White House announces $1.1 billion investment into Everglades following ask from wealthy donor
President Joe Biden used his $1 trillion infrastructure bill to boost an environmental foundation run by a hedge fund billionaire who contributed tens of thousands of dollars to the Democrat’s campaign.
The White House on Wednesday announced $1.1 billion in funding from Biden’s infrastructure bill will go toward preserving the Everglades in southern Florida. The move comes less than a year after billionaire investor and Everglades Foundation founder Paul Tudor Jones lobbied the Biden administration to commit $2.9 billion to the group’s cause. Just months before making the ask, Jones contributed $50,000 to the Biden Victory Fund and an additional $2,800 to Biden’s campaign.
“It’s Washington’s turn to help, with $725 million a year in matching dollars for Everglades restoration,” Jones’s foundation said in a national ad that aired shortly after Biden’s inauguration. “President Biden, let’s finish the job.”
In addition to Jones’s status as a prominent Biden donor, Biden’s Interior Department hired the foundation’s former CEO, Shann Estenoz, to serve as its policy head for national parks. The foundation celebrated the move—Estenoz’s successor said he was “thrilled” to see her join the administration.
The White House did not return a request for comment.
The Biden campaign accepted Jones’s money during the 2020 election cycle despite the billionaire’s past support for disgraced Hollywood mogul Harvey Weinstein. Jones, who served on the Weinstein Company’s board, emailed Weinstein in 2017 to console his longtime friend following allegations of sexual assault.
“I love you,” Jones wrote in the message. “Focus on the future as America loves a great comeback story. … The good news is, this will go away sooner than you think and it will be forgotten!”
After the email’s release, some prominent Democrats were forced to distance themselves from Jones. Arizona senator Mark Kelly (D.), for example, assured reporters that he did not know Jones and “of course disagrees with his comments” after the Arizona Republic highlighted a 2017 paid speech he gave to the Everglades Foundation. Biden did not face criticism for his campaign’s association with Jones.
The White House touted the Everglades investment in a Wednesday fact sheet, saying the move will “bolster our defenses against climate change” and “advance environmental justice.”
“President Biden knows that down payments now to bolster the resilience of our infrastructure to climate change will save Americans money in the long run,” the fact sheet states. “The Biden-Harris administration will commit $5.5 billion through the President’s Bipartisan Infrastructure Law to better protect communities from climate change, and protect vital ecosystems and the people and businesses throughout the country that rely on them.”
Fairfax, VA – Frontiers of Freedom released the following statement from President, George Landrith, about a Report published by U.S. Senator Rand Paul on the harmful impact inflation is having on American families and small businesses. The full report — “The Hidden Tax: Inflation’s Effect on American Families and Small Businesses” — can be found HERE.
Frontiers of Freedom President, George Landrith, said:
U.S. Senator Rand Paul (R-KY) has done Americans everywhere a real service by bringing into focus how the hidden tax of inflation hits hardworking middle income and lower income Americans the hardest and how this hidden tax burdens and weakens small businesses from coast to coast. If you’re a billionaire, you can afford to absorb this hidden tax, but if you’re a lower income American or even a middle income American, this hidden tax increase hits you hard and steals your hard-earned dollars — making it harder to feed and clothe your children, and provide for their future. And if you’re running a small business, this hidden tax makes it harder to grow the business, hire new people, and pay the ones you’ve already got. Simply stated, this hidden tax can be the difference between making it, and not making it.
Many Americans know what its like to have too much month, at the end of the money. But the hidden tax of inflation means that more and more Americans will have more and more of the month still to go when the money runs out.
Senator Paul correctly points out that one of the primary causes of this hidden tax is the almost $5 Trillion that was spent on COVID stimulus. Those who promoted this out of control spending argued it would benefit American families and small businesses. But as usual, it was America’s families and small businesses that are suffering as a result of this so-called COVID-stimulus. The primary beneficiary was government and allies of big government who grew at unprecedented rates. But American’s incomes and small businesses took unprecedented hits. Americans have seen the power of their paychecks shrink and small businesses have been forced to close because they cannot bear the hidden tax burden that inflation has imposed upon them.
The bad news is that so many in Congress see nothing wrong with out of control spending that caused this economic catastrophe. And the truth is it isn’t likely to get better nearly soon enough. For example, the Producer Price Index (PPI) reveals that prices for businesses have jumped by nearly 10 percent during 2021. That is the largest one year increase in prices in the history of the Labor Department tracking such information. And if businesses are seeing those kind of price increases, they will continue to fail and we will continue to see prices rise. This will severely limit the recovery and opportunity for Americans who desperately need a break from the bad news the last two years has brought. This is a 100% self imposed problem. We did this to ourselves. Or more precisely, the big-government apologists in government did this to us.
Frontiers of Freedom and the millions of Americans who support our work and our mission statement in all fifty states express our sincere thanks to Senator Paul for speaking out about inflation. More importantly, he has correctly identified why inflation is hitting us so hard. Getting government spending under control is necessary for at least two important reasons — first, we cannot saddle future generations with mountains of debt. But secondly, we don’t need to look to future generations to see how harmful out of control spending can be — here and now, we cannot continue to impose the hidden and heavy taxes of inflation on so many struggling Americans.
Although politicians have always had incentives to cast themselves and their policy proposals in the best possible light, they now seem to be going further than ever into the realm of hyperbole. And, increasingly, the public isn’t falling for it.
Gone are the days when political leaders saw credibility as their most precious asset. From presidents and prime ministers on down, economic policymakers have crossed into territory beyond the familiar terrain of political hyperbole, becoming increasingly disconnected from voters’ own understanding of reality.
There are multiple explanations for this. First, today’s communication environment favors extreme statements over cold, dispassionate, fact-based analysis. In a polarized society, politicians have grown more interested in feeding their extremist base than in offering moderation or compromise.
Second, forecasts sometimes turn out badly. The claim that “inflation is transitory” was not unreasonable at first; but it became more dubious with every passing month, partly because the public has a different understanding of the term than economists do. To the average voter, transitory means “gone quickly,” a description that does not fit a problem that has not only persisted but worsened. The American baseball legend Yogi Berra famously observed that prediction is tough, especially when it is about the future. In fact, because economic data sometimes must be substantially revised, even a description of current conditions can go astray.
Third, political leaders hate to be the bearers of bad news, preferring to blame problems on their opponents or some political foil like the oil and gas industry. Every time gasoline prices spike, the left claims it is the result of a nefarious conspiracy of domestic producers. Yet to my knowledge, no such conspiracy has ever been found. Though the OPEC cartel may seek to profit from market shifts, the price at the pump is ultimately subject to the forces of supply and demand.
The failure to see this reflects widespread economic illiteracy, which is the fourth reason for the current situation. Most voters have limited capacity or time to absorb seemingly subtle points such as the differences between “high” and “rising,” “net” and “gross,” and “short run” and “long run,” let alone to understand probability. And, unlike economists, politicians usually don’t bother much with nuance.
Consider inflation. To economists, statistical agencies, central banks, and finance ministries, inflation means prices are rising. But to the general public, inflation implies that prices are uncomfortably high for one’s budget. Suppose the 6.8% year-on-year increase in the US consumer price index were to fall to zero over the next 12 months. Many people would still feel that inflation was not under control, because the previous increase in prices would not have been reversed.
Or, consider how economists and statistical agencies define a recession. Technical issues aside, it means that the economy is contracting – hence the oversimplified rule of thumb that a recession occurs when real (inflation-adjusted) GDP growth is negative for two consecutive quarters. A recession therefore ends when the economy starts to grow again. But to the layperson, a recession hasn’t really ended until good times and plentiful jobs have returned. That is why slow economic recoveries are painful for those in power.
The difference between net and gross is another frequent source of confusion. A good example is the (usually exaggerated) claim that millions of jobs would be created by rapidly phasing out fossil fuels by relying on subsidies and mandates for wind and solar power. Never mind all the fossil fuel-related jobs that would be lost. This argument emphasizes the gross while ignoring the net effect.
Another example is the budget-scoring gimmickry used to hide the true costs of legislation like US President Joe Biden’s “Build Back Better” (BBB) bill. To cram as many “progressive” policies as possible into a ten-year $1.75 trillion budget window, many benefits supposedly would end after a short period. The implication is that programs lasting one, three, or six years would be paid for with ten years’ worth of tax hikes.
