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Poorly Named Inflation Reduction Act Now Law: Pandora’s Box is Open

By Peter RoffAmerican Liberty

National Democrats are no doubt pleased with themselves over the way they put another one over on the American people. The poorly named Inflation Reduction Act, now law, puts in place the framework they need to create their oft-wished-for progressive utopia.- Sponsored –

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It will do many things. Bringing inflation down, unfortunately for us all, is not one of them. Under President Joe Biden’s leadership, the economy has disintegrated to the point prices are rising faster now than at any time since the 1970s.

The first thing to do, in a case like that, is to stop spending. The new Biden-backed law proposes more than $500 billion in new spending over ten years, offset by what supporters of the new law argue will be $700 billion in new revenues obtained through higher taxes and more rigorous random audits, which does exactly what most serious economists recommend against in such times as these.

We are in a recession, make no mistake about it. Revised data released Thursday by the U.S. Commerce Department show the economy shrank by 0.6 percent in the second quarter of 2022 which, while not quite the 0.9 percent originally reported is still a sign that things are slipping.

The overall inflation number may be down a bit too, but that’s because the price of gasoline is coming down — though not for the reasons the Biden administration would have you believe. Energy Secretary Jennifer Granholm credits production increases for the price drop but absurdly includes in her calculations the nearly one million barrels per day of oil being released from the national strategic petroleum reserves by the president.

For those who don’t follow the economics of energy, that’s not an increase in production: It’s double counting. Those oil sticks have already been produced. The reason the price is coming down is that demand is coming down because the global economy is cooling off. This chart prepared by the Committee to Unleash Prosperity’s E.J. Antoni shows what’s going on:

The prices of other essential goods like foodstuffs continue to rise at frightening rates, meaning inflation will be with us for some time to come despite the legislation just shepherded through Congress by Democrats Chuck Schumer of New York and West Virginia’s Joe Manchin. All the new spending and mandates they jammed into the bill, especially what’s there to push the transition to green energy, are going to distort prices in the energy market and make matters worse.

The White House may try to dismiss that as a GOP talking point lacking a factual basis. Let them try, considering it’s been confirmed by independent, non-partisan entities including the Congressional Budget Office and Joint Tax Committee, and by a Penn/Wharton study.

Taking advantage of the public’s concerns about inflation — a Rasmussen Reports national survey found it to be the No. 1 issue on the minds of the American people — Schumer and Manchin put together a bill that repackaged much of what had been included in Biden’s twice-rejected Build Back Better bill, giving the party’s progressive wing its biggest victory in years. Party leaders, including the president, plan to spend much of September traveling the country trumpeting its supposed benefits to woo disaffected liberals back into the party before voting begins. They’ll succeed, and the numbers coming out of Tuesday’s primary elections in New York and Florida, and elsewhere suggest they already are because too many people don’t understand what the bill does and many who do won’t tell the truth about it for fear of being dismissed or attacked.

Offered as support for this theory is the fact many Democrats — and the bill passed with only Democratic votes — have already pivoted away from talking about it as a measure to bring inflation under control. Instead, they’re singing its praises as a measure that does more to combat what they call the threat of climate change than any measure passed in decades and highlighting its ill-conceived plan to cap the price of some prescription drugs.

Both measures are likely to do more harm than good because they will produce consequences that were either overlooked or deliberately ignored as the bill was being drafted. One of their biggest boasts, for example, is the notion the green energy measures in the bill will bring the rate of U.S. carbon emission production down by 40 percent by the year 2030. If that were true, it would be a big deal.

What they omit from their press releases and speeches, however, is that those same emissions were already projected to decline by 30 percent by 2030, meaning the U.S. taxpayers are spending nearly $400 billion to bring the global mean temperature down by less than a full degree — but that’s only if the Chinese stop building plants that use coal to produce electricity, which they clearly are not going to do.

The price tag for this imperceptible, perhaps unachievable temperature change — again, thank you, China — is matched by the costs imposed on working families by new taxes on the energy sector. The GOP members of the House Ways and Means Committee estimate working families will be, from an economic standpoint, disproportionally harmed by provisions including a $25 billion crude oil tax and methane taxes that will drive up the price of gasoline and the cost of operating traditional home heating and cooling systems.

The taxes included in the bill will also take a big bite out of the paychecks of people at the lower end of the economy. The Joint Tax Committee estimates more than 92 percent of households with incomes under $200,000 will either see their taxes rise or get no benefit at all. Median-income families earning between $50,000 and $75,000 will be 33 percent more likely to get a tax hike than a tax cut. Families earning $75,000 to $100,000 will be four times more likely to get a tax hike and families earning more than that up to $200,000 will be more than 10 times more likely to see their taxes go up without any adjustment in marginal rates.

That, in case there was any doubt, makes a lie out of Joe Biden’s oft-repeated promises that no one making less than $400,000 will see the amount they pay in taxes go up by as much as one thin dime. Meanwhile, the percentage of $1 million-plus households that will get a tax cut — 19.4 percent — is twice as high as any other income group, followed by those households where the annual income is between $500,000 and $1 million.

The impact on the price of prescription drugs is being equally distorted. Capping the price of current drugs will impede the discovery of new ones. Those that are created and make it to market will do so at higher prices than might have been the case had House Speaker Nancy Pelosi’s price control scheme not been adopted. As a result, Americans will be spending more at the pharmacy and on health insurance premiums, something that is again unnecessary and inflationary.

The Inflation Reduction Act, about which you will hear much over the next few weeks though perhaps not under that name, will accelerate the increase in inflation, not bring it down. Consumer prices are headed skywards, even if the price of gasoline continues to come down. In sum, it makes living in America less affordable in the future than it was when Joe Biden took office. That’s not what people expected would happen. They have the right to know why it will.


The Schumer Manchin Inflation Reduction Act Could Kill You

By Peter RoffAmerican Liberty

There’s something about the way laws are made and the impact they have on the nation that many people may not understand. Oh, they may know what it is intuitively, and that much of how Congress does its business doesn’t make sense, but they can’t explain why.

That means they can’t propose ways to fix it. This isn’t a failing on their part and it’s not because they don’t understand the democratic process or how a bill becomes a law. It’s the lawmakers themselves who have made the legislative process so opaque, with so many moving parts, that it’s hard for people who are not part of the professional political class to figure out what it means, how it works and how to improve it.

That’s useful to those who favor the continual growth in the government’s size and authority, especially at the federal level. The constant obfuscation allows deception and permits those few policymakers who are still politicians holding elective office to change positions on the spot without having to worry too much that the people who keep them in office will hold them accountable.

That’s how, for example, West Virginia Democratic Sen. Joe Manchin, who’d won plaudits for his opposition to President Joe Biden’s Build Back Better bill, was able to make a deal with Senate Majority Leader Chuck Schumer, D-N.Y., to produce, even take the lead on something which is called the Inflation Reduction act but is just a slimmed down, slightly less woke version of what he’d previously opposed. As a side note, it doesn’t do much of anything – say such neutral arbiters of its effect on the economy like the Congressional Budget Office and Congress’s Joint Tax Committee – to reduce inflation. According to them, it could make it worse than it otherwise might be before it finally levels off.

The Manchin-backed bill, which could just as easily and more accurately be called the Inflation Resuscitation Act as anything else, is chock full of the same kinds of tax increases, special interest spending, unnecessary regulatory crackdowns, sweetheart political deals (Arizona Sen. Krysten Sinema, we’re looking in your direction) and green energy mandates and subsides as Build Back Better. In the bigger picture, the differences between the two are insignificant enough that they hardly matter at all. Except that the Inflation Reduction Act could also be responsible for your death.

It won’t kill you, at least not literally, unless you happened to be walking by the U.S. Capitol when and if some unhappy Republican throws a bound copy of the bill out an open window and it lands on your head. It’s a big bill. What you need to know is the imposition of price controls on certain categories of prescription drugs contained within it will depress pharmaceutical industry research and development into new drug therapies by an estimated $663 billion according to a paper by Tomas Phillipson published by the University of Chicago.

Says the professor in an essay he penned for Newsweek, a reduction in funding of that size “will amount to a loss of 330 million life-years, about 30 times the loss from COVID-19 so far. The associated loss in value is more than $66 trillion, with longevity conservatively valued at half the amount used by agencies such as FDA and EPA.”

