An unlikely coalition of senators is backing a bill by Sen. Amy Klobuchar, D-Minn., to drastically overhaul the nation’s antitrust laws. They may want to give her proposal another read, because there are things about it that might not be what they seem.
Klobuchar wants to be president and is counting on this legislation, Senate Bill 2992, the “American Innovation and Choice Online Act,” to establish the progressive bona fides she needs to leap to the front of the pack running for president the next time the Democratic presidential nomination is up for grabs.
If she expects her effort to excite the people whose spines once tingled at the thought of President Bernie Sanders, she’s off base.
The Republicans who signed onto her bill generally did so in the belief it gives the government the power to ensure “Big Tech” plays fair with conservatives. It doesn’t, and letting federal bureaucrats determine what to censor online would be worse.
The legislation would also make life more difficult for social media companies the Democrats have allied with in pursuit of election victories. The framework her legislation would erect would take a big bite out of the hand that feeds her.
The impact on Big Tech isn’t the only reason politicians should be concerned. Those issues are largely political. The way some businesses are treated is not — and has given rise to complaints favorable treatment is being extended to some kinds of firms because of what it doesn’t address.
What kind of crony capitalism may we be seeing? The Klobuchar bill overlooks — because it’s not included in the list of discriminatory conduct by “covered platform” — the use of pharmacy benefit managers, also known as PBMs, that negotiate with pharmaceutical manufacturers and health insurers to set the price of prescription drugs.
Proponents say these companies produce lower prices for consumers. Critics say the opposite, arguing they are too open to inducements from manufacturers to set prices higher than they need be in exchange for some kind of remuneration.
Their involvement in the health-care system is, for the moment, a political hot potato second only perhaps to continuing quest by House Speaker Nancy Pelosi, D-Calif., to impose a regulatory scheme to impose price controls on drugs.
According to Health Industries Research Companies, CVS has the biggest share at 34% of total 2021 adjusted claims. Express Scripts is second at 25% and OptumRx has 21%.
Now 80% control doesn’t corner the market exactly, but progressives like Klobuchar used to argue it comes uncomfortably close.
Critics were disappointed when members of the Federal Trade Commission voted along party lines back in February not to investigate allegations of anti-competitive behavior by these pharmacy benefit managers. Nonetheless, they keep trying to call on the heavy hand of government regulation to swipe them into line.
Klobuchar cannot be unaware of this ,yet for some reason, her bill (which also has the support of Rep. David Cicilline, D-R.I., chairman of the House Antitrust, Commercial and Administrative Law Subcommittee of the House Judiciary Committee, doesn’t mandate or include a mechanism triggering their scrutiny under the proposed new track taken by the proposed legislation. Has cronyism crept into the process?
Some say yes, pointing to the fact UnitedHealth OptumRx, the No. 3 company, has its headquarters in Klobuchar’s Minnesota. CVS, which has the largest single share of the market, is based in Rhode Island, just like Cicilline,
UnitedHealth has given $154,820 in campaign contributions to Klobuchar while CVS gave $50,085 in political money to Cicilline, who also backed the company’s proposed $69 billion merger with Aetna, one of the largest of the nation’s health insurers.
That’s just the kind of business deal the legislation looks to stop because Klobuchar and friends believe mega-mergers are bad for consumers.
Coincidence? Probably. Still, the taint of corruption touches so much of what Washington does these days it’s hard to be sure.
What is clear is that big is not necessarily bad and that the consumer welfare standard, which has been the prevailing justification for most antitrust actions taken for nearly five decades, is a sound enough approach to dealing with legitimate antitrust issues when they arrive.
Klobuchar’s bill should be allowed to go no further.
Two years ago, millions of Americans were summoned into lockdowns, throwing families into financial crises and kicking kids out of school. And it was counterproductive, finds a new study, not only not reducing Covid-19 hospitalizations and deaths but inflicting additional harms such as millions of missed cancer screenings, increased suicide and anxiety, and ruining children’s educational futures.
“The correlation between health and economy scores is essentially zero, which suggests that states that withdrew the most from economic activity did not significantly improve health by doing so,” says the National Bureau of Economic Research study out this month.
According to the study, a stricter lockdown in states was correlated with the worst Covid outcomes, exactly opposite of what the corporate media and public health establishment told Americans. Fittingly, these freedom-restricting states were mainly Democrat-run. In contrast, the Republican-governed states with shorter and looser lockdowns showed lower Covid mortality while reducing the harms lockdowns cause people.
The study found the worst outcomes were found in New Jersey, Washington DC, and New York state, and the best in Utah, Nebraska, and Vermont.
Due to ill-advised lockdowns, many young Americans were deprived of a consistent education for nearly two years. Even when Covid cases dropped, numerous leftist school boards across the country voted against in-person learning. The study found in-person learning to be safer than remote learning both for children’s mental health and Covid prevention. This is because Covid poses a very low risk of danger to children, while lockdowns a high degree of risk.
“School closures may ultimately prove to be the most costly policy decision of the pandemic era in both economic and mortality terms,” says the NBER study. “One study found that school closures at the end of the previous 2019-2020 school year are associated with 13.8 million years of life lost… The OECD estimates that learning losses from pandemic era school closures could cause a 3% decline in lifetime earnings, and that a loss of just one third of a year of learning has a long-term economic impact of $14 trillion.”
According to a study published by Fair Health, during lockdowns children under the age of 18 showed an increase in anxiety disorders, major depressive disorder, and intentions to self harm. Despite such evidence, Democrats refuse to take responsibility for damaging Americans’ health and well-being.
The NBER study also notes that Florida, a state that reversed its lockdown early and faced years of media criticism for it, had better outcomes than many severely locked down states.
“Although sometimes criticized as having policies that were ‘too open,’ Florida proved to have average mortality while maintaining a high level of economic activity and 96 percent open schools,” the study notes.
Even today, after dozens of studies finding similar results visible as early as April 2020, just one month into U.S. lockdowns, the Biden administration is still reluctant to officially waive Covid restrictions and give kids the childhoods they deserve. The administration recently renewed the face mask requirement for airplane travel and is keeping more Covid restrictions on the table.
Governments and employers also continue restricting economic activity and damaging public trust by mandating certain Covid treatments for people to participate fully in society.
For a party whose representatives cried for the children at the border, what about American children who were robbed of an education and locked inside for nearly two years?
For at least a decade, American progressives have been waging war on the nation’s energy sector. They’re all in on wind and solar and are using scare tactics, tax breaks, and government preferences to push a Green Agenda that leaves zero room for oil, coal, or natural gas.
That’s the real Biden policy, fulfilling a vow he made in September 2019: “I guarantee you, we are going to end fossil fuel.” And for the past 15 months, the president has done his best to keep that commitment.
Such grandiose plans come at a price. Biden’s anti-fossil energy positions are causing tremendous political harm to himself and his party. Prices are up. His approval is down. His solution? Pass the buck, as the White House did recently when it called the spike in energy costs “Putin’s Price Hike.”