In fact, nobody believes that these programs will be allowed to lapse when their expiration dates arrive. As President Ronald Reagan famously said, “Nothing lasts longer than a temporary government program.” Hence, when the Congressional Budget Office scored the budgetary cost as if the BBB programs would last the full ten years, the total soared to almost $5 trillion, $3 trillion of which would be added to the already unprecedented national debt.
Democrats are hardly alone in using budget gimmickry. When Reagan’s budget director, David Stockman, was unable to get enough spending cuts to satisfy a law requiring that the budget forecast show a balanced budget a few years out, he included a famous asterisk: “spending cuts to be decided later.”
There are also different interpretations of short- and long-run time horizons. Economists measure the short run in quarters or a year or two; but for the general public, short-run means weeks – or a couple of months at most.Sign up for our weekly newsletter, PS on Sunday
Feeling increasing pressure from rising inflation, Biden often repeats the claim by some prominent economists that his BBB bill will reduce inflation. The logic here is that greater subsidies for childcare, paid family leave, and the like will enable more parents to work. That is a debatable empirical proposition. But even if true, the argument relies on a claim about inflation in the coming years, not in the coming weeks or months. It would be absurd to claim that massive additional government spending will quickly reduce short-run inflation in an economy that is already close to full employment. Not surprisingly, recent polls show that the public isn’t falling for it.
All political leaders feel pressure to try to circumvent the laws of economics or even the laws of arithmetic – as Biden has done by claiming that his bill costs nothing. Whatever temporary advantage this tactic confers, the resulting erosion of credibility eventually comes back to haunt political leaders of all stripes. That is especially true when politicians need public support the most. As my friend George P. Shultz used to say, “Trust is the coin of the realm.”
In a pandemic, you can send people all the money in the world and they still won’t go out to dinner or book a flight, especially if those services are suspended by government fiat. A pandemic is like a blizzard: If people get a lot of money when the snow is falling, they will fuel inflation once it has been cleared.
Inflation continues to surge. From its inflection point in February 2021 to last month, the US consumer price index has grown 6% – an 8% annualized rate.
The underlying cause is no mystery. Starting in March 2020, the US government created about $3 trillion of new bank reserves (an equivalent to cash) and sent checks to people and businesses. The Treasury then borrowed another $2 trillion or so and sent even more checks. The total stimulus comes to about 25% of GDP, and to around 30% of the original federal debt. While much of the money went to help people and businesses severely hurt by the pandemic, much of it was also sent regardless of need, intended as stimulus (or “accommodation”) to stoke demand. The goal was to induce people to spend, and that is what they are now doing.
Milton Friedman once said that if you want inflation, you can just drop money from helicopters. That is basically what the US government has done. But this US inflation is ultimately fiscal, not monetary. People do not have an excess of money relative to bonds; rather, people have extra savings and extra apparent wealth to spend. Had the government borrowed the entire $5 trillion to write the same checks, we likely would have the same inflation.
Other purported factors – including “supply shocks,” “bottlenecks,” “demand shifts,” and corporate “greed” – are not relevant to the overall price level. The ports would not be clogged if people were not trying to buy lots of goods. If people wanted more TVs and fewer restaurant meals, the price of TVs would go up and the price of restaurant meals would go down. Greed did not suddenly break out last year.
By contrast, inflation, when all prices and wages rise together, comes from the balance of overall supply and demand. The economy’s capacity to produce goods and services turns out to be lower than expected. Here, the labor shortage – the “Great Resignation” – is a key underlying fact. Employers can’t find people to work because many people remain on the sidelines, not even looking for jobs.
The US Federal Reserve was completely surprised by the surge of inflation, and through most of the year insisted it would be “transitory,” and go away on its own. That turned out to be a major institutional failure. Is it not the Fed’s main job to understand the economy’s supply capacity and fill – but not overfill – the cup of demand?
One might expect that among the thousands of economists the Fed employs, there is a group working on figuring out ports’ capacity, the effects of microchip shortages, how many people have retired or are not returning to work, and so forth. One would be disappointed. Central banks have sketchy ideas of supply, mostly centered on statistical trends in labor markets.
Why did this fiscal stimulus produce inflation when previous stimulus efforts from 2008 to 2020 fizzled? There are several obvious possibilities. First, this stimulus was much bigger. Former US Secretary of the Treasury Lawrence H. Summers correctly prophesied inflation in May 2021 by simply looking at the immense size of the spending packages, relative to any reasonable estimate of the GDP shortfall.
Second, officials misunderstood the COVID recession. GDP and employment did not fall because there was a lack of “demand.” In a pandemic, you can send people all the money in the world and they still won’t go out to dinner or book a flight, especially if those services are suspended by government fiat. To the economy, a pandemic is like a blizzard. If you send people a lot of money when the snow is falling, you do not get activity in the snowdrifts, but you will get inflation once the snow has cleared.
Third, unlike in previous crises, the government created money and sent checks directly to businesses and households, rather than borrowing, spending, and waiting for the effect to spread to incomes.
Will inflation continue? Fundamentally, inflation breaks out when people do not think the government will repay all its debts by eventually running fiscal surpluses. People then try to get rid of the debt and buy things instead, which drives up prices and lowers the real value of debt to what people believe the government will repay. Given that prices have risen 6%, people evidently believe that of the 30% debt expansion, the government will not repay at least 6%. If people believe that less of the debt expansion will be repaid, then the price level will continue to rise, as much as 30%. But inflation will eventually stop: A one-time fiscal helicopter drop leads to a one-time rise in the price level.2
So, whether inflation will continue depends on future fiscal and monetary policy. Fiscal policy is the big question: Now that we have crossed the Rubicon of people believing that a fiscal expansion will not be fully repaid, will people think the same about additional persistent deficits? The danger here is obvious.1
If fiscal inflation does erupt, containing it will be difficult. If monetary policymakers try to curtail inflation by raising interest rates, they will run into fiscal headwinds as well as a political buzz saw. First, with the debt-to-GDP ratio above 100%, if the Fed raises interest rates five percentage points, interest costs on the debt will rise by $1 trillion – 5% of GDP. Those interest costs must be paid, or inflation will just get worse. Similarly, if the European Central Bank raises interest rates, it increases Italy’s debt costs, threatening a new crisis and imperiling the ECB’s vast portfolio of sovereign bonds.Sign up for our weekly newsletter, PS on Sunday
Second, once inflation works its way to higher bond yields, stemming inflation requires higher fiscal surpluses to repay bondholders in more valuable dollars. Otherwise, inflation does not fall.
Monetary policy alone cannot contain a bout of fiscal inflation. Nor can temporary “austerity,” especially sharply higher marginal tax rates that undercut long-run growth and therefore long-run tax revenues. The only lasting solution is to get the governments’ fiscal house in order.
Finally, supply-oriented policy is needed to meet demand without driving up prices, to reduce the need for social spending, and, indirectly, to boost tax revenues without a larger tax base. Given supply constraints from regulations, labor laws, and disincentives created by social programs, potential solutions here should be obvious.
One great mystery is the persistent refusal of those on the left to abandon what is clearly not true.
That is, that the means for reducing the burden of poverty is more government spending.
It all really started in the 1960s under President Lyndon B. Johnson. He declared in his State of the Union address in January 1964 an “unconditional war on poverty in America.” Despite tens of trillions of spending since then, poverty remains, and so does the conviction of progressives that it can be wiped out with government spending.
Worth recalling is that the avalanche of government spending launched in the 1960s was followed in the 1970s by runaway inflation.
We now face the latest round of this misguided idea with the expansion of the Child Tax Credit in the Build Back Better Act — now derailed thanks to Sen. Joe Manchin.
Fellow Democrats are now all over the beleaguered senator for allegedly not caring about child poverty.
Build Back Better would have increased the credit from $2,000 per child to $3,000, or $3,600 for children under 6.
In a particularly destructive move, they detached any work requirement from receiving the Child Tax Credit.
A team of University of Chicago economists estimates providing a new generous Child Tax Credit, with no work requirement, would result in 1.5 million parents leaving the workforce.
More government, less work. This is somehow the answer that Democratic Party leadership is serving up to us for how to build a better future for our nation.
Where does the passion of Democrats really lie — in improving lives of Americans or in dramatically expanding government?