In layman’s terms, that means the cures that could be coming down the pike for Alzheimer’s, Parkinson’s disease and certain kinds of cancers – just to name a few of the ultimately fatal maladies we face as we get older – won’t arrive because they’ll never get out of the gate. Sorry, Boomer.

As Kevin Murphy and Robert Topel write in their study, The Value of Health and Longevity (also published by the University of Chicago) “Economic evidence shows that growth in life-expectancy is as important as GDP growth in lifting U.S. well-being. Put differently, few people would give up a year of their lives in order to gain an inflation-free year with marginally higher growth. Emphasizing the reduced economic effect of the so-called Inflation Reduction Act is akin to rejoicing that a hurricane spared the house, even though its owners died.”

This shouldn’t be hard to understand. If the legislative process and the impact of a given bill were explained to the American people with the same level of detail that goes into the analysis of the New York Mets’ pitching power, it wouldn’t be. So, without going too deeply into the weeds, if you accept that price controls affect profit margins by pushing them lower, you also have to accept they eliminate incentives to innovate.

Too many people, especially those who take their cues on economic issues from Karl Marx and AOC, view words like “capital, “profit” and “property” as dirty ones. When they are applied to the American model, they become glorious, responsible for the incentives that make living standards in the United States among the highest in the world and the envy of just about every other country.

The debate over this issue is not an honest one, with all sides getting a fair hearing. If it were, you’d know the vast majority of Americans oppose the idea of the government negotiating price controls with pharmaceutical companies when they understand the consequences that would ensue.

Government price controls are popular, according to just about every public poll, when people think all that will happen is the price of drugs will come down. Why pay more when you can pay less, right? When they learn it also means forcing manufacturers to negotiate on price with the government takes away from doctors the ability to prescribe medicines that in their opinion best meet the needs of their patients, the support for price controls drops considerably. A survey conducted by the Kaiser Family Foundation found support for capping schemes dropped the moment respondents became aware it might lead to less research and development of new drugs or limit access to newer prescription drugs. A March 2022 Ipsos poll conducted for the industry’s trade association found just 14 percent of those participating in the survey would support them if they resulted in limited access to newer prescription medicines.

If this information were planted as firmly in the public’s mind as the idea that the government can lower the price of drugs through negotiation or fiat, it would be easy to predict what the politicians would do. But it isn’t, so the fact price controls would kill innovation in the industry in the U.S., leading to the development of fewer breakthrough drugs is easy to hide.

The evidence is there if anyone cares to look for it. By burying their scheme in a bill that’s supposed to bring down inflation – and the pharmaceutical sector is one area where prices have continued to be relatively stable and have even come down – no one does. That’s the biggest benefit to legislating as Schumer and Manchin are doing. There are too many moving parts that will produce too many adverse outcomes for people to keep track of it all. The solution for the mess it will cause, when it comes, will be another big bill that doesn’t fix the problems the Inflation Reduction Act will cause while making the mess even bigger.


Even Biden’s Favorite Economist Says Inflation Reduction Act Won’t Reduce Inflation

White House touts report that says Americans will see no change in inflation due to the bill until late 2023

By Joseph SimonsonThe Washington Free Beacon

The $433 billion Inflation Reduction Act will have no meaningful impact on consumer costs, according to the economist President Joe Biden cites most often.

By the end of 2031, the latest Democratic reconciliation bill would shave just .33 percent from the Consumer Price Index, the traditional inflation metric, according to a report from Moody’s Analytics chief economist Mark Zandi. The current CPI is 9.1 percent, the highest in over 40 years.

Zandi and his coauthors say the Inflation Reduction Act will only “nudge the economy and inflation in the right direction.” And that conclusion strains the definition of “nudge.” Americans will see no change in inflation due to the bill, the report states, until the third quarter of 2023—a .01 percent decrease.

Zandi’s analysis is often shared by the White House or the president himself. During a February 2021 speech, Biden cited Zandi’s work twice while pitching his economic agenda. In July of last year, Senate Majority Leader Chuck Schumer (D., N.Y.) called on lawmakers to read Zandi’s favorable report on the bipartisan infrastructure bill.

But Zandi’s latest findings have not deterred the White House. Both Chief of Staff Ron Klain and Deputy Press Secretary Andrew Bates retweeted a CNN reporter’s tweet that quotes the report as saying the bill will “meaningfully address climate change and [reduce] the government’s budget deficits.”

The White House’s celebration of the report signals how desperate they are to pass a budget reconciliation package before the midterm elections. Initially named “Build Back Better,” the bill has seen a number of rebranding attempts as voters increasingly sour on Biden’s presidency over the economic concerns.

Zandi and his coauthors conclude that the inflation reduction bill lowers consumer costs for some medications, something the White House highlighted, although they decline to specify the total savings. Moreover, the deflationary benefits from lower health costs, the authors write, do not kick in until “mid-decade.”

“Moreover, large corporations will attempt to pass through some of their higher tax bill to consumers in higher prices for their wares,” the authors write, although they add that this may be difficult “in competitive markets.”

The immediate impact of the bill may also slow growth as well, the authors find. Starting in late 2023 for over a year, according to data in the report, the bill will slightly shave off expected GDP growth. Despite those data, the authors say the Inflation Reduction Act will add “an estimated 0.2 percent” to GDP by the end of 2031.

The Inflation Reduction Act contains $433 billion in spending and purports to raise $750 billion in revenue from higher taxes and lower Medicare prescription drug costs. A report from the nonpartisan Congressional Joint Committee on Taxation found that, despite White House claims, Americans making below $400,000 a year would see higher taxes.

Sen. Joe Manchin (D., W.Va.), who led negotiations on the bill, grew defensive when asked by Fox News about tax provisions in the bill and whether the bill will meaningfully address inflation.

“I know people who don’t like the president and don’t like Democrats might be upset,” Manchin said. “It is not whether you like the president or you like Democrats. Do you like America? Do you want to fight inflation? This bill does it.”


A Republican Majority by Default?

By Peter RoffNewsweek

It’s a remarkable feat—something not just anyone could accomplish. Yet in just a few short months, President Joe Biden managed to turn the recovery around. It’s not clear how he did it, but the boom for which he liked to take credit is officially over.

Of course, the White House doesn’t want to say that. It would be politically bad to acknowledge the situation that now exists. To avoid that, senior presidential aides and Cabinet secretaries like the Treasury Department’s Janet Yellen have been forced to turn rhetorical cartwheels while trying to explain that it isn’t really what the data tell us it is.

Team Biden has masterfully avoided the invocation of the word usually employed after two consecutive quarters of what the economists call “negative growth.” Call it what you want—some good alternative phrases like “economic Joe-down” and “Joe-cession” have already seeped into the conversation—the economic numbers don’t help Biden’s cause right now.

His unpopularity isn’t new news. A recent CNN poll found that 75% of Democrats who plan to vote in 2024 hope to have someone other than Biden for whom to cast their ballots. State by state, Biden’s favorable/unfavorable ratings are underwater in more than 45—including such liberal bastions as Massachusetts and even his home state of Delaware, where he’s down by seven.

Why is he so unpopular? Real wages are falling, income is down, and prices are up. That’s fact, not opinion or carefully structured analysis. Biden may think there’s plenty of good news out there, that it “doesn’t sound like a recession to me,” but it sure feels like a recession to the American people.

It would seem all that is good for the GOP’s prospects to pick up control of the U.S. House and Senate come election time—and by wide margins. The anti-Biden tide is going to swamp some boats that expect to ride the storm out—as happened in 1978, 1980, 1994, and 2010, when unpopular policies pushed by the occupant of the White House cost the president’s party seats it should not have lost.

How, then, with the Democrats seemingly in their worst political shape in nearly 50 years, does one explain a spate of recent polls like the one released last Tuesday in USA Today, showing them with a four-point lead—44% to 40%—over the GOP on the congressional generic ballot? Especially, that is, after the Republicans have been nearly double-digit dominant on the question of “Which party do you want to control Congress after the next election?” for many months now.