The people aren’t buying. Only 27 percent of voters in a recent Winston Group survey agreed America must “reduce reliance on oil and gas even if it means higher costs because that is the only way to ensure a transition to alternative energy.” By more than two to one they believe, the nation should continue to rely on oil and gas to meet current energy demands while “transitioning over to alternative energy” sources.
America’s current energy needs conflict with the Biden Administration’s climate policy priorities, but that doesn’t stop progressives from arguing the need for more green energy and less traditional fuels. Even when the average national price at the pump is well over $4 a gallon.
Energy costs are the main driver of inflation. In 2021, they were up 29 percent over the previous year. The price of gasoline surged, fuel oil costs jumped 41 percent, and overall yearly inflation hit an alarming 7 percent. The Biden people haven’t got a clue. In early March White House Press Secretary Jenn Psaki incorrectly claimed the administration’s energy policy was not to blame for increased prices. When pressed, she argued “The Keystone Pipeline was not processing oil through the system. That does not solve any problems. That’s a misdiagnosis or maybe a misdiagnosis of what needs to happen.”
It’s Psaki who made the “misdiagnosis.” An operational Keystone XL would have augmented the capacity of an existing pipeline running from Alberta, Canada to Superior, Wisconsin, delivering 830,000 additional barrels of oil a day.
Biden’s vilification of the oil and natural gas industry at a time when it’s needed to keep the economy and the country going is not new. Since its earliest days, his administration has pushed the cost of conventional fuels up through the Keystone XL Pipeline cancellation and the moratorium on new oil and gas leases on federal lands. Republican Rep. Jim Banks of Indiana recently released a study identifying more than 80 specific actions the Biden Administration has taken on energy-related matters that have helped boost the price at the pump. In Banks’ words, “President Biden has waged an unprecedented, government-wide assault on our nation’s ability to produce cheap, reliable energy.”
That’s why Americans have seen a steady increase in energy prices, not the invasion of Ukraine. Biden’s moratorium on federal leases is another problem. Many current leases are tied up in litigation. New leases on federal land were brought to a halt. The administration’s refusal to renew the Interior Department’s five-year offshore leasing plan, set to expire at the end of June has imposed a further strain on production. If the plan is not renewed, expect overall fuel production to drop by the tune of 500,000 fewer barrels of oil and gas produced per day from 2022 to 2040.
The United States Energy Information Administration’s Annual Energy Outlook 2022 predicts petroleum and natural gas will be the most used fuels in the U.S. through the year 2050. That’s reality – unless the government intervenes by imposing mandates that restrict or ration the production and use of fossil fuels.
That’s a problem domestically and internationally. Having the ability to turn the spigot on here at home, means there’s no need to reach out to hostile countries with offers to alleviate economic sanctions placed on them over their disregard for human rights and the threats they pose to the United States in exchange for access to their oil reserves. That’s a fool’s bargain – but one America’s current leadership is telegraphing it is ready to make.
Even without the war in Ukraine, people have realized we need abundant, reliable oil and gas “made in America.” Going to other countries is not the answer, nor is making an expensive, lengthy, transition to renewable sources that compromises our economic strength and national security.
We must increase oil and gas production in the U.S. now. We have the resources – we need the administration to get out of the way of developing them.
Increased energy prices in the wake of Russia’s war on Ukraine have caused critics of the Jones Act to claim the law is contributing to more expensive domestic petroleum products.
The law merely limits waterway shipping within the U.S. to American-built and -owned ships crewed by Americans, but its detractors falsely claim that repealing it would help lower costs.
The fact is the cheapest and safest way to move petroleum and natural gas products across a nation — and even a continent — is through pipelines.
The real culprit behind the high cost of transporting energy are extremists who oppose pipelines and prevent them from being built. Without such needed pipelines we will continue to pay too much to transport petroleum.
The Jones Act has nothing to do with these costs and in fact has many benefits. It is time for its opponents to stop playing politics.
As Americans have vividly seen in the last few years, building a pipeline is a political football. It takes years, even decades, to obtain the required political approvals.
And even once obtained, such permits can be reversed by know-nothing political activists. So this political circus arranged by these pipeline circus clowns means we overpay to transport oil.
The U.S. has more than 3 million miles of pipelines linking natural gas production and storage facilities with millions of American consumers — including homes. Those who argue that pipelines are inherently dangerous are simply wrong.
We have decades of data with millions of miles of pipelines — even going through neighborhoods. Pipelines are reliable, economical and safe.
Likewise, gasoline isn’t typically shipped in tanker trucks from refineries to local gas stations. There are pipelines that bring the gasoline to regional terminals. Then trucks take the gasoline from those terminals to local gas stations — thus limiting the miles that gasoline is transported via highway.
When extremists make it unnecessarily difficult to build this needed energy infrastructure, we can’t pretend the Jones Act is why we are overpaying to transport energy.
On the other hand, the Jones Act has a number of important benefits that its detractors would like to ignore.
The Jones Act simply requires that waterway shipping within the U.S. is done by American-built, -owned and -crewed ships. It doesn’t prevent foreign shippers from coming to our shores. But they can’t sail up our rivers and make multiple stops.
The Jones Act was intended to ensure that we have a viable shipbuilding and repairing capability to support our military. In a world where many foreign nations heavily subsidize their shipping industries, we must not allow ourselves to become dependent upon other nations to maintain our naval capability.
Former Vice Chairman of the Joint Chiefs of Staff, Gen. Paul Selva said, “I am an ardent Supporter of the Jones Act. [The Act] supports a viable shipbuilding industry, cuts cost and produces 2,500 qualified mariners.”
Likewise, Former Coast Guard Commandant, Admiral Paul Zunkunft said, “You take the Jones Act away, the first thing to go is these shipyards and then the mariners. … If we don’t have a U.S. fleet or U.S. shipyard to constitute that fleet how do we prevail?”
The military understands that the Jones Act is critically important to our national security.
Our adversaries would like a weaker America, not a stronger one. And the Jones Act helps keep us strong. If we haven’t learned in the past few years that being dependent upon hostile powers is both risky and costly, we haven’t been paying attention.
The Jones Act also has a significant impact on homeland security.
Dr. Joan Mileski, head of the Maritime Administration Department at Texas A&M, said, “If we totally lifted the Jones Act, any foreign-flagged ship could go anywhere on our waterways, including up the Mississippi River.” This would make our defenses incredibly porous as we have more than 25,000 miles of navigable inland waterways.https://e04e5a828992561bbe9773e12b110d72.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html
Michael Herbert, Chief of the Customs & Border Protection’s Jones Act Division of Enforcement said: “We use the Jones Act as a virtual wall. Without the Jones Act in place, our inland waterways would be inundated with foreign-flagged vessels.”
Without the Jones Act, Chinese Communist Party leader Xi Jinping or Russian President Vladimir Putin could gain access to America’s heartland, sending ships to operate up and down the Mississippi River. They could spy and even unleash weapons from container ships.
The Jones Act protects America. Blaming the Jones Act for the fact that extremists have hamstrung our nation’s energy infrastructure and driven prices up is a profoundly stupid argument.
The world is a dangerous place, filled with adversaries that will be all too happy if the Jones Act is weakened.
The president's $5.8 trillion budget shows he wants more of the same government spending that is already sending prices through the roof.