Equally revealing is what does not interest progressives at all.
A little more than a decade ago, Ron Haskins and Isabel Sawhill at the Brookings Institution publicized what they called the “success sequence.”
The success sequence consists of three steps in behavior to avoid poverty. Complete at least a high school education, work full time, and wait until age 21 before getting married and then having children.
According to testimony of Haskins in the U.S. Senate in 2012, those following the “success sequence” have a 2% chance of being in poverty and a 75% chance of reaching the middle class.
But the success sequence doesn’t much interest progressives because the focus is about individuals taking personal responsibility for their lives in a free country. The “personal responsibility” part and the “free country” part have little standing in the Democratic Party.
Also of little interest to our progressive friends is that larding down our economy with massive amounts of government retards economic growth. Why would anyone think slow economic growth is good for the poor, let alone any American?
As Americans allow themselves to be convinced that government is the answer to their lives, they become more likely to abandon faith and religion, which provide the light and principles for individuals to take control of their own lives.
New data from the Pew Research Center shows the toll that secularization is taking on our country.
According to Pew, 63% of Americans in 2021 identify as Christians, compared with 78% in 2007. In 2021, 29% indicated they have no religion, compared with 16% in 2007. Whereas in 2007, 56% said religion was “very important” in their lives, in 2021 this was down to 41%.
Perhaps as we close out 2021, we should again recall the words of America’s first president, George Washington, in his farewell address.
“Of all the dispositions and habits which lead to political prosperity, religion and morality are indispensable supports. … And let us with caution indulge the supposition that morality can be maintained without religion. Whatever may be conceded to the influence of refined education on minds of peculiar structure, reason and experience both forbid us to expect that national morality can prevail in exclusion of religious principle.”
President Biden’s approval rating has plummeted, and Democrats wonder why. The United States is facing hardships, but hardships alone don’t make a president unpopular. Leaders who are honest about the problems we face and forthright about the solutions they offer tend to do well (think, say, of Franklin Roosevelt and Ronald Reagan). Unfortunately, that is not the leadership Americans are getting from this president.
Instead, the Biden administration has tried to convince the public of things that are not just untrue but implausible. To note a few, Biden did not (and does not) have a “national strategy” to defeat COVID; our southern border is not “secure;” the Afghan withdrawal was not an “extraordinary success”; the current bout of inflation is neither “temporary” nor “a good thing”; and government spending never takes “the pressure off of inflation.”
Of course, politicians often overstate things and sometimes outright lie. Nothing new there. It’s the in-your-face nature of the administration’s falsehoods that is stunning.
For a recent example, take Biden’s efforts to promote his Build Back Better bill. The administration often claims that the legislation really “costs zero dollars” because it is “paid for.” Most Americans realize that paying for something doesn’t make it free. Otherwise, literally everything would be free. Seriously, people get this.
In fairness, Biden was attempting to state that BBB wouldn’t add to the deficit because taxing the rich would pay for it. But even that claim didn’t pass the smell test. Just about everybody outside of Washington, D.C., knows that government programs are never actually “paid for.” We are already borrowing from our great-grandkids just to cover our current profligate spending.
So, the Democrats resorted to various accounting tricks and budgetary chicanery to make it appear as though taxing “the rich” would pay the BBB bills. Few were fooled. Analyzing the bill using realistic assumptions, the Congressional Budget Office found that it would result in around $3 trillion in new deficit spending.
In yet another implausible claim, Biden said that BBB’s massive government spending would take “the pressure off of inflation.” No less an authority than former Clinton and Obama economist Larry Summers warned in February that profligate government spending would “set off inflationary pressures of a kind we have not seen in a generation.” The Democrats ignored him and passed a $1.9 trillion COVID relief boondoggle. In hindsight, Summers was prescient. In November, he recommended that the administration “not compound errors” it had already made “with far too much fiscal stimulus and overly easy monetary policy” and reject Build Back Better.
To counter these concerns, Biden claimed that BBB’s massive government spending would bring down inflation because government would pick up the tab for certain household expenses, such as child care. Of course, this ignores the impact that the bill would have on the supply of – and demand for – child care.
Child care providers are already in short supply. According to Sen. Richard Burr, ranking member of the Senate Health, Education, Labor and Pensions Committee, the bill would shrink the supply further “by killing off faith-based providers, small family child care homes, [and] kinship care,” while increasing the demand for child care with massive government subsidies. Not surprisingly, a study by the Progressive Peoples Policy Project, a think tank as left-leaning as its name implies, found that the bill would actually increase the cost of child care for middle-class families by about $13,000 per child annually.
The supply-and-demand dynamic and its impact on inflation seem to be mysteries to the administration – but not to most Americans. According to the Penn Wharton Budget Model, the average American family will incur an additional $3,500 in expenses this year solely because of already-surging inflation. It’s the kind of thing people notice.
Of course, the administration made this implausible claim only because the bill needed West Virginia Sen. Joe Manchin’s support to pass. Manchin, however, made it clear that, with inflation already at a 40-year high, he wouldn’t support legislation that added to the deficit or further swelled prices.
Like most Americans (including Larry Summers), Manchin refused to be fooled. He announced that he won’t support the bill – effectively killing it in its present shape. Rarely deterred by reality, Senate Majority Leader Chuck Schumer then announced that the Senate would move forward with a vote on the bill nonetheless.
Progressives have long lived in a bubble that cuts them off from the concerns of the “deplorables” in “fly-over America.” During the pandemic, the left hermetically sealed that bubble, shielding its leaders from the discontent that runs across political, geographic, racial, and ethnic lines. Otherwise, they would have foreseen the declining popularity of a president who repeatedly makes patently implausible claims and attempts to advance policies at odds with basic common sense.
The lesson here is not a new one. As someone said long ago: “You can fool some of the people all of the time, and all of the people some of the time, but you cannot fool all of the people all of the time.”
Joe Biden is one of the more complex men to ever be president. Is he, as his carefully crafted public persona suggests, a regular guy who rose from humble beginnings to the highest office in the land? Or is he a consummate insider, driven by a thirst for power and recognition?
It may not matter. Voters put him in office to do several very specific things—things which he is now failing to accomplish. If the current polling is any indication, the Biden presidency is dashing the hopes of his fellow Democrats who thought they were on the cusp of a period of transformational change.
Voters trusted Biden to provide stability, predictability and, above all else, competence. He offered the voters a choice between his years of experience in making the machinery of the nation’s capital work and his opponent’s inability to address effectively the most pressing issue of the day.
Now, more than a year later, with more people dead from COVID-19 in 2021 than in 2020, the voters are having second thoughts. Biden promised a comprehensive response to the pandemic, but has thus far failed to deliver. It may be beyond his or anyone’s reach, but he allowed the electorate to believe, aided by those who covered his campaign, that he could do it.
He’s also created a sense of “buyer’s remorse” among independents and others who believed his approach to governing would be moderate. Remember that, when pressed, Biden promised he would temper the radicalism of Bernie Sanders, AOC, “The Squad” and the activist groups that rallied to his side once it was clear he would win the nomination. “I am the Democratic Party,” he said at one point.
The American people are disappointed he has gone so far. Biden’s latest presidential approval rating hovers around 43 percent—not exactly a Nixonian number, but a far cry from the 60 percent or more who gave him high marks at the start of his term. The radicals who threw in with him, though, are likely equally disappointed because he has not gone far enough. They won’t say it, but they cannot understand why he has not put his political capital at risk and tried to rally the nation to his side in the important fights for Build Back Better, the abolition of the filibuster and the fulfillment of the Democratic agenda as set forth by the party’s left-wing leadership.
It may have been a fellow Democrat who delivered the knockout punch to Build Back Better, but there were others besides Sen. Joe Manchin (D-WV) who didn’t like it all that much. Sen. Krysten Sinema (D-AZ) also threatened to withhold her vote unless specific changes were made to the legislation—changes the progressives in the House would have opposed.
Other Democrats in Congress had problems with the bill as written, but all that is inside-the-Beltway baseball. What Biden and company missed, as Build Back Better was going down, was bigger than the opposition of congressional Democrats: They never explained to the American people why the bill would make their day-to-day lives better.
