EDITORIAL: Federal spending spree threatens Vegas’ recovery

What’s helpful in the short term may be what creates a sobering long-term reality. That’s something to remember as Democrats debate passing a new $3.5 trillion spending package.

The Las Vegas economy is on the upswing. That’s great, especially after one-third of workers were unemployed in the spring of 2020. Tourists have returned in droves. It’s a welcome sight to see crowds walking up and down the Strip.

Conventions are starting to ramp back up as well. That includes the massive National Association of Broadcasters trade show in October. It’s doing its part to help keep attendees healthy by requiring vaccinations. After a one-year hiatus to Texas, it’s thrilling to welcome back the 2021 Wrangler National Finals Rodeo this December.

More than 4 million people flew in and out of McCarran International Airport last month. That last happened in January 2020.

Unprecedented levels of federal spending have juiced the economy. Housing prices are soaring. Unemployment remains above national levels, even as many businesses are desperate for workers. And the question of sustainability lurks large.

“A bigger economic cliff is being created by our response policies,” Jeremy Aguero, principal analyst at Applied Analysis, said this month at a Las Vegas Global Economic Alliance event. “At some point, the bill is going to come due.”

It always does. Consider the federal eviction moratorium. Endlessly extending the ban hasn’t solved the problem. It’s only made it more politically difficult to lift the moratorium.

The same is true about federal spending. There was a strong case to be made that federal action was needed early in the pandemic to offset the government’s forced shutdown of many businesses. Millions of people losing their jobs overnight can be considered an emergency.

But pouring money into a recovering economy only fuels short-term gains and can have unintended negative consequences. That’s what happened with the American Rescue Plan. Enhanced unemployment benefits have reduced the labor pool despite a record number of job openings.

Now, Democrats are considering $3.5 trillion in new spending. It’s a cornucopia of progressive dreams, with money for elements of the Green New Deal, an expansion of Medicare and tax cuts for the wealthy in high-tax states.

If you want to create an inflationary bubble, this is the way to do it. But bubbles always burst. It took Las Vegas nearly a decade to dig out of the housing bubble.

Las Vegas is back. To stay this way, the country and Nevada need sustainable policies, not more reckless spending.