“My dad had an expression,” said President Joe Biden as he announced his budget plan for FY 2023. “Don’t tell me what you value, show me your budget, and I’ll tell you what you value.”
So at the very moment that we’re experiencing the highest inflation in 40 years, what does Biden value? The same sort of government spending that is already sending prices through the roof.
You’d figure that with Covid receding, debt rising, and a tidal wave of unfunded liabilities staring us right in the kisser, Biden would take the opportunity to radically reset the federal government’s balance sheet. Instead, his budget plan could be titled Rearranging Deck Chairs on the Titanic.
The president wants to spend $5.8 trillion, which would include jacking spending on defense, education, and police. He talks about levying a controversial—and probably unconstitutional—wealth tax on billionaires to help pay for it all but still expects a budget deficit of $1.2 trillion (see Table S1 in Summary Tables)! If you’re going to tax unrealized capital gains, President Biden, at least spend it on something pretty!
It’s debt-financed spending that helps spur inflation in the first place. Rather than cutting spending and reforming entitlements, the government borrows and prints money so it can keep giving more goodies to its favored citizens. You get more dollars chasing the same amount of goods, and that leads to price hikes.
Meanwhile, at least a dozen states—including such far-flung places as California, Georgia, Hawaii, and Maine—are thinking about giving residents money to spend on things like gas, the price of which has gone through the roof. “Direct relief will address the issue that we all are struggling to address,” says California Gov. Gavin Newsom. “That’s the issue of gas prices, not only here in our state, but of course, all across this country.”
Is he serious? Doling out tax dollars to alleviate the pain of inflation is like drinking a beer in the morning to ease your hangover. It’s only setting up the next binge.
Federal Reserve Chairman Jerome Powell has announced a series of interest rate hikes to help tame inflation, but in a recent speech, he made no mention of the increase in the money supply measured by M2, which has risen by a record 41 percent in two years, or of the Federal Reserve’s holding of U.S. debt, which has jumped $3.5 trillion over the same time period.
Powell’s interest rate hikes will be small enough that it’s unclear whether they will have much impact. Back in the 1980s, Fed Chairman Paul Volcker allowed the fed funds rate to more than double in less than two years’ time to over 20 percent, which helped kill inflation but also caused the most severe recession since the Great Depression.
According to recent conservative estimates from the Congressional Budget Office, as the federal budget grows, the cost of paying interest on the debt will keep increasing until it accounts for about 24 cents of every dollar spent by 2050. And that’s assuming interest rates will remain historically low.
So even moderate increases in the fed funds rate would push the cost of servicing the debt much higher, causing the government to borrow more money and kicking us into a vicious cycle of economic despair.
Biden can talk a good game about “returning our fiscal house to order,” but it’s clear he doesn’t understand why prices are going up—and that his policies will keep them high for the foreseeable future. That might cost Democrats control of the House and the Senate in the fall and perhaps Biden the White House in 2024.
That will be too bad for him and his party. But his unwillingness to confront massive spending and debt is going to cost all of us a lot more than that.
The president has an unerring instinct to make problems worse
“This is a wartime bridge to increase oil supply into production,” President Biden said during his announcement Thursday that he would release more barrels of oil from the nation’s Strategic Petroleum Reserve than at any point in American history. His decision was also a concession. None of the policies Biden has enacted throughout his short presidency have alleviated the problems they were meant to solve. Quite the opposite: In practically every case, Biden has made things worse.
Energy? Killing the Keystone pipeline was one of the first things Biden did when he took office. In February, Biden delayed approval of new oil and gas leases. He continues to blame the increase in gas prices on Vladimir Putin’s invasion of Ukraine, even though prices began to rise early in Biden’s term. Biden scapegoats oil companies for sitting on profits, while he could be doing everything in his power to ramp up domestic production of available fuel sources—including nuclear.
The fallout from Putin’s war was bound to make energy scarce and thus more valuable. Biden could have lessened the pain on the American consumer by pursuing an all-of-the-above energy dominance policy from the start, and by reducing the size of the American Rescue Plan so that it didn’t contribute to inflation. He chose to ignore the warnings of economists such as former Treasury secretary Lawrence Summers and followed his advisers who incorrectly predicted that inflation would be temporary. By turning to the Strategic Reserve, Biden is promoting a temporary fix while the long-term solutions are plain to see. He’s relied on similar gimmicks before. They haven’t worked.
Consider Biden’s immigration policy. He spent his early days as president tearing up President Trump’s agreements with Mexico and several Central American countries that forced asylum-seekers to stay in third-party nations while U.S. judges decided on their claims. The rush for the border was swift and ongoing. This week, Biden is expected to reverse a rule Trump enforced during the coronavirus pandemic that allowed border agents to repatriate illegal immigrants swiftly because of the public health emergency. Homeland Security officials tell the New York Times that because of Biden’s decision they are planning on unauthorized crossings to double from an already high level. Republicans must be giddy with anticipation at the coming headlines.
Immigration and the border were the first places where you saw erosion in Biden’s job approval numbers last spring. Now he’s about to do something that will undermine border security and his political standing, and for no discernible reason. The pandemic is not over. Border crossings aren’t falling. We know that Biden’s decision will attract additional illegal immigrants. Nothing about this policy makes sense.
Biden doesn’t make sense. His Europe trip was a substantive success but a stylistic failure. The Western alliance is holding. But the president gaffed his way across Eastern Europe—saying the West would respond “in kind” to a Russian chemical attack, denying the deterrent value of sanctions when his subordinates have said precisely the opposite, telling U.S. troops that they would see the horrors of war in Ukraine firsthand, then raising the possibility that America’s strategic goal is regime change in Russia. Then, when Fox’s Peter Doocy soberly asked him about these inadvisable statements, Biden denied that he had said anything problematic.
I happen to believe that the world would be a safer place if Vladimir Putin were out of power—that indeed one possible consequence of a Russian defeat in Ukraine is Putin’s demise. I also believe that presidents shouldn’t sound like me. They need to watch their public statements because, as we were reminded throughout the Trump administration, words matter. Biden’s sentiment in Warsaw was correct. His sense of timing was wrong. After all, you never get in trouble for what you don’t say. Biden’s problem is that he rarely lets his actions speak louder than his words. And the words are garbled.
People notice. They don’t like what they hear, they can’t stand what they see. The public verdict on Biden is grim. He has not benefited from a rally-around-the-flag effect. His approval rating continues to fall. He’s at 41 percent approval in the FiveThirtyEight average of polls. He fell under 40 percent approval in this week’s Marist poll. Republicans continue to lead the congressional generic ballot. Democrats recognize that the electoral battlefield has widened. Biden is running out of time to improve his standing. And he hasn’t demonstrated an ability to bounce back as president.
Biden entered office at a time of national emergency. He benefited from the public’s desire to see Donald Trump off the airwaves for the first time in years. He oversaw the successful implementation of the vaccination program Trump had started. The resilience of the American economy helped him too.