House Minority Leader Kevin McCarthy (R-CA) speaks
House Minority Leader Kevin McCarthy (R-CA) speaks during his weekly news conference at the U.S. Capitol on February 27, 2020 in Washington, D.C.MARK WILSON/GETTY IMAGES

It doesn’t make sense—especially, as Rasmussen Reports said last Monday, with just 23% of likely U.S. voters thinking the country is headed in the right direction. The reason for the bump producing this apparent reversal of the Democrats’ political fortunes may have something to do with statistical manipulation. Pollster John McLaughlin told this publication that the USA Today poll had the two major parties “in equilibrium at 31%,” but because it sampled registered voters and not those considered likely to vote, “it waters down the GOP generic vote” considerably. “A lot of [the Democratic] respondents will not vote,” he added.

He may be right. A Rasmussen Reports poll of likely voters released on Friday found Republicans with a five-point lead on the generic ballot. That’s the upside. The downside is the voters may be souring on the GOP—and these new polls may be right, because the GOP is failing to offer voters an appealing alternative to the Biden agenda.

American elections are usually binary: this candidate or that one. Third-party candidates rarely win, and rarely have an impact. Most people pick either the Democrat or the Republican when they pull the lever. And right now, the GOP seems headed to a majority by default. They’ll win because they’re not “them”—Democrats. Biden and the progressives have overreached, something even the USA Today poll showed. They aren’t winning converts to their cause; they’re losing them.

If the GOP wants to lock down its hoped-for majority down, it needs to explain to its whole coalition of voters—the independents open to voting Republican, the moderates, the free marketeers, the social conservatives, and others—what the party’s plan is to get the economy moving, secure America’s borders and position in the world, and bring back the nation’s spirit. And the GOP must do so without driving its likely voter blocs into separate corners.

It’s a tall order that party leaders seem reluctant to embrace. They have about 100 days to come up with a plan to bring all these parts together and help voters make up their minds. In doing so, if that’s what they intend, they need to remember former House Majority Leader Dick Armey’s axiom: “When we act like us, we win. When we act like them, we lose.”


What Caused Gas Prices To Jump?

A range of world actors and events share the blame for the run-up in prices.

By David R. Hendersondefining ideas

If you, unlike Michigan Democratic senator Debbie Stabenow, have bought gasoline lately, there’s a good chance that you’ve seen a sticker on the gas pump with a picture of President Biden saying, “I did that.” Typically, those stickers are placed by customers, not gas station owners, and for that reason, I’m against them: they violate the owners’ property rights.

But I’m more interested here in the substantive question: did Joe Biden “do that”? My answer is “somewhat.” It wasn’t Biden alone. The Federal Reserve had some role, and the recovery from the pandemic had a large role. But the many actions Biden took before Vladimir Putin’s invasion of Ukraine and some of his actions afterwards have certainly caused the price of oil and gasoline to rise. Biden didn’t do all of  “that.” Other governments have contributed to the problem, and various US government restrictions in the oil and gasoline markets have also contributed.

More important, many of Biden’s actions, unless reversed, will contribute to high oil and gasoline prices in the future. We shouldn’t be surprised. After all, he and his employees John Kerry, special presidential envoy for climate, and Jennifer Granholm, secretary of energy, explicitly want a diminished role for fossil fuels in the near future. If future oil production falls, then, for a given demand for oil, oil prices will rise.

We need to separate two categories of gasoline price increases: increases due to inflation and increases due to actions specific to the oil and gasoline markets.

Inflation

Between January 2021, when Biden took office, and May 2022, the consumer price index (CPI), which is the usual measure of the inflation rate, rose by 11.7 percent. So, if gasoline prices had simply kept pace with the CPI, they would now be 11.7 percent higher than in January 2021. In January 2021, the average retail price of gasoline in the United States was $2.42. By the week of June 13, 2022, it had reached a whopping $5.11 per gallon. That’s up by $2.69. The 111 percent increase is, of course, much bigger than the increase in the CPI. Clearly, other factors besides inflation have caused gasoline prices to rise.

The major entity responsible for inflation is the Federal Reserve. In the 1960s, Milton Friedman famously stated that “inflation is always and everywhere a monetary phenomenon.” What he meant is that any persistent inflation that we have observed has been preceded by an increase in the money supply. That’s why a standard line that people have used is that inflation is due to too much money chasing too few goods.

There are several measures of the money supply. The one that monetary economists use most is M2, which includes M1 plus time deposits under $100,000 and shares in retail money market funds. M1, in turn, consists of currency and coins held by the non-bank public, checkable deposits, and savings deposits. In February 2020, just before the pandemic-induced lockdowns, M2 was $15.46 trillion. By April 2022, it had reached $21.73 trillion, an increase of 40.6 percent. Of course, we didn’t get close to a 40 percent inflation rate. The main reason is that Americans’ demand to hold money increased dramatically early in the pandemic. With fewer goods and services for people to buy, they (we) hoarded money. Now, with the pandemic largely behind us, our demand for money is slowly falling.

But why did the money supply increase so much? A major factor was the huge increases in pandemic-related federal government spending, during both the Trump and the Biden administrations. The CARES Act, which President Trump signed in March 2020, increased government spending by $2.2 trillion. To put that in perspective, total federal spending in FY 2019 was $4.45 trillion. And FY 2019 was not exactly a low-spending year, except in retrospect. Nor was Trump done. In late December 2020, he signed another spending bill that included $900 billion in further pandemic-related spending. Those spending increases weren’t enough for President Biden. In early March 2021, Biden signed a further $1.9 trillion pandemic-related spending bill.

All three of these spending measures massively increased the federal budget deficits for FY 2020, FY 2021, and FY 2022. That meant that the federal government had to borrow additional trillions of dollars. The Federal Reserve “monetized” a large part of that additional debt by buying federal government bonds that had first been sold to the public. According to Veronique de Rugy, of the $6 trillion in new federal debt issued during the pandemic, the Federal Reserve monetized $2.7 trillion, or 45 percent. That’s how the money supply increased.

So, if we’re going to blame the entities that caused inflation, they are, in order, the Federal Reserve, Donald Trump, and Joe Biden. On the plus side, we should give huge credit to Joe Manchin, the Democratic senator from West Virginia, for standing strong against Biden’s further huge spending increase, misleadingly labeled “Build Back Better.”

The Oil Market

But the major cause of gasoline price increases, as the earlier data show, has not been inflation. The other causes are specific to the oil and gasoline markets.

Start with oil. The biggest factor in the increase in gasoline prices since January 2021 is the increase in the price of oil. Between January 2021 and May 2022, the price of West Texas Intermediate oil (a standard measure of prices) increased from $52.00 per barrel to $109.55, an increase of 111 percent. There are 42 gallons per barrel of oil. The $57.55 increase in the price of oil, the major input in gasoline, accounts for $1.37, or over half, of the $2.69 increase in the price of gasoline.

Before we turn to other factors that account for the gasoline price increase, let’s first consider who or what is responsible for the increase in the world price of oil. The major factor is the increase in worldwide demand as we make our way out of the economic collapse of 2020. We can’t have data on demand because demand is always a schedule: it gives the amount demanded at each price and all we observe at a point in time is the price and the quantity consumed. But here’s how we know that demand increased. Between the first quarter of 2021 and the fourth quarter of 2021, worldwide consumption rose from 93.9 million barrels per day (mbd) to 99.2 mbd. When both the consumption of oil and the price of oil rise, that necessarily means that demand increased.

Besides increases in demand, what factors have led to higher oil prices, especially in the past few months?

One factor is Biden’s and many European governments’ response in the oil market to Vladimir Putin’s invasion of Ukraine. They have colluded to keep Russian oil off the market. The Russian government has responded by selling oil to China and India that it would have sold mainly to European consumers. This could be just a game of musical chairs, with the qualification that the number of chairs equals the number of players. In such a case, the overall effect on the world oil market would be small. But the collusive agreement seems to be holding up. Why do I say that? Because the prices that Russia is charging China and India are deeply discounted from world prices. If the collusion had broken down, the prices would be close to equal. The EU and Biden have effectively segmented the world oil market. Chinese and Indian consumers move down their demand curve at the lower prices they pay, buying more than they would have, and we other consumers are bidding over a diminished supply. So, the EU and Biden have definitely contributed to the higher price of oil since the Russian invasion. 

Interestingly, Biden admits that his and the EU’s actions have increased oil prices. In a June 22, 2022, speech, Biden stated:

We cut off Russian oil into the United States, and our partners in Europe did the same, knowing that we would see higher gas prices.