Pollster David Winston has been following the progress of Build Back Better “in its various forms” for most of the year. He’s identified four key reasons why it stalled and then died. The most important reason was that voters outside the Democratic base “never believed” what Biden and others said about the bill—that it would “cost zero,” that it “would reduce costs for everyday essentials” and that it would “help relieve supply chain problems.”
Second, the tax hikes and spending increases, never popular with most Americans, made Build Back Better look like just another “government spending bill with too many unrelated spending priorities” that would not make things better.
Third, Winston says, voter concerns about inflation were “real, and were validated by official sources,” and that when the White House “tried to blame other factors for inflation and price increases,” it lost control of the issue.
Finally—and this is where the president’s missing-in-action approach to the bully pulpit was most damaging to his ambitions—Biden was never able to make the passage of Build Back Better a priority for the American people like Reagan and Trump did with tax cuts, and Obama did with health care reform. It was “too far left,” Winston observed, “for a center-right country.”
America does not want to be transformed, at least not yet. Build Back Better failed because it was ill-conceived, not because one senator opposed it. Joe Manchin may have twisted the knife, but Joe Biden put it in his hand.
While President Joe Biden and his administration tout what they say are successes as the end of the president’s first year in office looms, the spin from Psaki and others just doesn’t match the reality being experienced by Americans from coast to coast.
To highlight the breadth of the issues caused by Biden policies, the RNC released a video series on Biden’s “12 Days of Crises” to coincide with Christmas and highlight the pain being felt by Americans.
“Crisis, lies, and failure are the hallmarks of Biden’s presidency,” noted RNC Chairwoman Ronna McDaniel. “In less than a year under Biden’s watch, there has been a catastrophic withdrawal from Afghanistan, historic price increases, and a crisis at the border.” And that is where Biden’s 12 Days of Crises — as outlined by the RNC — begin, all of which have been covered by Townhall this year.
On the first day of crises Joe Biden gave us a border crisis.
Our own Julio Rosas has reported extensively from the U.S.-Mexico border in Del Rio, Texas and Yuma, Arizona — and several locations in between — showing the Biden administration’s lack of action to stem a record-setting number of illegal border crossings, apprehensions, and “gotaways” in addition to increasing human and drug smuggling operations. When Julio confronted Biden’s DHS secretary about the situation, Alejandro Mayorkas still wouldn’t call the status of America’s southern border a “crisis.” Biden continues to claim that the border is closed, but Julio’s reporting proves it’s just one of Biden’s many unmitigated crises.
On the second day of crises Joe Biden gave us a disastrous Afghanistan withdrawal.
As our loyal readers know, Townhall led the charge warning that what Biden said was going on in Afghanistan was little more than wishful thinking. While the White House claimed there was no diplomatic evacuation taking place in Kabul, Townhall reported that embassy staff were shredding documents and destroying computers. When Biden claimed that the Afghan government’s potential fall to the Taliban was anything but certain, Townhall told the truth Biden surely knew but wouldn’t say. We also warned that Biden’s withdrawal was setting up the largest hostage crisis in U.S. history, and when Biden and his administration lied about how many Americans were left behind, we kept telling the stories of those Biden stranded. Following the Kabul drone strike Biden’s defense officials called a “righteous strike,” Townhall warned that it may have been a botched attack. And it was.
On the third day of crises, Joe Biden gave skyrocketing gas prices to every American.
The pain felt by Americans at the pump is something Biden has also ignored, and his supposed fix of tapping into America’s Strategic Petroleum Reserve intended to be used in emergencies like natural disasters or disruptions caused by foreign wars did almost nothing to help the American people. Making things worse, Biden has spent his first year in office turning the United States from an energy independent country to one dependent on foreign supplies. One of his first acts after being sworn in was to kill the Keystone Pipeline, just part of his work to make fossil fuels so expensive that suddenly less-reliable “green” energy seems appealing.
On the fourth day of crises, Joe Biden gave us an unconstitutional vaccine mandate.
After saying that he wouldn’t issue a federal vaccine mandate, Biden — somewhat predictably — went back on his word and levied a requirement on federal employees, federal contractors, and tens of millions of Americans who work for private companies. His mandate was announced as an attempt to distract from his disastrous withdrawal from Afghanistan, and it was so haphazardly put together that it quickly encountered legal challenges from states’ attorneys general and companies who wanted to fight for their employees’ healthcare freedom. And, after many companies implemented Biden’s mandate, a growing number have also reversed the mandate, including Biden’s beloved Amtrak.
On the fifth day of crises, Joe Biden gave Americans a reckless tax and spending spree.
No matter how many times Biden, Psaki, Schumer, and Pelosi claimed that the cost of Biden’s Build Back Better budget was “zero dollars,” it’s just not true. As Townhall covered, the Congressional Budget Office — which Biden used to praise until it no longer served his purpose — confirmed what we’d reported for months: Build Back Better is really a plan to make America’s economy even worse.
On the sixth day of crises, Joe Biden put parents and students last.
One needs to look no further than Biden’s relationship with teacher unions to see he doesn’t value students or their families. School closures and remote learning? No problem for President Biden. Mask mandates for young children? It’s necessary. Terry McAuliffe thinks parents shouldn’t have a role in their kids’ education? Full endorsement from Biden. And don’t forget Biden’s Department of Justice took the National School Boards Association’s lead and directed the FBI to go after parents who are speaking up and demanding accountability from their school boards.
On the seventh day of crises, Joe Biden gave himself another vacation in Delaware.
It wasn’t a secret when he took office that Joe Biden loves Delaware. Almost more than he loves ice cream cones and Amtrak. What Americans may not have counted on was just how much time he would spend there, even amid some of his other crises. Perhaps most notably, his botched withdrawal from Afghanistan, during which Biden would return to the White House from the beach in Delaware to give a speech and then immediately get back on Marine One to go back to Delaware.
On the eighth day of crises, Joe Biden gave all Americans rising prices.
It seems as though every month brings a new record-high for inflation numbers under President Biden. At first, he said it was transitory, then members of his own administration killed that theory, but Biden still isn’t taking any action to alleviate the pressure. Prices on basically everything, from gas to grocery and utility bills, continue to rise. And while Biden keeps trying to tout wage growth as proof that his economic policy is helping Americans, he conveniently neglects to mention that inflation has wiped out any gains in wages. In fact in months such as October, the impact of Biden’s agenda meant that Americans actually saw real wages decrease by 0.5 percent.
On the ninth day of crises, Joe Biden created a nationwide supply chain crisis.
Here’s to hoping all your Christmas and holiday shopping happened without incident, but if you’re waiting for some goods on a ship from Asia, your gift might still be floating in the boat parking lot off the Ports of Long Beach and Los Angeles, or sitting in a container awaiting transport. Shortages caused rations on certain Thanksgiving meal items at grocery chains and, according to Biden’s statement earlier in the holiday season, Santa was the only one who could guarantee the tree is surrounded by gifts on Christmas morning.
On the tenth day of crises, Joe Biden put China first.
China, one of Biden’s first forays into foreign policy as president, went poorly from the start. Despite signing the Uyghur Forced Labor Prevention Act into law on Thursday, the Biden administration was hesitant to support the legislation and reports suggested that the White House was urging a delay on the bill. And don’t forget how often Biden and his administration have dismissed concerns about China’s rule in the outbreak of the Wuhan coronavirus.
On the eleventh day of crises, Joe Biden did nothing to address crime surges across the country.
In case there wasn’t already enough data to prove that America is getting less safe under President Biden, this week’s armed carjackings of an Illinois state Senator and member of the U.S. House Representatives should send a message to Biden and other Democrats that their defund-the-police agenda is endangering lives across the country. Homicides, carjackings, brazen smash-and-grab robberies, and other crime continue to hit records not seen in decades, but yet again Biden won’t take action
On the twelfth day of crises, Joe Biden’s approval rating plummeted lower and lower after each crisis.
So yes, there’s a lot of bad caused by the Biden administration, but within that is a silver line emerging for Republicans ahead of the midterms: Biden’s tanking favorability means the GOP’s fortunes are rising when voters across the country have — many for the first time since 2020 — a chance to register their opinion of Joe Biden at the ballot box. Things have gotten so bad that the White House is now frantically announcing new Biden pets in an attempt to change the narrative.