Then the situation went sideways. Biden’s problems started on the southern border, ramped up with the Delta variant of coronavirus, accelerated with inflation, spread with the debacle in Afghanistan, and haven’t abated since. His rallying of the West in support of Ukraine is laudable, but he still hasn’t done enough to help the Ukrainians and he keeps stumbling on his own message. His commitments to the left wing of his party keep him from embracing the center. And damaging leaks about the federal investigation into his son’s finances only will mount if Republicans take Congress in November.
Biden’s reliance on the Strategic Petroleum Reserve is telling. This is a presidency that is running out of gas.
The administration wants to double the funding for a federal program that has failed in its aim to close achievement gaps between low-income and higher-income students.
This week, President Joe Biden released his $5.8 trillion budget proposal for 2023 which included a plan to more than double Title I education funds for low-income students. Biden’s 2022 budget proposal included the same plan to double federal Title I spending, but in the end, Congress only approved a 6% increase, about $19 billion less than what the administration requested.
While Congress is equally unlikely to pursue the president’s proposal this year, it’s important to note why doubling down on Title I funding would be such a flawed strategy. Research consistently shows the program, intended to provide federal funding for schools with higher percentages of children from low-income homes, has failed in its aim to close achievement gaps between low-income and higher-income students since its inception in 1965 as part of the Elementary and Secondary Education Act. For example, a study by researchers at George Mason University concluded:
“Given the modest evidence on academic gains and gaps closure attributable to Title I, and considering that the program costs about $15 billion per year, we conclude that Title I compensatory program has been largely ineffective in accomplishing its goal of closing the achievement gaps between disadvantaged and non-disadvantaged students.”
The ineffectiveness should come as no surprise to those familiar with how Title I works. After Biden proposed the 2022 Title I windfall last year, my colleague Christian Barnard and I highlighted just a few of the program’s faults in National Review:
“The current formulas are riddled with complexity, including political provisions that have nothing to do with students’ needs. For example, states are guaranteed a minimum amount of funding even if their share of Title I–eligible students doesn’t warrant it. As a result, Title I dollars are delivered like buckshot, ranging from Idaho getting $984 per eligible student in 2020 to Vermont getting $2,590 per eligible student — 163 percent more per pupil than Idaho. Title I spending needs to be fixed, not increased.”
Keep in mind that President Biden’s Title I proposal comes at a time when many public schools are already flush with cash, thanks to $190 billion in federal COVID-19 relief funding that is supposed to prioritize students in high-poverty school districts. Not only that, but public schools are also facing sharp enrollment declines, meaning the budget proposal calls for spending more money on fewer kids when K-12 spending is already at record levels.
Policymakers should be skeptical of continuing to pour more money into a broken federal program. Instead, they should pursue reforms that make Title I dollars flexible, so they support giving families more opportunities and the ability to customize their education. For example, Congress could update the program’s allocation rules and ensure the aid follows students to their public or private school of choice.
Lawmakers could also overhaul the program’s complex web of formulas and non-transparent compliance rules that contribute to school districts’ ineffective spending of the federal funding.
There are a lot of needed reforms to reduce achievement gaps and improve outcomes for low-income students, but pouring more money into Title I isn’t one of them.
The U.S. central bank must move “expeditiously” to bring too-high inflation to heel, Federal Reserve Chair Jerome Powell said on Monday, and will, if needed, use bigger-than-usual interest rate hikes to do so.
“The labor market is very strong, and inflation is much too high,” Powell told a National Association for Business Economics conference. “There is an obvious need to move expeditiously to return the stance of monetary policy to a more neutral level, and then to move to more restrictive levels if that is what is required to restore price stability.”
In particular, he added, “if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so.”
Fed policymakers last week raised interest rates for the first time in three years and signaled ongoing rate hikes ahead. Most see the short-term policy rate – pinned for two years near zero – at 1.9% by the end of this year, a pace that could be achieved with quarter-percentage-point increases at each of their next six policy meetings.
By the end of next year, Fed policymakers expect the central bank’s benchmark overnight interest rate to be at 2.8%, bringing borrowing costs to a level where they would actually start biting into growth. Most Fed policymakers see the “neutral” level as somewhere between 2.25% and 2.5%.
Powell repeated on Monday that the Fed’s reductions to its massive balance sheet could start by May, a process that could further tighten financial conditions.
U.S. stocks extended earlier losses after his remarks and traders boosted bets that the Fed will deliver a half-percentage-point rate hike at its policy meeting in May.
“This is not just going to be a near-term tactical phenomenon,” said Kevin Flanagan, head of fixed income strategy at WisdomTree Investments in New York. “This is a more strategic type of messaging, I think, from the Fed.”
A consensus for more aggressive tightening – or at least an openness to it – appears to be growing
Atlanta Fed President Raphael Bostic, who expects a slightly gentler path of rate increases than most of his colleagues, said earlier on Monday he is open to bigger-than-usual rate hikes “if that’s what the data suggests is appropriate.”
Speaking on Friday, Fed Governor Chris Waller said he would favor a series of half-percentage point rate increases to have a quicker impact on inflation.
The U.S. unemployment rate currently is at 3.8% and per-person job vacancies are at a record high, a combination that’s pushing up wages faster than is sustainable.
“There’s excess demand,” Powell said, adding that “in principle” less accommodative monetary policy could reduce pressure in the labor market and help stabilize inflation without pushing up unemployment, generating a “soft landing” rather than a recession.
Inflation by the Fed’s preferred gauge is three times the central bank’s 2% goal, pushed upward by snarled supply chains that have taken longer to fix than most had expected and that could get worse as China responds to new COVID-19 surges with fresh lockdowns.
Adding to the pressure on prices, Russia’s war in Ukraine is pushing up the cost of oil, threatening to move inflation even higher. The United States, now the world’s biggest oil producer, is better able to withstand an oil shock now than in the 1970s, Powell noted.
Although the Fed in normal times would not likely tighten monetary policy to address what in the end may be a temporary spike in commodity prices, Powell said, “the risk is rising that an extended period of high inflation could push longer-term expectations uncomfortably higher.”
Last year, the Fed repeatedly forecast that supply chain pressures would ease and then was repeatedly disappointed.
“As we set policy, we will be looking to actual progress on these issues and not assuming significant near-term supply-side relief,” Powell said on Monday. Policymakers began this year expecting inflation would peak this quarter and cool in the second half of the year.
“That story has already fallen apart,” Powell said. “To the extent it continues to fall apart, my colleagues and I may well reach the conclusion we’ll need to move more quickly and, if so, we’ll do so.”
Fed policymakers hope to rein in inflation without stomping on growth or sending unemployment back up, and their forecasts released last week suggest they see a path for that, with the median view for inflation falling to 2.3% by 2024 but unemployment still at 3.6%.
Powell said he expects inflation to fall to “near 2%” over the next three years, and that while a “soft landing” may not be straightforward, there is plenty of historical precedent.
“The economy is very strong and is well-positioned to handle tighter monetary policy,” he said
Professional golfers competing for million-dollar prizes may not appear to be disadvantaged in the labor market, but they actually provide a good example of America’s deteriorating Gig Economy landscape nationwide. As independent contractors, not playing for a team or working for an employer, pro golfers are in a class with millions of hard-working folks who seriously lack rudimentary legal and ethical protections in their jobs.