Longer term, Biden will contribute to higher oil prices regardless of what happens with Russia and Ukraine. The reason is that he has signaled in many ways his hostility to US production of oil and natural gas. The American Energy Alliance has listed “100 Ways Biden and the Democrats Have Made It Harder to Produce Oil and Gas.” As with most such lists, some of the items seem minor. But the shocking thing is how many appear to be substantial. They include an executive order imposing a moratorium on new oil and gas leases on government lands and a proposed rule by the Securities and Exchange Commission that would require public companies to disclose their greenhouse gas emissions. No oil company decision maker could miss the overall negative tenor of the list. I recommend a quick perusal of the list of 100.

Interestingly, one of Biden’s cabinet members recently admitted her hostility to long-term production of oil and natural gas. In a June 15 interview with CNN’s John Berman, Energy Secretary Jennifer Granholm admitted that she and Biden want oil companies to produce more oil this year but not produce more in five to ten years. The video is priceless. You can tell by the look on Berman’s face and by his tone that he is skeptical that oil companies can be motivated to bear a lot of startup costs just to produce more oil for only a year or two. 

But you don’t have to go with tone or facial expression. Berman laid out the problem beautifully:

But that’s the problem for these companies. These companies are saying, you know, “you’re asking me to do more now, invest more now, when in fact five or ten years from now we don’t think that demand will be there, and the administration doesn’t even necessarily want it to be there.”

You might think that because oil prices are determined in a world market, US government actions that discourage domestic US production don’t matter much. But that’s not true. Because oil demand worldwide is fairly inelastic, small changes in supply can cause large changes in price.

Refining Capacity

As noted above, the increased price of oil between January 2021 and May 2022 accounts for $1.37 of the $2.69 increase in the price of gasoline. What about the remaining $1.32 of the increase? The problem is that the increased demand for gasoline is pushing against a very inelastic refining supply. Here’s how Debnil Chowdhury and Susan D. Bell put it in “Restart or remain shuttered—why rationalized US refineries will not come to the rescue” (IHS Markit, June 24), after noting the amount of refinery capacity that has been sidelined by storms or other incidents:

General market sentiment, our medium-term outlook included, is that the current high-margin environment [for refineries] will be fleeting. Recouping recommissioning costs will be difficult unless these strong margins are sustained beyond 2023. Refiners are unlikely to invest hundreds of millions of dollars in recommissioning costs for only one or two years of strong returns.

Getting permission to build a refinery in the United States is not easy. While the US Energy Information Administration lists thirteen US refineries that have been built since 1978, none of these has the capacity to refine more than 84,000 barrels per day. Compare that to the Marathon Oil refinery in Garyville, Louisiana, built in 1976, which has the capacity to refine 578,000 barrels per day. Oil company executives would have to think long and hard before applying for permission to build a new refinery or putting serious resources into expanding a refinery. You can bet that all of them heard, loud and clear, Granholm’s statement about not wanting so much oil in five or ten years. 

Conclusion

As I noted earlier, I’m not a fan of violating the property rights of gasoline station owners and so I would never put an uninvited sticker on a gasoline pump. But if I were to do so, the sticker would have a picture of Joe Biden saying, “I did some of that, and I’ll do more.”


The Supply-Side Fight Against Inflation

Central banks’ only real option for tackling inflation is to reduce demand – an approach that implies a significant drag on global growth. But even as interest rates rise, a recession can be avoided if policymakers recognize the large role that supply-side measures must play in restoring price stability.

By Michael SpenceProject Syndicate

spence152_Yu Fangping  CostfotoFuture Publishing via Getty Images_supply inflation
Fangping / Costfoto/Future Publishing via Getty Images

Central banks’ efforts to contain high and rising inflation are fueling growth headwinds and threatening to tip the global economy into recession. But the proximate cause of today’s inflationary pressures is a large, broad-based, and persistent imbalance between supply and demand. Higher interest rates will dampen demand, but supply-side measures must also play a large role in inflation-taming strategies.

Over the past year or so, the rollback of pandemic-containment policies has spurred a simultaneous surge in demand and contraction in supply. While this was to be expected, supply has proved surprisingly inelastic. In labor markets, for example, shortages have become the norm, leading to canceled flightsdisrupted supply chainsrestaurant closures, and challenges to health-care delivery.

These shortages appear to be at least partly the result of a pandemic-driven shift in preferences. Many types of workers are seeking greater flexibility – including hybrid or work-from-home options – or otherwise improved working conditions. Health-care workers, in particular, report feeling burned out by their jobs.

If this is true, the inflation picture must include an adjustment in relative labor costs. To bring markets back into balance, wage and income increases will be needed, even for jobs for which there was previously an ample supply of workers.

This transition will generate some inflationary pressure. Yes, nominal prices and wages have limited downward flexibility. But at a time of excess demand, firms generally try to pass on higher costs via price increases – and they often get away with it, at least for a while.

Lingering blockages associated with the pandemic, especially in China, which remains committed to its zero-COVID policy, are also fueling inflation. But these blockages will eventually subside, as will short- to medium-term capacity constraints caused by shifts in the composition of demand (in terms of both products and geography), though some will persist for a while. Capacity – whether in ports or semiconductors – takes time to build.

But today’s inflation has deeper roots. Over the past several decades, the activation of massive amounts of underutilized labor and productive capacity in emerging economies has generated deflationary pressures. With those resources having now been significantly depleted, the relative prices of many goods are set to rise.

Moreover, there is a global push to diversify and, in some cases, localize demand and supply chains – a response to the increasing frequency of severe shocks and rising geopolitical tensions. A more resilient global economy is a more expensive one, and prices will reflect that.

The war in Ukraine has not only accelerated this supply-chain transformation, but also has caused energy and food prices to skyrocket, further exacerbating inflation, especially in lower-income countries. In the case of fossil fuels, a prior pattern of underinvestment in capacity at multiple points along the supply chain has compounded the problem.

But there is even more to the story. More than 75% of the world’s GDP is produced in countries with aging populations. Old-age dependency ratios are rising, and in some countries, the workforce is shrinking. Productivity gains could counter the contraction of labor supply relative to demand, but after nearly two decades of falling productivity growth, such gains are not forthcoming.

So, inflation is rising fast, and central banks are under pressure to take drastic action. But their only real option is to reduce demand, by raising interest rates and withdrawing liquidity. These measures have already spurred a massive repricing of assets, including currencies, and they threaten to push global growth below potential, with lower-income economies suffering disproportionately, and to reduce investment in the energy transition.

There is another way: supply-side measures. Trade and investment have long enabled supply to expand rapidly in response to growing global demand. But, for nearly two decades – and especially in the last few years – proliferating trade barriers have been adding friction to this process. Creeping protectionism must be reversed, with US President Joe Biden removing the tariffs imposed by his predecessor, Donald Trump, and Europe accelerating the integration of its services markets.

At the same time, efforts must be made to improve productivity. Digital technologies will be crucial here. While the pandemic helped to accelerate the digital transformation, many sectors – including the public sector – are lagging, and concerns about the effects of automation on employment persist.

But in a supply-constrained world characterized by persistent labor shortages, productivity-boosting digital technologies, together with higher wages for workers, would go a long way toward improving the balance between supply and demand. For example, artificial-intelligence-based tools can perform a wide range of functions, from screening luggage more efficiently at airports to analyzing medical imaging to detect cancers. Beyond digital technologies, regulatory regimes can be streamlined and improved, in order to reduce supply-side bottlenecks.

Such an agenda must be applied to both the public and private sectors. At the international level, efforts to facilitate trade, address supply-chain rigidities, and close data gaps will be essential. Otherwise, central banks will be left to deal with inflation alone – with dire consequences for the entire global economy.


Report: Top Biden Officials Have Zero Business Experience

By Peter RoffAmerican Liberty

Gage Skidmore from Peoria, AZ, United States of America, CC BY-SA 2.0 , via Wikimedia Commons

The nation’s plunge into inflation-fueled economic doldrums may be linked to the lack of practical, real-world business experience of many of President Joe Biden’s top officials, a report released Thursday suggests.- Sponsored –

“The United States has the highest inflation rate in four decades. The stock market sell-off has liquidated $10 trillion of wealth. Retirement savings are dwindling. Consumer, small business, and investor confidence are shrinking. There’s widespread concern that America is at best teetering on the edge of a recession and may already be in one. And, in terms of growth, the economy has flatlined,” said The Committee to Unleash Prosperity’s Stephen Moore, principal co-author of Not Ready for Prime Time Players.