Looking to the year ahead, RNC Chairwoman McDaniel pledged to “continue to hold Biden and Democrats accountable for their failed policies and refusal to take responsibility” and predicted that “voters will soundly reject Biden and his failures, and we look forward to taking back the House and Senate in 2022.”
Record inflation caused by the Biden Administration’s mismanagement of the U.S. economy will leave many low-income parents feeling like they’ve been visited by The Grinch come Christmas. Recent polling by the Associated Press found that six out of every ten Americans believe gift prices are higher than usual this year.
The same survey found nearly half of all families with an annual income of less than $50,000 felt pushed to cut back on holiday shopping by as much as 20 percent, according to an estimate furnished by America’s Research Group.
The survey results are an anecdotal affirmation of a study recently released by Penn-Wharton that found the inflation that has returned with such vigor during the Biden presidency after being marginal over the last several decades has reduced the average American family’s purchasing power by as much as $3,500.
The politicians who are struggling to find a way to resolve the mounting inflation crisis have become the object of ridicule in recent days due to their incompetence. Consider this observation from noted economist Richard Rahn, head of the Institute for Global Economic Growth:
The folks in government want you to know that even though many prices such as oil are up 45 percent and food up 22 percent over the last year, there are other very important products such as toys, whose prices have been falling, down 27 percent over the past year. So, if you buy more toys and less gasoline and food, your real income in terms of purchasing power will remain the same.
Inflation is the canary in the coal mine. It’s a leading indicator that rough seas are ahead for the economy. The International Monetary Fund reports that, among the top 35 developed nations, the United States now has the highest level of inflation. The National Federation of Independent Business recently announced a “historically high number” of small businesses are saying the general economic situation is forcing them to raise prices.
President Biden has been criticized repeatedly for failing to take the issue of inflation seriously. His proposals to continue the orgy of spending and borrowing that began under his predecessor during the COVID pandemic have made matters worse. For example, his so-called stimulus package contributed, according to the San Francisco Federal Reserve, to the rise in inflation while making the labor shortage worse.
Federal Reserve officials have been warning quietly since October of the growing risks inflation poses to the post-lockdown recovery. Numerous studies have shown the states that re-opened quickly – or never shut down at all – doing much better economically and are recreating more jobs than those that locked down and remained that way for much of the year.
Unfortunately for the president, the future is not rosy and bright. According to a recent release from the Gallup organization, the outlook of investors “has worsened” in recent months and they are far less bullish on the prospects for economic growth than they were in the first half of 2021.
“The overall effect is a decline in the Gallup Investor Optimism Index,” the firm reported, “from +39 in the prior survey (conducted in the second quarter) to +10 in the fourth,” putting it close to its lowest point since the pandemic began.
Rahn, among other economists, remains pessimistic. In a recent column, he went on at length regarding the failure of Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen to realize inflation was not “transitory,” especially with consumer prices are now rising at an almost 7 percent annual rate and producer prices at a 10 percent.
“They would not have been surprised if they had been reading this column over the past year, looking over the WSJ editorial page or watching Larry Kudlow, Steve Moore and Art Laffer on Fox,” he wrote. “The Fed has several hundred economists working for it (many from the “best schools”), yet its forecast record over the last couple of decades is far worse than most of its private sector peers.”
Too much money leads to inflation. The Biden Administration wants to print and borrow as much as it can as part of its now moribund Build Back Better program. If it continues its current path, there will be little or nothing to build back, better or otherwise.
Amid rising inflation, an ongoing border crisis, and a stalled legislative agenda, Biden is looking for someone to blame.
few days after the 2020 presidential election, President-elect Joe Biden pledged to be “a president who seeks not to divide but to unify,” a theme he’d campaigned on. “Let this grim era of demonization in America begin to end here and now,” he said in his victory speech. “It’s time to put away the harsh rhetoric, lower the temperature, see each other again, listen to each other again.”
So much for all that. As Biden’s first year in office comes to a close, he has proven to be one of the most divisive presidents in generations, surpassing even Donald Trump in his vindictiveness and willingness to demonize Americans who disagree with him — even if it means lying about COVID-19.
Consider the events of the past few days. Following a White House briefing last Thursday on the spread of the omicron variant, Biden said, “We are looking at a winter of severe illness and death for the unvaccinated — for themselves, their families, and the hospitals they’ll soon overwhelm.”
The next day, White House COVID response coordinator Jeff Zients repeated this line, saying, “We are intent on not letting omicron disrupt work and school for the vaccinated. You’ve done the right thing, and we will get through this,” he said. “For the unvaccinated, you’re looking at a winter of severe illness and death for yourselves, your families, and the hospitals you may soon overwhelm.”
So that’s the official administration line: opened schools and businesses for the vaccinated and “severe illness and death” for the unvaccinated, who will overwhelm hospitals with the omicron variant and, by implication, bear responsibility for the pandemic from here on out.
It’s one of the most bizarre and appalling statements from a presidential administration in American history, breathtaking in its dishonest scapegoating and shocking in its callous disregard for the millions of Americans who have decided, for reasons of their own, not to get the Covid shots.
Bullying these people will not persuade them, and neither will lying about the omicron variant. There’s no evidence right now that omicron is going to bring “severe illness and death,” or that it’s even going to cause a surge in hospitalizations. The evidence so far suggests just the opposite.
In South Africa, where omicron first emerged last month, hospitalization rates have fallen by 91 percent amid the current wave. Just 1.7 percent of all Covid patients were admitted to a hospital in the second week of the omicron surge, compared to 19 percent in the same week of the delta surge, according to South African health officials.
What’s more, the omicron variant appears to be milder than earlier strains of Covid-19. “We are really seeing very small increases in the number of deaths,” said Michelle Groome, head of health surveillance for South Africa’s National Institute for Communicable Diseases. Others have also noted a decoupling of new Covid cases and deaths in South Africa, whereas in past surges they have been closely aligned.
More evidence of this decoupling comes from the United Kingdom, where Covid deaths haven’t surged along with a rising case count from omicron. Indeed, there is no data anywhere to suggest that the omicron variant is anywhere near as deadly as previous strains of the virus, or that it causes more severe illness. The data so far show just the opposite.
Indeed, if omicron is a more contagious but also a milder strain (as we would expect with a mutating virus in a pandemic), then it makes sense that cases would surge but severe illness and death would not.
Here in the United States, that appears to be what we’re seeing so far: a surge of new cases but a slight decrease in hospitalizations. So instead of freaking out about omicron, prognosticating death and doom for the unvaccinated, maybe it’s time to do what some states, like Florida and Texas, have been doing all along: work to protect the most vulnerable and prevent deaths, ensure hospitals don’t get overwhelmed, and keep schools and businesses open.
In other words, manage the pandemic, which at this point is looking increasingly endemic. (Even The Atlantic has at last come around to this way of thinking — except for science writer Ed Yong, who bizarrely canceled his own birthday party over omicron. Sad!)
So much for Biden’s dishonesty about what a winter surge of the omicron variant will bring to the United States. What about his callousness and contempt for unvaccinated Americas?
It’s hard to imagine a message more calculated to divide the country than what Biden’s White House has put out, essentially diving Americans into an ingroup of vaccinated and an outgroup of unvaccinated, then blaming the entire pandemic on the outgroup — including whatever happens this winter.
The only possible explanation for such messaging is that Biden feels his presidency is in chaos and his legislative agenda has stalled out. If that’s the case, he’s not wrong. Over the weekend, Sen. Joe Manchin, D-West Virginia, announced he won’t support Biden’s Build Back Better legislation, a massive entitlement expansion that would cost some $5 trillion over the next decade. It was the signature piece of Biden’s agenda, and now it’s dead.
On the border, illegal immigration is still surging at historic levels, with the promise of another surge and an ever-deepening crisis this coming spring. Biden has done his best to ignore the crisis, even as a growing number of Americans say they disapprove of his handling of the border.
The economy is struggling, inflation remains high, and Biden’s popularity is sinking to dangerous lows just a year into his presidency. So his last resort, it seems, is to scapegoat the unvaccinated.
Never mind that many of the unvaccinated have already gotten and recovered from Covid, and have foregone the shot because they have natural immunity (a reality that never seems to factor into the Biden administration’s pandemic policies or messaging). Never mind that some people, having seen over the course of nearly two years that Covid is not as dangerous as the media and political elites have made it out to be and that Covid treatment has vastly improved, have assessed their risk and decided not to get the shots.