Unlike their peers in baseball, football and basketball, PGA Tour golfers have to cover their own expenses, from travel to coaching to health services. Caddies alone can cost $3,000 per tournament, in addition to a percentage of the golfer’s winnings. But worse, the PGA Tour restricts ways for players to earn extra money, including banning participation in competitor tournaments, appearance fees, and media and licensing income. At the same time, unlike pro sports leagues, the Tour does not even provide golfers with minimum compensation.
In order to play in the Asian Tour last month (February 3rd-6th), at the same time as a PGA Tour event in Pebble Beach, some of the biggest names in golf, including Dustin Johnson, Bryson DeChambeau, and Phil Mickelson, had to beg the Commissioner for a waiver. It was reluctantly granted, but only if the players guaranteed they would play in Pebble Beach in future years. What kind of independence is that?
Rory McIlroy, four-time champion in golf’s Majors and chairman of the PGA Tour Players Council, decided not to play in either event that weekend, but in an interview Jan. 26, he said of golfers who chose the Asian Tour event: “At the end of the day, it’s their job and livelihood…. I like being my own boss. I don’t want to be told what to do. I don’t want to be told where to show up or when to show up.”
The good news is that protecting workers’ rights in a Gig Economy is an issue gaining traction in Washington. The Biden Administration supports the idea that tens of millions of workers should have the flexibility of independent contractor status and still be treated fairly, with and proper protections and benefits.
In its landmark ruling against the NCAA’s restrictions on the money-making activities of college athletes, the U.S. Supreme Court last June reportedly seemed to find that the NCAA provided no evidence in its filings to suggest that fans would be less interested in college sports if athletes receive greater benefits. Likewise, the PGA has scant evidence to suggest that pro golfers participating in supplemental competitions, or making money outside of the event, would negatively impact the PGA Tour.
As of 2019, there were 36 million U.S. workers subject to non-competes, denying them the right to sell their services to any organization they wish. Non-competes violate the spirit of the Gig Economy, harm wage growth, and even limit the ability of workers to leave and start their own business. Fans of the PGA Tour ideally want the best for the players, and the sport overall. It would be in the fans interest to grow the sport by supporting the end of the PGA Tour’s non-compete practices.
Last year, Sen. Chris Murphy (D-Conn.) led the charge against anti-competitive practices with an astute legislative proposal, the Workforce Mobility Act, which would limit non-competes to extraordinary cases and require employers to inform their employees explicitly of the limitations when a non-compete is allowed.
California has been a leader by largely prohibiting non-competes, and President Biden’s wide-ranging Executive Order last year encouraged the Federal Trade Commission (FTC) to restrict or ban such agreements, including the type the PGA Tour currently imposes.
It can be perfectly appropriate for employers to protect their trade secrets and intellectual property, but the idea that employers should be able to broadly limit an employee’s future employment options and earning potential is simply unfair and sounds like an unjust contract of adhesion.
This is a conversation across all industries. Thousands of lawsuits are pending that would extend the rights of Gig Economy workers, and the Administration recognizes that independent contractors lack equity in reasonably seeking earnings because the scales are tipped heavily in the favor of large employers and governing bodies.
If PGA Tour golfers lack the ability to seek their livelihoods freely and fairly, then imagine how little power lower-income independent contractors have to secure decent treatment and adequate compensation. Deliberate steps need to be taken now to truly protect Americans who want and need flexibility in the workplace. Yes, including professional golfers.
The White House's latest attempt to scapegoat rising prices ignores everything that happened before the past three weeks.
Ten months ago, Jeremy Siegel issued a dire warning about the trajectory of prices.
“The money supply since the beginning of the pandemic, so a little over a year, has gone up almost 30 percent. Now, that money is not going to disappear. That money is going to find its way into spending and into higher prices,” Siegel, a professor of finance at the University of Pennsylvania’s Wharton School, told CNBC during an interview on May 14. “Over the next two, three years we could easily have 20 percent inflation with this increase in the money supply.”
He was hardly the only one sounding the alarm. A few months earlier, before Congress approved President Joe Biden’s $1.9 trillion American Rescue Plan, several prominent economists had warned that the stimulus bill—the third major one passed since the outbreak of COVID-19 just a year earlier—was too big and threatened to overheat the economy.
Among the critics were people like Lawrence Summers, who served as Treasury Secretary during the Obama administration. “There is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation,” Summers warned in a Washington Post op-ed in February 2021. “Administration officials’ dismissal of even the possibility of inflation, and the difficulties in mobilizing congressional support for tax increases or spending cuts, there is the risk of inflation expectations rising sharply.”
“I think we do not need to spend $1.9 trillion…and we should have a smaller program,” Olivier Blanchard, the former chairman of the International Monetary Fund, wrote on Twitter in response to Summers’ op-ed. Biden’s plan to shovel another $1.9 trillion into the economy was coming on top of unprecedented fiscal stimulus and high personal savings rates (due to the pandemic). Americans were already poised to spend a lot more money chasing the same amount of goods as the pandemic waned, and the increase in demand would require impossible levels of output to match. “Strong inflation” would be the natural result, he warned.
“This would not be overheating,” he wrote. “It would be starting a fire.”
By July, a few months after the American Rescue Plan passed, economists surveyed by The Wall Street Journal said Americans should be bracing for levels of inflation not seen in more than 20 years. That dire prediction was an underestimation.
This history matters because the White House’s latest attempt to explain away inflation rates that have hit their highest levels in 40 years is to blame Russian President Vladimir Putin, and the war he has started in Ukraine, for the whole mess. After the Labor Department released new data last week showing that inflation had jumped to 7.9 percent over the past year, the White House responded with a statement claiming that “today’s inflation report is a reminder that Americans’ budgets are being stretched by price increases and families are starting to feel the impacts of Putin’s price hike.”
The argument is that Russia’s invasion of Ukraine—and the global response to it, which has included cutting off purchases of Russian oil and gas—are pushing prices higher throughout the economy. “Make no mistake, the current spike in gas prices is largely the fault of Vladimir Putin and has nothing to do with the American Rescue Plan,” Biden said Friday.
It’s true that gas prices have spiked dramatically in the weeks since Russian troops invaded Ukraine. But Biden’s attempt to pin a year of steadily rising prices on the events of the past few weeks makes little sense.
For one thing, last week’s report from the Labor Department showing that inflation had hit 7.9 percent looked at prices from February 2021 through February 2022. Putin’s invasion of Ukraine began on February 24, so the White House is asking you to ignore 361 days of data in order to focus on what happened during the last four.
It’s certainly possible that the war in Ukraine—and the disruptions it has caused to global fuel and food supply chains—will put more upward pressure on prices. But that information won’t be visible in the government’s official data until the next consumer price index report is released in early April.
What about Biden’s more narrow claim: that rising gas prices are largely to blame for inflation. It’s true that higher gas prices will push other prices higher as a result—because higher fuel prices make it more expensive to ship anything from place to place. And the White House is correct that energy prices are rising faster than prices overall. Overall energy prices are up 25.6 percent since last year, and gasoline prices are up 38 percent, according to the Labor Department’s most recent data (which, again, captures prices through the end of February).
