at U.S. cyberhacking and threatening Taiwan, etc., etc.? Not to speak of human rights and Uighur and Hong Kong democracy. Do we really want to help China?