Never mind any of that. For Biden, blaming the unvaccinated is a way to deflect from the manifest failures of his administration on almost every other important issue.
These are not the actions of a great “unifier,” or even a marginally competent leader. After his inauguration, Biden embraced comparisons to Democratic presidents like Franklin D. Roosevelt and Lyndon B. Johnson, who enacted titanic government welfare programs amid great changes in American society.
But more apt comparisons, at this point, would be to inept 19th-century presidents like Franklin Pierce and James Buchanan, one-termers whose blundering tenures were marked by chaos, division, and dangerous incompetence.
In the period since President Joe Biden marked his hundredth day in office, his popularity as president has tumbled about thirteen points from the mid–50 percent range to the low 40s. The most precipitous drop occurred in late summer 2021, around the time of the Afghanistan debacle. Although it is easy to explain why Biden continues to lose the trust of a majority of Americans, at year’s end he retains the support of a significant minority who still endorse his basic worldview and think that casting further aspersions on Donald Trump will somehow deflect attention from Biden’s own record.
Going into 2022, that deflection will not work. Biden is likely to lose his precarious control over both the Senate and the House unless he can confront and correct his hapless record of misguided priorities. Start with his self-inflicted Afghan meltdown and its repercussions. Before September 1, 2021, there was no reason for the United States to cut and run in Afghanistan. The heavy losses were in the past. Troop levels were low (around 2,500). Casualties were even lower: zero. A coordinated strategy was in place for the Afghans to take the military lead. Biden was consumed by his desire to score political points by pulling out before the symbolic date of September 11, 2021, even though the Taliban were not holed up in their winter caves but were still active in the field. When Biden cut off supplies and logistics, the Afghan army folded. Now, after the Taliban takeover, the risk of starvation, religious intolerance, and subordination and degradation of women are the order of the day.
Biden might describe this debacle as a “success” but it is turning out to be the opening round of a further array of setbacks in other areas. No ally can trust him fully. No foreign aggressor need fear that a strategic Biden pulled out of Afghanistan to save scarce military assets for use in other dangerous theaters. If anything, more resources must now be devoted to the Middle East as Iran, Russia, and Turkey—all with severe problems of internal stability—regard Biden as an easy mark to be toyed with rather than a serious adversary to be avoided. And so, look forward to further Russian incursions in Ukraine and intensified activities in remote places like Armenia, Azerbaijan, and Turkey, where US Secretary of State Antony Blinken finds it difficult to tell friend from foe. China’s aggressive intentions toward Taiwan are also fueled in part by Biden’s squeamish attitude.
Given these hostile developments, some expansion of military forces, especially naval and air, seems to be imperative, but Biden is more concerned with long-term climate change and a dangerous flirtation with woke politics in the military. The Defense Department’s bold words on our national preparedness are belied by the 1.6 percent budget increase, a below-inflation increase, which is likely to cause systematic programmatic delays that go hand-in-hand with increased tensions across multiple theaters.
Similarly, Biden’s energy policy reflects systematic presidential overreach, starting with his opening day executive order that unilaterally revoked the permit for the long-overdue Keystone XL pipeline. That decision was an open affront to our Canadian allies, who are far less likely to put their trust in the United States going forward. But more important, it was the first step in the president’s concerted plan to slow-walk the continued development of US fossil fuel sources, relying on the vain hope that increased production of wind and solar will somehow offset those hefty losses. But when the shortages start to set in and the gas prices go up, Biden engages in a “grand” strategic gesture to release some fifty million barrels of oil from the Strategic Petroleum reserve, which will cover less than three days of domestic supply. At the same time, he issues his marching orders to the FTC to investigate the oil companies for alleged price fixing, only to find oil prices dropping shortly thereafter.
Biden’s initial energy blunders have led to further adverse consequences. His appeal to OPEC and others to increase the output of crude oil to offset shortages in the domestic production have fallen on deaf ears. Worse, Biden might well adopt suggestions from Senator Elizabeth Warren to ban or cut back on foreign exports, which could only make matters worse, in part, by slowing down the replacement of dirtier coal with cleaner natural gas. Any export ban would also lead to a decline in domestic production overall, idling refining capacity. These two factors in combination could lead to job and revenue losses, as dirtier foreign energy displaces cleaner domestic production. Biden’s first priority should be to unleash, not stifle, domestic activity.
Nonetheless, Biden has doubled down on his anti-fossil-fuel policies. His misnamed Build Back Better (BBB) program contains a long list of taxes, fees, and regulations that are intended to stifle the production of fossil fuels, which compounds the energy market distortions created by offering a dizzying array of subsidies for solar and wind. These latter sources are not the pollution-free solutions that they are often advertised to be, including, for example, the deforestation in the Philippines in order to mine the larger quantities of nickel needed by solar power systems. Yet Biden is strangely unaware of the downside to alternative energy sources and thus has plunged forward with his recent “Executive Order on Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability.” His program targets zero-emissions programs for electricity generation, automobile fleets, and physical plants. His order does not make the slightest effort to put a cost estimate to the program or to make the elementary calculation on whether a higher rate of return can be achieved through greater efficiency in fossil-fuel production. His program purports to set federal policy for “a carbon-pollution-free electricity sector by 2035 and net-zero emissions economy-wide by no later than 2050,” which both sidesteps Congress on the one side and seeks to bind future presidents and future Congresses on the other. Ironically, Biden thinks he can achieve savings “through use of full lifecycle cost methodologies”—the case with nickel could easily point against wind and solar.
Furthermore, although the particular impact of this program on the overall economy is unclear at best, nothing in his executive decree addresses the level of inflation, which reached 6.8 percent in November 2021. The Democratic faithful, such as John Cassidy of the New Yorker, spin a happy tale that the crux of the difficulty lies in a combination of supply chain problems and the COVID pandemic, so that when these quiet down, inflation can subside to its former 2 percent level. But Biden is not wise to pin too much hope on this theory, which rids his administration of responsibility even as it battles its own ill-conceived COVID policies, including the increasingly unpopular vaccine mandates being clobbered in the courts. Rather, the large increases in money supply, spurred by government spending and the purchase activities of the Federal Reserve, are key parts of the inflation story.
The biggest inflationary threat comes from the combination of taxation, public expenditures, and regulations associated with “Build Back Better.” At this point, it looks as though that new bill will not make it past the Senate, which Biden should regard as a blessing in disguise. He can then campaign on the platform that our current economic woes were intensified by the failure of the Senate to engage in much-needed public investment, while breathing a sigh of relief that matters did not get any worse.
But they can. A quick look at trade policy suggests how matters can unravel with another round of government meddling. The strongest rap against Donald Trump was the constant fear that his meddling in international markets could lead to trade wars and dangerous protectionism. But now the Biden administration has moved into a protectionist stance, including gratuitous spats with Canada (yet again) over a proposed tariff increase on Canadian softwood lumber, which will only slow down growth in the domestic construction industry. Biden has lost sight of the central principle of trade policy, which is never to arrange tariffs for concentrated domestic industries; the high costs will hurt consumers and export markets that depend on the use of cheaper inputs to remain competitive in markets.
It is therefore no surprise that Biden finds voters pessimistic about both his limited leadership capabilities on the one hand, and his economic policies on the other. Candidate Biden ran on bold promises that helped get him elected. But President Biden has fallen short. Almost a year remains for him to set his house in order in time for the congressional elections, but he shows little inclination to become more moderate, rendering it all the more likely that on the day of reckoning he will have little personal esteem or political support.
Having adopted a more flexible policy framework in response to the low-inflation conditions that preceded the COVID-19 crisis, the US Federal Reserve now finds itself confronting an entirely different economic regime. The balance of forces is thus weighing heavily against decisive action to control today’s price increases.
Price increases in the United States are spreading across goods and services, and inflation also can be seen in broad-based business inputs such as transportation, energy, and increasingly labor. How should we expect central bankers to react?
For its part, the US Federal Reserve has emphasized that it will contemplate raising interest rates only after it is done tapering its monthly asset purchases, which will be sometime in July 2022 at the current pace of unwinding. Nonetheless, some members of the Fed’s rate-setting Federal Open Market Committee worry that the central bank will have fallen behind the curve by that time, forcing it to raise rates more abruptly, to higher levels, and for longer than anticipated. Hence, Fed Vice Chair Richard Clarida recently indicated that the Fed might consider speeding up the taper (so that it can raise rates sooner) when its members meet again in December.