But if that’s all Putin’s fault, how do you explain the fact that energy prices—and gasoline prices, specifically—had been rising faster than just about anything else for much of the past year? In November, the Labor Department reported that energy prices were up 33 percent and gasoline prices up 58 percent over the previous year. In August, those numbers were 25 percent and 42 percent, respectively. What’s happening here seems to run a lot deeper than the events of the past few weeks.
“Yes, Putin’s invasion is making a huge difference. But demand for gasoline surged much earlier when consumers, with money in the bank and uninterested in flying because of COVID-19 concerns, put family cars on the road in the midst of the great COVID shutdown, making the number of miles traveled in spring 2021 rise to new heights,” wrote Bruce Yandle, former executive director of the Federal Trade Commission and economist at the Mercatus Center, last week in Reason.
Finally, this brings us back around to the economists who were warning last year that Biden’s stimulus bill would be a recipe for high inflation. It’s unlikely that Siegel, Summers, and the rest had a crystal ball that could predict Russia’s invasion of Ukraine.
What they were predicting—and, indeed, what we are now seeing—was persistently rising prices due to an excessive amount of money being dumped into the economy. Any attempt by the Biden administration to explain inflation that doesn’t include a hard look at its own policies is simply dishonest.
President Joe Biden has a problem with numbers. He can’t make them add up and it’s not clear that he knows what they mean. He’s so devoted to his progressive narrative that he becomes confused when the data doesn’t support the conclusions he and his economic team want to reach.
This leads him to say all kinds of wacky things about taxes and prices and spending and inflation that are undermining the American public’s confidence in the U.S. economy. It is possible, as has been proved more than once over the last 25 years, to talk us into a recession. And, with the Atlanta Fed projecting zero growth for the first quarter of 2022, the president and his team may be doing just that.
Consider Biden’s remarks in his most recent State of the Union Address. As a way of pumping up the enthusiasm over his plan to fight inflation and rebuild the American economy following the lockdowns, he criticized the pro-growth tax cuts enacted under his predecessor. “Unlike the $2 trillion tax cut passed in the previous administration that benefited the top 1 percent of Americans,” he said, his American Rescue Plan “helped working people – and left no one behind.”
That, to put it mildly, is an exaggeration of the worst order. The Trump tax cuts benefited the top 1 percent of income earners because they benefited everyone who pays federal income taxes. The only people they didn’t help directly were the roughly 50 percent of Americans who don’t make enough money to pay income tax to Uncle Sam.
Some people, including Mr. Biden, think that’s unfair. Then again these are the same people who confuse tax avoidance – which is the lawful attempt to minimize one’s tax payment – with tax evasion. The latter, which is the practice of not paying taxes legitimately owed, is illegal. If the president and his congressional allies like Senate Finance Committee Chairman Ron Wyden, D-Ore., had their way the former might become illegal any time now too. But that’s a matter for another day.
The Tax Cuts and Jobs Act Biden derides as only benefiting the wealthy increased the incentive for those “of means” and those who wished to someday be “of means” to make more frequent and more valuable capital investments expecting, as was shown to be the case before the pandemic-inspired lockdowns jiggered the system, that greater financial risk produced greater financial rewards.
This created an environment in which almost every American was a winner. The economy grew, jobs were created, and unemployment sank like a stone among the demographics that garner the most media attention like single women, young African-Americans and Latinos. Productivity rose and with it, as most analysts reported, so did wages.
Biden doesn’t get that. He still believes that for the rich or powerful to do well, the poor and struggle must suffer. It’s an outmoded way of thinking that most people thought died out with the Soviet Union but, as Putin’s invasion of Ukraine reminds us, some threats just never go away.
He’s got it all cocked up on energy too. Asked Thursday about rising prices at the pump, Biden blamed the war in Ukraine and the sanctions that have been imposed on Russia for the spike. That has something to do with it to be sure. The bigger cause is the way the president used what former House Majority Leader and Ph.D. economist Dick Armey calls “the invisible foot of government” to kick America’s energy independence to the curb.
The price of gasoline is rising because America’s energy sector cannot increase production to levels sufficient to meet the demand for gasoline at less than $3 per gallon. To put it another way, Biden broke the spigot by suspending oil leases, restricting exploration, reinstating economically counterproductive regulations, killing the Keystone XL pipeline and doing whatever else he and his brain trust could to conceive to force consumers to speed up their adoption of wind and solar power.
How’s that worked out? Well, since he’s come into office the average American family have seen their annual energy costs increase, by some estimates, by more than $1,000, gas prices have reached the highest level ever recorded – above $4 per gallon on average in 38 states – and congressional Democrats are once again talking about instituting a special tax on “excess” energy company profits that can be paid out to low-income individuals and families to help them deal with higher prices. To call that madness is an insult to the insane.
When asked what he plans to do, the best answer Biden could come up with was to suggest there wasn’t much he could do about it right now. Then he talked about oil companies and production increases and investments as though he understood it all. Here’s what he told the members of the Democratic National Committee Thursday night:
“We are increasing oil production with a [sic] record productivity. By the end of the year, we will have produced more oil than any time in the last number of years. … The CEOs of major oil companies have said they’ll increase investment and production… My message is: It’s time — in this time of war, it’s not a time of profit. It’s time for reinvesting in America. And they hear it. You know, there’s a — there’s an impediment to production in the United States, and it’s called ‘the bankers on Wall Street.’ And this crisis is another indication of why we need to get off dependency on fossil fuels.”
That may be confusing to follow so, to translate, in the president’s view: 1) Energy companies are bad because they profit when prices rise because the politicians have created a global crisis of the 1st order; 2) We have plenty of oil but business isn’t producing it so they can make more money; 3) The big bad bankers on Wall Street are behind it all; and, 4) We need to go green.
As they say, there’s nothing like letting the facts get in the way of a good narrative.
Biden forgot to mention a lot, including how the national average price of gas was already up by $1.14 before Russia invaded Ukraine because of the anti-fossil energy initiatives his administration had taken or announced plans to take — like the Biden SEC’s effort to force public traded companies to disclose the potential economic impact to their business from global warming and greenhouse gas production.
From the largest Cabinet Department to the smallest independent agency, the Biden administration is waging a regulatory war on fossil fuels that touches every sector of the economy. And all the president can say is “What? Who? Me?” A convenient memory lapse assisted by a fundamental misunderstanding of economics is killing off the American energy renaissance.
Thousands are dying from Russian missiles and bombs in the suburbs of Ukraine.
In response, the Biden Administration’s climate-change envoy, multimillionaire and private-jet-owning John Kerry, laments that Russian President Vladimir Putin might no longer remain his partner in reducing global warming.
“You’re going to lose people’s focus,” Kerry frets. “You’re going to lose big-country attention because they will be diverted, and I think it could have a damaging impact.”
Did the global moralist Kerry mean by “impact” the over 650 Russian missiles that impacted Ukrainian buildings and tore apart children?
Are Russian soldiers losing their green “focus”? When Putin threatens nuclear war is he merely “diverted”? Would letting off a few nukes be “damaging” to the human environment?