A majority of key appointees, the report said, have zero years of business experience.

“Instead of having the best minds in America working on these problems, the president is relying on political and policy stooges who couldn’t make a garden grow, let alone the U.S. GDP,” Moore, an economist, said.

Aside from the president, who earned a law degree from Syracuse University in 1968, was elected to the New Castle County Council in 1970 and was elected to the United States Senate in 1972 when he was just 29 years old – Vice President Kamala Harris, Treasury Secretary Janet Yellin, Council of Economic Advisors Chairman Cecilia Rouse and Shalanda Young, director of the White House Office of Management and Budget, have no previous private sector experience.

The report draws attention to some of the concerns limited prior private sector experience may cause regarding the ability of administration officials to make informed policy decisions. Pete Buttigieg, the former South Bend, Indiana mayor and unsuccessful 2020 Democratic presidential candidate who is now U.S. Transportation Secretary, the authors wrote, “now has oversight over a $1 trillion industry and is the official in charge of dealing with intricate supply chain issues at our ports and other vital parts of our transportation infrastructure. Yet he has virtually no experience in transportation or logistics.” 

In formulating their conclusions, the authors of the report looked at 68 top officials in the Biden administration, starting with the president. The list of those whose employment history was examined includes cabinet members, regulatory officials and senior White House aides. Others in key economic policy positions who lack any identifiable business experience include Attorney General Merrick GarlandClimate Change Ambassador John F. Kerry, HUD Secretary Marica Fudge, U.S. Trade Representative Katherine Tai, Federal Communications Commission Chairman Jessica Rosenworcel, Federal Trade Commission Chairman Lina Khan, Deputy Assistant to the President for Labor and the Economy Seth Harris, Special Assistant to the President for Economic Policy Daniel Nornung and Jonathan Kanter, the Assistant U.S. Attorney General for Antitrust. 

The report also found:

  • The median number of years of business experience of the 68 officials featured in the report is zero.
  • The average business experience of Biden appointees is 2.4 years.
  • 62 percent of the senior Biden appointees who deal with economic policy, regulation, commerce, energy and finance have no practical experience working in the private sector.
  • The majority of the Biden economic/commerce team is made up of professional politicians, lawyers, community organizers, academics, lobbyists and lifelong government employees.
  • Only one in eight has extensive business experience.

This is in stark contrast to the Trump administration, which was populated by many senior policymakers with experience in the business world including the president, who spent 45 years in the private sector before choosing to run for office. The average business experience of the members of the Trump Cabinet was 13 years and the median for years of experience was eight.

The study was undertaken, the authors said, to address what it called “growing concerns” that top decision-makers in Congress and the Biden administration lack the basic skill sets and business/management experience and acumen to either oversee a $6 trillion federal government or to regulate the various sectors of the national economy.

“It’s easy to understand why we have the highest inflation in forty years, the economy may have already put America into a recession. Despite the White House claims like record job ‘creation,’ a sizable majority of the country now believes, according to the latest polls, that America is on the wrong track. The people making economic policy have never worked in the real world,” said Moore, who co-authored the study with the committee’s Jon Decker, “Americans are hurting and we need to change course immediately.”

Moore’s analysis is backed by a New York Times/Siena poll released Monday that shockingly showed nearly 80 percent of the American voters surveyed thought the nation was headed in the wrong direction. Just 27 percent of Democrats and a mere 5 percent of Republicans said things were on the right track, putting the numbers at their lowest since the near collapse of the U.S. economy at the end of the Bush administration helped put Barack Obama in the White House.

The “takeaway” from the study, the authors wrote, is the need to consider the qualifications of those making policy as it pertains to their ability to solve the nation’s economic troubles, which are growing more severe by the day.

“Surely, we want our political class to have a diversity of backgrounds. We want lawyers, grassroots activists, those with political and policy experience, scientists, health experts, and academics with required specialties,” Moore and Decker wrote. “But we also want people who have experience running large operations with hundreds and thousands of employees and who understand logistics.”

“We need people at the top rungs of government who have experience dealing with large-scale crises (as we experienced during COVID), and also at least some familiarity with the everyday struggles that businesses have with the government,” they write before concluding “The Biden administration has made ’diversity’ a major goal of its administration. But the one area that is sorely missing in this diversity goal is in attracting talented and experienced men and women from the field of small business, commerce, and finance. When it comes to the government: Ignorance is not bliss.”


Biden Gas Prices Tweet Reveals Alarming Economic Illiteracy

By Norman LeahyAmerican Action News

fuel level indicator in reserve, without fuel. Fuel empty.

It’s no secret that high gas prices have President Joe Biden and other Democratic pols in a tizzy.

Enough of one that they have decided it’s good policy, and better political optics, to bully gas station owners over how much they charge at the pump. The president’s Twitter team published this gem over the long holiday weekend:

My message to the companies running gas stations and setting prices at the pump is simple: this is a time of war and global peril. 

Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now.

Setting aside the notion that an American president feels the need to harangue the franchise owner on the corner…the economic illiteracy on display in Mr. Biden’s tweet is inexcusable. 

It would be generous and kind to blame the communications staff for this. But the buck stops with Joe, so the blame is all his. As such Mr. Biden deserves the strong corrective he gets from, among others, The Wall Street Journal:

More than a quarter of gas stations have closed since the 1990s because they couldn’t make the economics work. If retailers were to sell fuel at cost, most would go out of business. Perhaps those owned by large refiners would survive, but they’d be accused of predatory pricing by Mr. Biden’s antitrust cops.

The President’s economic ignorance isn’t a one-off. In recent months he has accused oil and gas companies of price gouging and demanded that they increase production even while his Administration threatens to put them out of business. Mr. Biden doesn’t understand that businesses make long-term decisions based on demand expectations and policy signals. Jeff Bezos called the President’s weekend tweet “either straight ahead misdirection or a deep misunderstanding of basic market dynamics.” They aren’t mutually exclusive.

Indeed, the Biden team’s misdirection is just a manifestation of its misunderstanding…of market function, prices, incentives, regulation and so on. 

And if you think the gas station episode was bad, buckle-up, because Team Biden is about to face a cascade of troubles thanks to one of his oldest political backers…Big Labor:

…the labor contract for 29 West Coast ports, which covers 22,000 dockworkers, lapsed over the weekend.

For now, talks continue; the two sides are reportedly fighting over port managers’ desire to automate more operations, as major ports in Europe and Asia have already done. But if a work stoppage or slowdown results, it could wreak havoc on the country’s already-fragile supply chains, with potentially catastrophic consequences for inflation and the economy.

Also, of course, for Democrats’ chances in the midterms.

This isn’t some remote risk. The last time this contract was being renegotiated, starting in 2014, talks broke down and work slowdowns led to expensive shipping delays. The Obama administration had to intervene. Labor disruptions (strikes, lockouts, slowdowns) also occurred during West Coast port contract negotiations in 2002, 2008 and 2012.

Does Biden side with his old allies in the labor movement? Or does his professed determination to fight inflation convince him to convince them to get back to work?

Given Biden’s grasp of economics, we should prepare for the worst.


Biden Sold a Million Barrels From US Strategic Petroleum Reserve to China-Owned Gas Giant

Biden's Energy Department said move would 'support American consumers' and combat 'Putin's price hike'

By Collin AndersonThe Washington Free Beacon

The Biden administration sold roughly one million barrels from the Strategic Petroleum Reserve to a Chinese state-controlled gas giant that continues to purchase Russian oil, a move the Energy Department said would “support American consumers” and combat “Putin’s price hike.”

Biden’s Energy Department in April announced the sale of 950,000 Strategic Petroleum Reserve barrels to Unipec, the trading arm of the China Petrochemical Corporation. That company, which is commonly known as Sinopec, is wholly owned by the Chinese government. The Biden administration claimed the move would “address the pain Americans are feeling at the pump” and “help lower energy costs.” More than five million barrels of oil released from the U.S. emergency reserves, however, were sent overseas last month, according to a Wednesday Reuters report. At least one shipment of American crude went to China, the report said.