Notwithstanding the growing (but often unspoken) worries at the Fed, central bankers nowadays are reticent to see inflation as a problem. In the past, the current levels of inflation would have prompted them to square their shoulders, look determinedly into the TV cameras, and say, “We hate inflation, and we will kill it” – or words to that effect. But now they are more likely to make excuses for inflation, assuring the public that it will simply go away.
Clearly, the prolonged period of low inflation after the 2008 global financial crisis – when the Fed had great difficulty elevating the inflation rate to its 2% target – has had a lasting impression on central bankers’ psyches. The obvious danger now is that they could be fighting the last war. Moreover, even if they do not fall into that trap, structural changes within central banks and in the broader policymaking environment will leave central bankers more reluctant to raise interest rates than they were in the past.
To adapt to the pre-pandemic low-inflation environment, the Fed changed its inflation framework so that it would target average inflation over a (still-undefined) period. This meant that it could allow higher inflation for a while without being criticized for falling behind the curve – a potentially useful change at a time when elevating the public’s inflation expectations was thought to be the key problem. Gone was the old central-bank adage that if you are eyeball to eyeball with inflation, it is already too late. Instead, the Fed would stare at inflation for a while and act only when it was sure that inflation was here to stay.
Moreover, the new framework places a much greater emphasis on ensuring that employment gains are broad-based and inclusive. Because historically disadvantaged minorities in the US are often the last to be hired, this change implied that the Fed would potentially tolerate a tighter labor market than in the past, and that it would have more flexibility to run the economy hot, which is useful in an environment of weak demand. Yet now the Fed is facing an environment of strong demand coupled with supply-chain disruptions that look unlikely to abate quickly. Ironically, the Fed may have changed its policy framework just as the economic regime itself was changing.
But shouldn’t greater flexibility give decision-makers more options? Not necessarily. In the current scenario, Congress has just spent trillions of dollars generating the best economic recovery that money can buy. Imagine the congressional wrath that would follow if the Fed now tanked the economy by hiking interest rates without using the full flexibility of its new framework. Put differently, one of the benefits of a clear inflation-targeting framework is that the central bank has political cover to react quickly to rising inflation. With the changed framework, that is no longer true. As a result, there will almost surely be more inflation for longer; indeed, the new framework was adopted – during what now seems like a very different era – with precisely that outcome in mind.
But it is not just the new framework that limits the effectiveness of the Fed’s actions. Anticipating loose monetary-policy and financial conditions for the indefinite future, asset markets have been on a tear, supported by heavy borrowing. Market participants, rightly or wrongly, believe that the Fed has their back and will retreat from a path of rate increases if asset prices fall.
This means that when the Fed does decide to move, it may have to raise rates higher in order to normalize financial conditions, implying a higher risk of an adverse market reaction when market participants finally realize that the Fed means business. Once again, the downside risks of a path of rate hikes, both to the economy and to the Fed’s reputation, are considerable.
The original intent in making central banks independent of the government was to ensure that they could reliably combat inflation and not be pressured into either financing the government’s fiscal deficit directly or keeping government borrowing costs low by slowing the pace of rate hikes. Yet the Fed now holds $5.6 trillion of government debt, financed by an equal amount of overnight borrowing from commercial banks.
When rates move up, the Fed itself will have to start paying higher rates, reducing the dividend it pays the government and increasing the size of the fiscal deficit. Moreover, US debt is at around 125% of GDP, and a significant portion of it has a short-term maturity, which means that increases in interest rates will quickly start showing up in higher refinancing costs. An issue that the Fed did not have to pay much attention to in the past – the effects of rate hikes on the costs of financing government debt – will now be front and center.
Of course, all developed-country central banks, not just the Fed, face similar forces that push toward restraint on rate hikes. So, the first large central bank that moves may also cause its currency’s exchange rate to appreciate significantly, slowing economic growth. This is yet another reason to wait. Why not let someone else move first, and see if they invite market and political wrath?
If the post-2008 scenario repeats, or if China and other emerging markets transmit disinflationary impulses across the global economy, waiting will have been the right decision. Otherwise, the current impediments to central-bank action will mean more and sustained inflation, and a more prolonged fight to control it. Fed Chair Jerome Powell will have a lot to weigh as he begins his second term.
President Biden rewards a hostile China
And you think your Zoom calls are important. On the evening of November 15, President Biden spoke over video for three and a half hours with China’s autocrat Xi Jinping. The “virtual summit” was held online because Xi hasn’t left China since the beginning of the coronavirus pandemic two years ago. According to official readouts of the conversation, Biden and Xi talked to one another warmly. They covered a lot of ground—everything from ICBMs to global energy supplies. They took the first steps toward improved relations between the United States and the People’s Republic of China (PRC). Global media amplified this official message. “The Biden-Xi Summit Was Actually Kind of a Big Deal,” read one headline in Slate.
Don’t believe it. Biden’s tête-à-tête with Xi Jinping was less constructive and more harmful than his in-person visit with Russia’s Vladimir Putin in June. At least Biden got something, however insignificant, from that earlier encounter with authoritarianism. The United States and the Russian Federation issued a brief joint statement on nuclear “strategic stability.” They established a “Strategic Stability Dialogue” that would “lay the groundwork for future arms control and risk reduction measures.” The dialogue began in September. Will it go anywhere? Probably not. But the mind-numbing diplomatic process has started. And it involves real people, meeting in real five-star hotels, in real European cities.
That’s not the case with China. The only thing Xi gave Biden was a pledge to make a pledge sometime in the future. The virtual summit was vaporware—the promise of a possible conversation that doesn’t yet exist and most likely never will. At a Brookings Institution event on November 16, National Security Adviser Jake Sullivan said the two heads of state decided to “look to begin to carry forward discussion on strategic stability.” Try saying that diplomatic tongue-twister three times fast. It’s the equivalent of a contestant on The Bachelor gushing, “I think I’m maybe beginning to fall in love with you.” I translate Sullivan’s gobbledygook this way: Xi and Biden had a conversation about having a conversation about China’s rising stockpile of nuclear warheads and the threat it poses to global security and nonproliferation. Nothing more.
This doesn’t even rise to the level of negotiating for the sake of negotiating. It’s talking about having negotiations for the sake of … well, what exactly? Talking some more? Reminding Xi of all the good times he spent on the phone with Biden a decade ago? Apparently, at the outset of the discussion, Xi used a friendly idiom to describe the U.S. president. Whoop-de-do. Does that signal a meaningful change in China’s behavior on trade, the pandemic, Hong Kong, Xinjiang, North Korea, and Taiwan? Of course not.
On the contrary: The most powerful, ideological, and despotic ruler of China since Mao Zedong used this opportunity to remind the U.S. president that the only guarantee of good relations with the PRC is to get out of its way. Even more worrisome, Xi Jinping repeated his threats against Taiwan, but with a twist, saying, “We are patient and willing to do our utmost to strive for the prospect of peaceful reunification with the utmost sincerity, but if separatist forces provoke and force the issue, or even break through the red line, we will have to take decisive measures.” He also said the United States is playing with fire. And “whoever plays with fire will get burned.”
The Obama veterans who work for Joe Biden have trouble enforcing red lines. Xi Jinping does not. He used similar language in 2017, warning Hongkongers not to challenge the mainland’s sovereignty and Chinese Communist Party control. And, sure enough, when a protest movement emerged in Hong Kong in 2019, Xi crushed it.
Notice, too, how Xi blames Taiwan for cross-strait tensions even as his air force violates Taiwanese airspace with impunity. His message is that China’s policies will remain the same and that it is Biden’s responsibility to rein in Taiwan and to not provoke the mainland. Some “friend.”
Journalists close to the administration emphasize the personal exchanges between Biden and Xi rather than the content, or lack thereof, of the meeting itself. “Monday night’s discussion touched the bedrock of what matters most in the U.S.-China relationship,” wrote David Ignatius of the Washington Post, “and it was at least a beginning of something that could reduce the risk of a global catastrophe.” If Monday really was a beginning, it was not auspicious. Ignatius himself quotes Biden aides “who recalled that when the two men met at Sunnylands, Calif., in 2013, while Biden was vice president, the Chinese leader had raised the possibility of new measures for crisis prevention between the two countries. Little came of that opening.”