Climate-change moralists love humanity so much in the abstract that they must shut down its life-giving gas, coal, and oil in the concrete. And they value humans so little that they don’t worry in the here and now that ensuing fuel shortages and exorbitant costs cause wars, spike inflation, and threaten people’s ability to travel or keep warm.
The Biden Administration stopped all gas and oil production in the ANWR region of Alaska. It ended all new federal leases for drilling. It is canceling major new pipelines. It is leveraging lending agencies not to finance oil and gas drilling.
It helped force the cancellation of the EastMed pipeline that would have brought much-needed natural gas to southern Europe. And it has in just a year managed to turn the greatest oil and gas producer in the history of the world into a pathetic global fossil-fuel beggar.
Now gas is heading to well over $5 a gallon. In over-regulated blue states, it will likely hit $7.
The result is left-wing terror that the voters in the coming midterm election might rightly blame Democrats for hamstringing the American ability to travel, keep warm in winter and cool in summer, and buy affordable food.
But how will the Biden Administration square the circle of its own ideological war against oil and natural gas versus handing the advantage to our oil- and gas-producing enemies, as Russia invades Ukraine?
Or put another way, when selfish theory hits deadly reality, who loses? Answer: the American people.
President Joe Biden lifted U.S. sanctions on the Russian-German Nord Stream 2 pipeline designed to provide green Germany with loathsome, but life-saving, natural gas.
But first Biden canceled the Keystone XL pipeline in the United States. He has no problem with pipelines per se, just American ones.
While Biden doesn’t like the idea of Germany burning carbon fuel, or Putin reaping enormous profits from Berlin’s self-created dependency, or Germans importing liquified natural gas from America, Biden also does not like the idea of forcing German families to turn off their thermostats in mid-winter when there is Russian-fed war not far from Germany’s borders.
Here at home, Biden gets even crazier. As our enemies around the world reap huge profits from record high oil and gas prices, did Biden ask Alaska, North Dakota, or Texas to ramp up production?
In other words, did he ask Americans to save fellow cash-strapped Americans from a self-created energy crisis, in the way he assured the Germans that during war reality trumps theory?
Not at all.
Instead, Biden came up with the most lunatic idea in recent diplomatic history of begging autocratic and hostile regimes the world over to pump more oil to lower America’s gas prices.
For years, America has sanctioned the oil-rich Venezuelan dictatorship, a narco-terrorist state that wars on its own people and its neighbors. Now Biden is begging strongman Venezuelan President Nicolas Maduro to pump the supposedly dirty fuels America has in even greater abundance but finds it too icky to produce.
Biden also has beseeched the once sanctioned, terrorist Iranian government. He wants Tehran to help us out by upping the very oil and gas production that America has tried to curtail for years. In return, Iran is demanding a new “Iran Deal” that will soon ensure the now petro-rich theocracy the acquisition of nuclear weapons.
On the eve of the Russian invasion, Biden begged Putin to pump even more oil to supplement its current Russian imports to the United States.
Did Putin see that surreal request as yet another sign of American appeasement that might greenlight his upcoming planned invasion? In Russian eyes, was it more proof of American weakness and craziness after the humiliating flight from Afghanistan?
Biden has blasted the human rights record of Saudi Arabia’s royal family. Now he is begging the monarchy to pump more of its despised carbon-spewing oil to make up for what his administration shut down at home. Is that why the Saudi royals refused to take his call?
The moral of Biden’s oil madness?
Elite ideology divorced from reality impoverishes people and can get them killed.
Instead of taking responsibility for his self-inflicted problems and laying out solutions to fix them, Biden has repeatedly deflected blame.
he White House repeatedly uses the Russia-Ukraine conflict to blame Russian President Vladimir Putin for the crises President Joe Biden created. Even when Americans point out the administration’s hypocrisy, the White House refuses to take responsibility for the domestic problems that it knows could result in the downfall of Democrats in the upcoming midterm election.
“Inflation goes up today, the president’s statement blames the ‘Putin Price Hike.’ Are you guys just going to start blaming Putin for everything until the midterms?” Fox News’s Peter Doocy asked during the White House press briefing on Thursday.
Psaki, of course, refused to give Doocy a straight answer and instead told reporters that “we’ve seen the price of gas go up at least 75 cents since President Putin lined up troops on the border of Ukraine.”
Doocy countered by asking why the White House’s statement on January’s high inflation didn’t indict the Russian president then, especially if he was so guilty for causing the problems afflicting Americans since January of 2021, but Psaki didn’t bite.
Biden and his team at the White House will absolutely keep blaming Putin for all the domestic crises weighing on Americans because they have nothing to lose by refusing responsibility and everything to gain in the 2022 midterms.
Things in the U.S. are not going well for the Biden administration. The president’s approval rating may have slightly climbed after he made dozens of empty promises and lies at his State of the Union address but his first year in office was a complete disaster.
Under Biden’s watch, the U.S. Southern border was overwhelmed with illegal migration and increased drug trafficking, gasoline prices climbed astronomically, and the supply chain crisis hurt Americans already struggling under the weight of steadily increasing inflation.
Instead of taking responsibility for these problems and laying out solutions to fix them, the Biden administration has repeatedly deflected blame onto the pandemic and even corporate greed. One year into steadily rising and record-high energy costs, Psaki still had the guts this week to claim that high gas prices and expensive goods that have been plaguing Americans for months are Putin’s fault.
She also said they are “temporary and not long-lasting” even though the White House and the president himself previously insisted that price hikes were“expected” and would be “temporary.” Eight months after their predictions, inflation is at a 40 year high and is expected to climb higher in the coming months.
As a result, Americans do not view the administration or Democrats favorably. Just recently, Biden and his leftist allies have tried to ditch their own detrimental Covid agenda in an attempt to win over frustrated voters. So far, their plan to satiate Americans, 40 percent of whom recently testified that they were “nervous” under the Biden presidency, is not working.
Americans largely vote with their pocketbooks. When gas costs $7 a gallon in parts of the country because Biden wants to broker deals with foreign enemies instead of reinstating American energy independence, voters who agree that economic conditions are their top priority are not happy. Recent polling suggests that more Americans, 51.6 percent, disapprove of the president and vice president than approve.
Biden and his team have epically failed in multiple ways. Despite the administration’s efforts to call U.S. attention to a foreign conflict, Americans affected by Biden’s incompetence won’t forget all of the domestic crises he’s created and then tried to ignore.
The White House has nothing to lose by blaming Putin and everything to gain by ignoring the crises Biden created. The more the administration spins the narrative, with the help of corrupt corporate media, to absolve themselves of blame, the better Democrats believe they will do in this year’s key election.
For Joe Biden, the February jobs report provides a reason to celebrate. It looks like America is finally getting back to work. COVID is over. The recovery has begun – if you don’t look closely enough.
The Biden Boom, which someone is sure to call it eventually, is full of holes. Thanks to the American Rescue Plan, which the president talked up ad nauseam during the State of the Union Address, there were billions of dollars pumped into the economy without having anywhere productive to go. As a result, we got what the Republicans have taken to calling “Bidenflation” as prices rise at a rate many of us have not seen since the 1970s.