The Biden administration also claimed the Unipec sale would “support American consumers and the global economy in response to Vladimir Putin’s war of choice against Ukraine” and combat “Putin’s price hike.” But as the war rages on, Unipec has continued to purchase Russian oil. In May, for example, the company “significantly increased the number of hired tankers to ship a key crude from eastern Russia,” Bloomberg reported. That decision came roughly one month after Unipec said it would purchase “no more Russian oil going forward” once “shipments that have arrived in March and due to arrive in April” were fulfilled.

The White House did not return a request for comment. Its decision to sell barrels from the country’s Strategic Petroleum Reserve to a Chinese conglomerate comes as the American public increasingly sours on Biden’s energy policies. According to a January Gallup poll, roughly three in four Americans are not satisfied with the federal government’s national energy policy, the highest level in roughly two decades. 

Power the Future founder Daniel Turner admonished Biden for selling “raw materials to the Communist Chinese for them to use as they want.”

“We were assured Biden was releasing this oil to America so it could be refined for gasoline to drive down prices at the pump. So right off the bat, they’re just lying to the American people,” Turner told the Washington Free Beacon. “What they’re saying they did and what they did are not remotely related.”

Turner also said the decision highlights the Biden family’s “relationship with China.” Biden’s son, Hunter Biden, is tied to Sinopec. In 2015, a private equity firm he cofounded bought a $1.7 billion stake in Sinopec Marketing. Sinopec went on to enter negotiations to purchase Gazprom in March, one month after the Biden administration sanctioned the Russian gas giant.

Biden campaigned heavily against the oil and gas industry in 2020, promising to “end fossil fuel.” He went on to cancel the Keystone XL pipeline and implement a moratorium on new gas leases on federal land during his first month in office. Biden’s energy secretary, meanwhile, is working with left-wing activists who want to eliminate fossil fuels, and in late October, House Oversight and Reform Committee Democrats pushed top oil executives to produce less gas due to climate change.

Gas prices have since soared to record highs. In mid June, the national average for a gallon of gas surpassed $5 for the first time ever. Still, the White House has assured Americans that they need to pay high gas prices to support the “liberal world order.”

“What do you say to those families that say, ‘Listen, we can’t afford to pay $4.85 a gallon for months, if not years?'” CNN anchor Victor Blackwell asked Biden economic adviser Brian Deese in late June. “This is about the future of the liberal world order and we have to stand firm,” Deese responded.


Who’s In Charge?

Biden's drift and weakness

By Matthew ContinettiThe Washington Free Beacon

“Which way am I going?” asked President Biden when he ended Thursday’s press conference at the NATO summit in Madrid. He began to exit stage right, before someone redirected him toward stage left. This combination of ignorance and indecision was not new. Throughout his 18 months as president, Biden has been confused, uncertain, sluggish. He behaves as if he is guided by unseen forces. He moves on a course set by hidden captains.

People notice. Every time I speak to a conservative audience, I am asked who is really in charge in the White House. My answer has been that the president is in command. After all, institutions take on the character of their leaders. If all the White House has to offer is excuses, if decisions are made either slowly or randomly, if the communications team and the president and vice president seem to live on different planets, if incompetence and mismanagement appear throughout the government, it is because the chief executive allows it. No conspiracy is required to explain the ineptitude. This is Joe Biden we are talking about.

Lately, though, I have been having second thoughts. Not that Barack Obama or Ron Klain or Dr. Jill are running the show in secret. What I have been wondering, instead, is whether anyone is leading the government at all. There is no power, either overt or covert, in or behind the throne. The throne is empty.

Think of the economy, the border, and Ukraine. From time to time, Biden addresses these issues. He may even answer questions about them. The White House sends out press releases describing its latest initiatives. Vice President Harris or the second gentleman pops up somewhere to talk about all the good she and he are doing.

Yet each of these elements—the president, his staff, his spokesperson, his vice president, his policy—comes across as disconnected, discombobulated, as if each inhabits a separate sphere of activity. Whether because of Biden’s age, or his weekend trips to Delaware, or years of remote work, or lower-level staff turnover, or a painstakingly slow decision-making process, or ideological stubbornness, or a lack of a strategic plan, this administration drifts from crisis to crisis, and from one bad headline to the next. And nothing improves.

The June 29 Reuters/Ipsos poll has Biden’s job approval rating at 38 percent. By far, Americans say the economy, unemployment, and jobs are the most important problems facing the country. What is Biden’s plan? He blames Vladimir Putin and the energy industry for high gas prices. He says it’s the Federal Reserve’s job to reduce inflation. He asks Middle East autocrats to pump more oil rather than easing the burden on domestic fossil fuel production. He wants more spending, more tax hikes, more regulation. Will Congress give him what he wants? Okay, you can stop laughing.

The result: America slouches toward stagflation because the alternative—reducing (non-China) tariffs, suspending “Buy American” provisions, reversing his entire energy policy, dropping his tax plans, committing to spending cuts—is unacceptable to the president.

Earlier this week, authorities found at least 50 dead people in a tractor-trailer on the side of a road in El Paso, Texas. The victims were illegal immigrants who had paid human traffickers to bring them to the United States. This ghastly discovery was a reminder of illegal immigration’s human toll, and of the inadequacy of Biden’s migration policies. One reporter asked White House press secretary Karine Jean-Pierre for her response to Republican critics. “The fact of the matter is the border is closed,” Jean-Pierre said, “which is in part why you see people trying to make this dangerous journey using smuggling networks.”

Closed? Unauthorized crossings hit another milestone in May, when Border Patrol encountered some 239,000 individuals. At that time, however, authorities could expel illegal migrants under public health regulation Title 42. The status of the Remain in Mexico program was unclear. Biden, of course, wants to end Title 42, and the Supreme Court ruled on June 30 that he has the authority to shut down Remain in Mexico. If you think the border is “closed” now, just wait.

Biden could explain to the nation why it is in our interest to admit as many asylum-seekers as possible, even if a rise in illegal entries and in cross-border human and drug trafficking is the consequence. Or he could admit that his policies are responsible for a humanitarian disaster and withdraw his earlier executive orders. Or he could use whatever political capital he has left to pass an immigration reform bill that combines legal pathways to entry with workplace enforcement. But he won’t do anything. Why? Because he is either satisfied with the situation or simply overwhelmed by it. Neither option is reassuring. And the problem grows worse.

Where Biden is most engaged is Ukraine. He warned against the invasion, rallied NATO against Russia, encouraged Sweden and Finland to join the Western alliance, and committed America to supply Ukraine with aid and weapons. “The generic point is that we’re supplying them with the capacity—and the overwhelming courage they’ve demonstrated—that, in fact, they can continue to resist the Russian aggression,” Biden told reporters Thursday. “And so, I don’t know what—how it’s going to end, but it will not end with a Russian defeat of Ukraine in Ukraine.”

Shouldn’t the leader of the Free World have some idea of how this brutal conflict might end? The war has taken a horrible human toll. Its effects on energy and food markets have been devastating. The goal should be to end the war.

How? Not by giving Putin what he wants. By giving Ukraine what it needs to push Russia back to the pre-war line of control. A Russia on defense is more likely to sue for peace.

Biden makes this prospect more difficult by limiting the systems we provide to Ukraine, by dribbling them out over time, and by insisting that we won’t provide Ukraine with weapons that could strike targets inside Russia. From the start of the war, Biden has been more interested in signaling to Russia what he won’t do than in causing Putin to fear what he might do. His self-constraint extends the fighting rather than shortens it and provides Russia the space for its slow roll through eastern and southern Ukraine. The war has become another disaster that Biden allows to play out in the background, in between bike rides and scoops of ice cream from Starkey’s.

American aid to Ukraine is just and necessary. Since 1947, the policy of the United States has been to “support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.” But Biden won’t be able to sustain the domestic support for American involvement in a years-long war of attrition. He needs to match his actions with his words and drop his inhibitions on the aid we provide the Ukrainians. And he could do so while launching a peace initiative, thereby restoring coercive diplomacy as a tool of American foreign policy.

Coulda, woulda, shoulda. Decisive leadership is not Joe Biden’s calling card. And so, the crises continue to mount. And Americans are left with feelings of aimlessness and fear.


Biden Calls Gas Tax Holiday a ‘Big Help.’ Obama Called It a ‘Gimmick.’