Less will come of this one. The vaporware summit was a return to an earlier model of Sino-American relations: the two nations play nice and pretend one isn’t at the other’s throat. It was also a reminder that, since the fall of Afghanistan, President Biden has spurned the China hawks for China doves. The Economist reports that in early September, as the administration reeled from its ignominious and self-inflicted defeat in Central Asia, Xi Jinping “was shockingly testy at the start of a telephone call with Mr. Biden.” Then in late September the United States assented to the swap of imprisoned Huawei executive Meng Wenzhou for two Canadian businessmen held hostage since 2018. On October 7, Jake Sullivan met with Chinese foreign secretary Yang Jiechi in Switzerland to find areas “where the United States and the PRC have an interest in working together.” And on November 10, the United States and China issued a joint declaration to fight climate change.
Words on a page. Another statement China will ignore. This summit was a gift to Xi as he consolidates rule ahead of next year’s winter Olympics in Beijing and his anticipated (and unprecedented) third term as China’s leader. Biden has done nothing to make China pay for its pandemic cover up. He hasn’t increased the defense budget in real terms. He hasn’t further restricted Chinese investment in the U.S. economy. “China’s leaders still want investment and technology from the West,” writes the Economist‘s correspondent, “but they think it is in decadent decline and are decoupling from Western norms and ideas.” America’s leader has done nothing to make them think otherwise.
To many Americans, the widespread deployment of 5G technology means faster download speeds on their mobile device.
While that is absolutely one of the real benefits of 5G technology, it is a great deal more than that. In fact, the U.S. maintaining its high tech advantage in the 5G arena has national security implications.It also has widespread economic importance. It is also critically important that 5G technology be American, and not Chinese technology — not for reasons of national pride, but because national security matters.
For this reason, we need U.S. policymakers to remove unnecessary impediments to American innovation and deployment in the 5G arena. The truth is that China is hoping that our regulatory regimes will slow and impede American innovation and the speed of implementation of this new technology so that we leave the window open for China to dominate the world in 5G technology.One of the current impediments to 5G progress is the Federal Aviation Administration (FAA), which despite having no actual evidence for vaguely stated concerns, nonetheless alleges that maybe 5G technology will interfere with altimeters in older helicopters and older small private planes. Without providing any specifics or data, the FAA is throwing up roadblocks.
I am confident that we all agree that if expanding 5G technology were going to mean planes falling out of the skies, we would all want to put the breaks on. But the FAA hasn’t provided any real transparency to its vague concerns or any significant specifics and there is zero evidence that 5G technology interferes with altimeters.But it’s not just that the FAA hasn’t provided any factual support. The truth is this issue has been heavily studied by the Federal Communications Commission (FCC) which regulates the usage of wireless spectrum to be sure it doesn’t create conflicts. Roughly 40 other countries have also studied this issue and they all agree that there is no harmful interference with 5G and altimeters.Why didn’t the FAA raise any concerns over American planes already flying to these countries?
On a practical level, around the globe there are a number of 5G cell towers. Some of them are near airfields and there has been no observed interference with altimeters.
The European Union Aviation Safety Agency has concluded: “[E]ven though 5G has already been deployed in several States around the world, we are not aware of any reported occurrence that relates to possible interference originating from 5G base stations.”While China may be able to give American consumers a better internet connection (as American technology would also clearly do), the communist country will not promote economic growth around the globe and certainly not in America. Moreover, because 5G technology will be more than just faster connection speeds, but will also be the “internet of things” and allow for our devices to communicate with each other (to the extent we authorize that), 5G technology will open up thousands of new businesses just as smartphones did.
The sharing economy — exemplified by Uber and Lyft and Airbnb — was made possible by smartphone technology.
In the same way, but probably multiplied by a factor of one thousand, 5G technology will become the foundation of thousands of amazing ideas that will make the lives of consumers more convenient. It will create millions of new jobs and greater opportunity for more and more people.
But if we hamstring our own industries and entrepreneurs, the totalitarian regime in China will gladly fill the void. And if China deploys 5G technology, privacy and security will take a huge hit.The Chinese regime has been gathering online data on Americans for decades. Dominating and defining the technology that will be built into your phone and later into household appliances will give the totalitarian regime unprecedented access to all of our private information — perhaps even how much milk we have in the refrigerator.
But the other problem would be a very serious national security issue. Can you imagine having 5G chips in military hardware that could give the totalitarian regime access to intelligence and even the ability to turn off the hardware?
Imagine our missile defense being turned off because we ceded 5G technology to China.
Experts and policymakers from all sides of the political spectrum agree that 5G technology does not pose risks to altimeters. So if the FAA has some secret information that it has yet to reveal, it should provide transparency and reveal precisely what its concerns are as well as the scientific and data basis for such concerns.
Otherwise, the FAA needs to work in good faith and allow America to continue to be the world’s high tech leader and innovator. Our national economic wellbeing and our national security hang in the balance.
President Joe Biden’s plan to build America back better is much more costly than most everyone anticipated. The budget reconciliation bill currently stuck in the House is perhaps the most expensive single piece of legislation in history. Even a few members of his own party are uncomfortable voting for it.
According to some estimates, the new taxes, spending, and borrowing involved total out at about $10 trillion over 10 years. At one-half U.S. annual GDP pre-COVID, that’s not chump change. Biden says not to worry because it’s paid for, something only someone who’d spent 50 years in Washington could say with a straight face. He’s unfamiliar with how the private economy functions. The higher corporate taxes he touts, for example, are considered a cost of doing business that is mostly passed along to the consumer.
It’s not his fault he doesn’t get it. He’s spent almost his entire adult life in politics. Any wealth he’s amassed comes from belonging to “the aristocracy of pull,” not business acumen. The people around him, however, know better.
Raising taxes on personal incomes over $400,000 a year, raising the corporate tax rate, and establishing a global corporate minimum tax won’t raise the revenue needed to cover the cost of the plan Biden is trying to sell to the American people, not to mention holdouts in his own party like West Virginia’s Joe Manchin. The big spenders know other sources of revenue will need to be tapped, if not now then later. That makes anything not taxed currently fair game, which puts changes in the private individual retirement account system on the table.
Most IRAs are treated favorably in the tax code. Either the funds are taxed when they are invested and withdrawals are made tax-free or investments are tax-free and, after the accounts have increased in value over time because of the magic of compound interest, the funds are taxed when they’re drawn down. Changing that will have downstream impacts especially harmful to investors in the middle-class.
It won’t punish the rich. It will hit the new investor class, especially the millennials entering the workforce, hard. What’s on the table limits investment options while subjecting the income they set aside for retirement to retroactive taxation. “It’s like a fisherman’s net,” IRA expert Ed Slott said. “The net picks up a lot of small fish that are unintended targets.”
This proposal to eliminate Roth 401K Conversions for IRAs and employer-sponsored plans for single filers making $400,000 or more and joint filers making $450,000 or more is bad policy and bad politics. What the Bidenites are proposing would be devastating to retirement incomes and should be anathema to senators from states with large retirement populations like Mark Kelly and Kyrsten Sinema in Arizona and Nevada’s Catherine Cortez Masto. These ideas and the proposed ban on the conversion of after-tax contributions to Roth account regardless of income would likely wreck the retirement plans of millions of average Americans.
Moreover, the ideas are absurd from a revenue perspective. According to early estimates, the changes under consideration would only raise $4 billion over the next 10 years. That’s not even a drop in the bucket of what’s needed to pay for the Biden plan. Does that mean future changes that are even more radical? Probably. Once we’re down that road it will be hard to stop even if it hurts Baby Boomers and Millennials alike.
Attempting to limit the amount people can put into Roth IRAs will reduce the national savings rate, complicate retirement planning for millions of Americans, and constitute another broken promise by the politicians in Washington. Some folks have indeed used these accounts as a tax dodge, setting up as many as they need to reduce their annual tax burden, but you don’t use a howitzer to kill a housefly.
For most Americans, IRAs are a pathway to a comfortable, secure, perhaps even prosperous retirement. The proposals currently under consideration to eliminate the Mega Roth and other independent retirement account options are an attack on the middle class that Congress should reject.
If it doesn’t, the voters will remember.