If you were born during or after the Reagan years – which kicked off a genuine “long boom” that continued far beyond his presidency – you’ve never seen anything like what we’re now seeing. That alone would blame the precipitous drop in Biden’s job approval numbers and why some polls are showing the Republicans leading the Democrats by as much as 20 points on the question of which party do you feel will do a better job handling the nation’s economic challenges.
As to inflation, it looks like the president doesn’t have a clue. In his speech Tuesday, he said the annualized increase in prices – which is hovering near 10 percent – was juiced upwards by the outsized impact the rise in the price of automobiles had on the total:
Last year, there weren’t enough semiconductors to make all the cars that people wanted to buy.
And guess what, prices of automobiles went up. So – we have a choice.
One way to fight inflation is to drive down wages and make Americans poorer.
I have a better plan to fight inflation.
Yes, he has a plan – but how can we trust it when it’s clear he doesn’t get the fundamentals. As the Committee to Unleash Prosperity put it in the Thursday edition of its Hotline:
“We’re still scratching our heads trying to figure out what the White House strategy is for bringing down inflation which is now running between 7% and 10% depending on the measure used…. Then old Joe told a whopper when he said that new vehicles accounted for a third of all inflation over the last year. New vehicles accounted for only 6% of inflation. Even if you add new and used vehicles together, it accounts for only 17% of inflation, half of what he claimed. Inflation is everywhere right now.”
The Biden plan, whatever it is, doesn’t build back anything better. It relies on price controls and government intervention in the marketplace to bring Bidenflation to heel. The problem is it won’t work now any better than it did when presidents in both parties tried in the 70s. What he’s bringing back is Jimmy Carter 2.0, only without the federal deregulatory efforts that were the one bright spot in four otherwise malaise-filled years.
Still, the job growth in February 2022 was impressive. The economy added a total of 687,000 jobs, 654,000 of them scattered throughout the private sector rather than confined to just a few parts of the commercial and industrial sectors. The service sector added more than half a million workers while the leisure and hospitality industries badly battered by the lockdowns added almost 200,000 workers.
These are all positive signs. The good news is the U.S. labor market is recovering. The bad news is that Joe Biden thinks he and his American Rescue Plan are responsible for it all because, as he said Thursday night, it “created jobs. Lots of jobs.”
Biden didn’t create a thing. It was the Republican governors who ended the lockdowns who are responsible for the job growth America has experienced coming out of the pandemic. Month over month, most of the top ten states that had the most “new hires” were led by the GOP while the states that showed no job growth or continued to lose jobs were run by folks who practice Bidenomics.
In his hubris, in the rush to demonstrate his policies are having a positive impact on the economy, he’s claiming credit for jobs that existed until the people who had them were, along with most everyone else, forced to stay home in a futile attempt to stop the spread of COVID. “Our economy created over 6.5 million new jobs just last year, more jobs created in one year than ever before in the history of America,” Biden said, an easy claim to make when the people who see the economy as you do were responsible for killing those jobs (or their predecessor positions in the first place). It’s an assertion that makes as much sense as the observation from a soldier in the field in South Vietnam who explained to a reporter how “We had to burn the village down to save it.”
What’s next? That depends on whether the Republicans in Congress can continue to hold the line and block any further assistance spending packages. As economist E.J. Antoni of the Texas Public Policy Foundation told me, the U.S. economy is currently experiencing “strong, widespread job growth, undermined by inflation.”
“We are at 99 percent of the jobs we had before the pandemic so there’s no reason for any additional stimulus,” Antoni, who also advises the Committee to Unleash Prosperity said. The real problem, he continued “is that there is too much money sloshing around while real wages are plummeting.”
Bidenflation is the real economic enemy, not joblessness. Forecasters had already “baked into the cake” some large price increases for the coming year before the crisis in Ukraine began. That means, Antoni said, “the Middle Class is in for a lot of pain.
Indeed, it’s beginning to look like things could come off the rail at any time, especially if Biden gets his way on initiatives like the Green New Deal – under whatever name it is known now – and other attempts at central economic planning that didn’t work in the 70s, didn’t work in the former Soviet Union and won’t work here in America ever. Prosperity initiatives leading to growth like those enacted before the 1982 recession may be the only way out of the mess we’re in. As a senator, Biden voted against most of them when they were before Congress in legislative form. There’s no reason to believe he’ll offer them up now as president but, if he were serious about restoring the health of the U.S economy, he could do a lot by taking off the brakes he’s imposed on the U.S. energy sector. That alone could lift our economic prospects by making essential energy cheaper, creating new opportunities for exports, and millions of new, well-paying jobs. Real growth, real increases in real wages and a reality check to remind everyone the free market works.
Pentagon gives $35 million to subsidize MP Materials's rare earth mineral production
The White House on Tuesday featured a mining company partially owned by a Chinese mining conglomerate at an event dedicated to strengthening the domestic supply chain.
President Joe Biden announced at the event that the Pentagon would award $35 million to the Las Vegas-based MP Materials in an effort to boost U.S. rare mineral production. But MP Materials has arguably allowed China to tighten its grip on the world’s rare earth minerals supply chain. Shenghe Resources Holding, which is partially owned by the Chinese government, owns 8 percent of the company. Shenge spearheaded the deal in 2017 to help MP Materials purchase a mine at Mountain Pass, Calif., out of bankruptcy. The Chinese company is also MP Materials’s largest customer, accounting for nearly all of its $100 million annual revenue.
MP Materials’s links to China have long concerned American officials. The Department of Energy warned its scientists in 2020 not to collaborate with MP Materials executives because of China’s links to the company, Reuters reported.
“Clearly, the MP Materials ownership structure is an issue,” Tom Lograsso, an official with the Department of Energy’s Critical Materials Institute, told Reuters.
The Pentagon award will subsidize MP Materials’s production of heavy rare earth minerals at its mine at Mountain Pass. The minerals are used to produce high-powered magnets used in electric vehicle motors, wind turbines, and defense systems.
James Kennedy, a consultant in the rare earth minerals industry, has raised concerns about other Pentagon grants to MP Materials. Kennedy called Shenghe’s investment in MP Materials a “geopolitical ruse” that helps China maintain a monopoly on the rare earth minerals market.
Those concerns have not deterred the White House. MP Materials chairman James Litinsky spoke at the virtual White House event alongside Biden, Gov. Gavin Newsom (D., Calif.), White House infrastructure czar Mitch Landrieu, and Energy Secretary Jennifer Granholm.
Litinsky said MP Materials was “committed to bringing the supply chain home” to the United States but made no mention of his company’s links to Shenghe Resources Holding. He said MP Materials has partnered with General Motors to produce magnets for 500,000 electric vehicle motors.
It is unclear whether the Pentagon has placed any restrictions on MP Materials’s dealings with Shenghe going forward.
Shenghe’s investment in MP Materials is part of an ambitious plan to stabilize China’s supply of rare earth minerals. The company has also partnered with companies in Greenland and Australia to mine rare minerals, Quartz reported. One goal is to “consolidate the achievements of overseas cooperation projects.”
MP Materials did not respond to a request for comment.