Democrats denounce fuel tax suspension

By Ginger MorrowThe Washington Free Beacon

On the campaign trail in 2008, Obama said of the tax suspension, “We’re arguing over a gimmick that would save you half a tank of gas over the course of the entire summer so that everyone in Washington can pat themselves on the back and say they did something. Well, let me tell you, this isn’t an idea designed to get you through the summer, it’s designed to get them through an election.”

House Speaker Nancy Pelosi (D., Calif.) in April said gas tax holidays are “good PR,” but shared the concern that there is “no guarantee that the reduction in the federal tax would be passed on to the consumer.”

Rep. Peter DeFazio, (D., Ore.), the chairman of the House Transportation and Infrastructure Committee, agreed.

“Suspending the 18.4 cents per gallon federal gas tax is not going to give consumers significant relief—if any at all,” DeFazio said in February, adding that the move may have negative effects. “Suspending the tax will blow a $26 billion hole in the highway trust fund this year and cause further delay in rebuilding our decrepit infrastructure and the tens of thousands of jobs that investment would have provided.”

Sen. Joe Manchin (D., W.Va.) also foresees road blocks for infrastructure projects. He said the suspension “just doesn’t make sense,” adding, “People want their bridges and their roads, and we have an infrastructure bill we just passed this summer, and they want to take that all away.”

The Free Beacon reported Monday that Biden is the least popular president in more than a century. Democrats are on the fence about his viability for a second term and bracing for a tumultuous midterm season.


The View Through Debbie Stabenow’s Windshield

By Peter RoffAmerican Liberty

The View Through Debbie Stabenow’s Windshield

Whether or not Marie Antoinette said rioting French peasants upset about the shortage of bread to feed their families should “eat cake” instead is not important. The idea that she did has been passed down, generation to generation, as the perfect illustration of how the isolated elites in a society can become hopelessly out of touch.

This is not just a problem for the rich but also for the powerful, who use their positions to grant themselves perks that alleviate the need for them to worry about the kinds of things that keep the rest of us at night.

Like whether we’re going to have enough gas in the car to get to work in the morning.

Since coming into office, the Biden Administration has been at war with the American energy sector. Following the President’s lead, they believe climate change is an existential threat to the continued well-being of mankind that can only be thwarted if Americans are forced to go green.

That’s what’s really behind the sudden, continuing rise in the price of gasoline. It’s not, as President Joe Biden continues to assert, a transitory thing caused by Vladimir Putin’s invasion of Ukraine. It is the result of calculated policy decisions intended to roll back the energy independence that became a reality by the end of the Trump Administration.

There’s nothing wrong with green energy per se. Indeed, the United States would realize considerable benefit from the ability to rely on fuel coming from renewable sources like wind and solar and to be more efficient in the generation and use of power from fossil fuels so that less of it is wasted

All that can be achieved by market forces a lot faster and cheaper than by government mandates. The Biden Administration has chosen – regardless of the consequences – to force this upon us all, meaning that some people are now, in a period of inflation unseen for at least 40 years, to face the very real choice between putting gas in the car and food on the table.

Too many Democrats regard that as a good thing. They don’t blame the government for the problem. They blame the energy sector, which it criticizes for earning record profits because the price at the pump is up thanks to the shrinkage Biden and his cohorts have forced on the industry. The cancelation of new pipelines and oil and gas leases on federal lands are two among a handful of reasons domestic energy producers cannot respond to the increase in demand by increasing the supply to keep prices stable.

The energy markets are behaving as the President wants, given his belief, he can prioritize his strategy to increase the use of energy made from renewables and the need to bring down the price of gasoline.

White House Press Secretary Karine Jean-Pierre seemed badly ignorant of economic reality when she insisted during a recent press briefing that there was nothing inherently problematic with pursuing both objectives at the same time.

“What we’re trying to deal with right now is how do we lower costs for American families,” she said. “One of the things that we are seeing currently right now with oil refiners is they are using this moment,” she continued, “to actually make a profit.”

She can get away with shifting blame for a while but what does she suggest as an alternative? Does she think the energy sector should sell gasoline and other fuels at a loss? That’s a recipe for economic catastrophe, as would be the kind of nationalization of the sector that exists in so many other countries.

The problem is that Biden and Jean-Pierre and so many others are out of touch with what’s going on. The people aren’t rioting for gas yet, but it may just be a matter of time.

Consider the comments of Michigan Sen. Debbie Stabenow, who recently described a drive she made from her home state to Washington in an electric vehicle.

“After waiting for a long time to have enough chips in this country to finally get my electric vehicle,” the state’s senior elected Democrat said during a June 7 meeting of the Senate Finance Committee. “I got it and drove it from Michigan to here last weekend and went by every gas station and it didn’t matter how high it was.”

Stabenow doesn’t have to choose between putting food on her table and putting gas in her car. Rather than being grateful and understanding she’s insulated from reality because she enjoys elected privilege, she claims she’s mystified by the expressions of concern coming from the American people because they are routinely paying more than $100 for a full tank of gas. Wonderful.

An elected official, whose annual salary is just shy of $200,000, is driving a car that cost more than most Americans make in a year that the taxpayers probably pay for her to use, thinks high gas prices aren’t a problem because she doesn’t have to pay them anymore. That’s the kind of leadership that causes politicians to lose their heads.


America’s Most Important Economic Storyteller Is Confused

By Derek ThompsonThe Atlantic

As somebody who’s paid to tell stories about the economy, I always find it satisfying to assemble data points to produce a compelling pointillist picture about the state of the world. But these are rough times for economic pointillism. The data are all over the place, and the big picture is a big mess.

I look at the stock market, where valuations have collapsed. Okay, so markets are trying to tell us that future growth will be slower. Then, I see that consumers expect persistent inflation over the next five years. A growth slowdown with sticky inflation? Unusual, but not unprecedented. Consumers are glum about economic conditions but optimistic about their own finances, and they’re spending money on services and leisure and travel as if they’re eager participants in a booming economy. So everything is terrible, but I’m doing fine? Okay, that’s psychologically rich. Nominal gas prices are at record highs, but unemployment is near multi-decade lows; mortgage interest rates are rising quickly, but they’re at historically normal levels. So, things are bad, but also good, but also crummy, and maybe fine?

Regrettably, there’s another, significantly more important economic storyteller that also seems deeply confused about the economy. That would be the Federal Reserve.

Just six months ago, the Fed said it expected that prices would normalize in 2022, and it forecast that a key inflation index would average 2.6 percent growth this year. But now it projects that 2022 inflation will be twice as high, at 5.2 percent. Three months ago, the Fed signaled that it would raise a key interest rate by 0.5 percentage points in June. But this week, the Fed changed its mind after getting spooked by a few inflation reports and suddenly decided to jack up the federal-funds rate by 0.75 points, its most significant increase in 28 years.

Fed Chair Jerome Powell’s explanation for the rate change was baffling. He claimed that the number of job openings in the economy pointed to “a real imbalance in wage negotiating” but also said that the labor market had practically nothing to do with inflation. He explained that headline inflation has soared largely because of supply-side issues, such as the war in Ukraine’s impact on the gas market, that the Fed can’t really do anything about. But he also insisted that the Fed had to up the ante on interest-rate hikes to bring down inflation by reducing demand. He insisted that he didn’t want to send the economy into a recession, but the Fed’s own economic forecasts project several consecutive years of rising unemployment—something that generally happens only in a recession.

The full story only barely holds together. In the Fed’s view, inflation is partially caused by the labor market, but also not caused by the labor market; it’s largely a supply-side issue that the Fed can’t fix, but the Fed is going to try desperately to fix it anyway; and we’re hopefully not getting a recession, but we’re probably getting a recession. Like I said: baffling.

What the Fed is actually trying to do here—as opposed to the story it’s telling about what’s happening in the economy—is clear, yet extremely difficult: It is trying to destroy demand just enough to reduce excess inflation but not so much that the economy crashes. This a little bit like trying to tranquilize a raging grizzly bear with experimental drugs: Maybe you bring down its core temperature but also maybe you leave the big guy in a coma. The Fed could succeed. It could get Americans to spend a little less, borrow a little less, and loan a little less, and this synchronized decrescendo in economic activity would almost certainly reduce inflation. But here’s the problem: If global energy prices don’t come down and global supply chains remain tangled by Omicron variants and other natural disasters, we might end up with the worst of both worlds: destroyed domestic demand and constricted global supply. Slow growth and high energy prices could mean the return of the dreaded stagflation.

In the next few months, you should be prepared for the economic situation to get even stranger. Markets might be on the lookout for signs that the Fed is successfully crushing domestic demand. In other words, some investors will be hoping that the housing market stalls and retail spending slows, because these are signs that the Fed’s policy is working. We will be in an upside-down world where bad news (the economy is slowing down) is interpreted as good news (the Fed’s policy is working), and good news (consumer spending is still red hot) is interpreted as bad news (the Fed’s policy isn’t working).

For much of this century, the Fed has been an island of relative competency in a sea of institutional failure. But the Fed is neither an all-knowing artificial intelligence nor a band of wizard oracles sent from the future to stabilize price levels. The people who work there are fundamentally pundits with an interest-rate lever. They’re folks like you and me, telling stories about an economy that they’ve recently gotten wrong, wrong, wrong, and then kinda right, and then wrong again. I don’t know if this is comforting or terrifying to you, but it’s the full truth: Right now, we are truly all confused together.


There Is No Plan

The closer attention you pay to Biden, the less he has to say

By Matthew ContinettiThe Washington Free Beacon

Getty Images

President Joe Biden is “rattled,” according to NBC News, and “looking to regain voters’ confidence that he can provide the sure-handed leadership he promised during the campaign.”

How? By trying to change the media narrative. On May 30, Biden published an op-ed in the Wall Street Journal that explained “My Plan for Fighting Inflation.” The next day, Biden wrote a “guest essay” for the New York Times on “What America Will and Will Not Do in Ukraine.”

Bad poll numbers and a collapsing domestic and international situation have excited the typically drowsy president into action. There’s a problem, though. The closer you read Biden’s op-eds, the less he has to say. This new, annoyed, engaged Biden may be a prolific writer and speaker. But he’s not an incisive one. He won’t admit that there is a connection between his ideology and America’s problems. He can’t decide between giving Ukraine the weapons necessary to defeat Russia or settling for a war of attrition.

Biden’s Journal op-ed is a masterclass in passing the buck. He doesn’t bring up his “plan for fighting inflation” until midway through his thousand-word piece. My inner college professor wanted to send the article back to him with suggestions for revision. Number one: Always move your best material to the top!

The plan itself is gauzy and thin. “The Federal Reserve has a primary responsibility to control inflation.” You wouldn’t know that from listening to Progressives, including some of Biden’s nominees to the Federal Reserve, who argue that the Fed’s interest in price stability distracts it from promoting full employment, green energy, and diversity, equity, and inclusion. Now Biden wants the Fed to correct not only its mistakes, but his own. Let’s see if his faith in an independent central bank can stand the test of higher interest rates, higher unemployment, and lower incomes.

Parts two and three of Biden’s inflation plan are the remnants of his Build Back Better agenda: some clean energy and housing subsidies here, a few tax hikes there. He mentions his use of the Strategic Petroleum Reserve to lower gas prices, but not his appeals to Venezuela and OPEC to boost the oil supply. As for the obvious answers to America’s energy problems—a complete reversal of Biden’s hostility to oil and gas exploration and production, huge investments in nuclear power, and emergency efforts to increase refinery capacity—Biden has no words. His devotion to the environmental lobby and to green energy blinds him. If the Progressive Left rejects nuclear power, the “clean energy future” it desires won’t arrive.

This mismatch between ends and means is visible in Biden’s Ukraine policy. The president tells New York Times readers that the United States sends Ukraine weapons “so it can fight on the battlefield and be in the strongest possible position at the negotiating table.” The desired end state is “a democratic, independent, sovereign, and prosperous Ukraine with the means to deter and defend itself against further aggression.” And Ukrainian president Volodymyr Zelensky is in the driver’s seat. “I will not pressure the Ukrainian government—in private or public—to make any territorial concessions.”

All good. Why, then, limit the weapons deliveries to systems with ranges of 40 miles? Why slow-walk and agonize over each tranche of support? Why engage with Russia in farcical and dangerous negotiations over Iran’s nuclear weapons? Why not take a more active role in peace talks between Ukraine and Russia? The Biden policy is static even as the shape of the war changes in ways that favor the aggressor. The president’s goals are laudable. But his tactics are calibrated for a war that Ukraine is winning.

And Ukraine is not winning. At least not now. The Ukrainians defeated Russia’s attempt at regime change. But they have been less successful in removing Russia from eastern Ukraine and from their port cities in the south and southeast. Absent a change in Biden administration policy—in the ranges of weapons systems America provides Ukraine, in the establishment of a humanitarian corridor to relieve the Russian blockade of Ukrainian Black Sea ports, or in a major diplomatic effort—the war will turn into a frozen conflict with no clear resolution and with mounting humanitarian costs. How that situation would help anyone, including Biden, is unclear.

Then again, little Biden says or does makes sense from the vantage point of either policy or politics. He’s right to be rattled. He’s also clueless.


‘Out of Touch With America’: Biden’s Small Business Budget Makes No Mention of Inflation

Budget proposal requests millions for 'climate crisis'

By Patrick HaufThe Washington Free Beacon

A shuttered storefront in Cairo, Ill. / Getty Images

While the Biden administration’s small business budget references environmental initiatives more than 20 times, it makes no mention of inflation’s impact on businesses—a contrast that Republican lawmakers say shows a disconnect between the White House and American voters.

The Small Business Administration’s 2023 budget proposal, which the White House in March submitted to Congress for approval, lists the “climate crisis” as an agency priority, requesting $10 million toward environmental initiatives such as the replacement of federal government vehicles with zero-emission cars. The request, meanwhile, makes no mention of rising consumer prices, which in March hit a four-decade high of 8.5 percent—even as recent polling shows inflation is a top concern for business owners. Four out of five small business owners say their companies have “suffered” from inflation, according to an April Goldman Sachs report.

Sen. Joni Ernst (R., Iowa), a member of the Senate Small Business Committee, said the budget is “out of touch with America and reality.”

“The president and his SBA administrator are more focused on appeasing climate activists than helping Americans on Main Street,” Ernst told the Free Beacon. “They need to get a clue.”

The Small Business Administration told the Free Beacon that while inflation is not explicitly mentioned in the budget, the agency’s proposed funding for domestic production and global supply chain programs will help small businesses struggling with rising prices.

“We remain committed to advocating for all our entrepreneurs, including supporting several initiatives in the FY22 budget dedicated to lowering costs for Americans,” an agency spokesman told the Free Beacon.

The White House in recent months has blamed rising prices on global supply chain shortages and the war in Ukraine. Some economists, however, have warned that the Biden administration’s record spending has been the main driver of surging inflation. President Joe Biden’s American Rescue Plan, which Congress passed last year, cost an estimated $3.5 trillion. The Small Business Administration, through its Paycheck Protection Program, has forgiven $714 billion in loans to businesses that maintained their staff amid the pandemic.

“This inflation is caused by trillions of newly ‘minted’ dollars flowing through the economy and government-created supply shortages from overregulation and restrictions on society the past two years,” Joel Griffith, a research fellow at the Heritage Foundation who focuses on financial regulations, told the Free Beacon.

Congress will review the Small Business Administration’s proposed budget as it prepares to draft appropriations packages later this year. Several Republicans on the House Small Business Committee, including Beth Van Duyne (Texas), Byron Donalds (Fla.), Dan Meuser (Pa.), and Blaine Luetkemeyer (Mo.), told the Free Beacon the administration is putting left-wing policies above pressing economic concerns.

The budget “does just the opposite of addressing inflation: more reckless spending on policies straight from the Democrats’ radical and extreme agenda,” Luetkemeyer told the Free Beacon.

A Gallup poll in March found that climate change is the top issue for only 2 percent of Americans. Inflation and increased cost of living, meanwhile, are the top concern for 17 percent. Sen. Marco Rubio (R., Fla.), also a member of the Small Business Committee, said the Small Business Administration’s priorities are misaligned.

“Every small business owner I talk to is being hammered by inflation, and that’s on top of supply chain delays and a labor shortage,” Rubio told the Free Beacon. “But no one in the Biden Administration seems concerned about the fate of small businesses because they’re too busy pushing some radical, woke nonsense that won’t help anyone on Main Street.”


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