Biden-omics is coming – massive debt, unchecked spending, higher inflation, taxes, interest, unemployment, and hype. Those seven blips are in formation on most economists’ radar. They result from historical ignorance, socialist instincts, recklessness, and disrespect for private businesses and citizens. The seven blips – in order:
First, massive debt — There can be no argument. We are in a debt dive, record-breaking national debt, record publicly held, and federal outlays now far beyond tax revenues. The Congressional Budget Office (CBO) reported on April 30 that “mandatory spending” hit $4.6 trillion annually. CBO confirms the dive: Outlays (spending) totaled $5.8 trillion, revenue projected $3.5 trillion, carry-forward deficit $2.3 trillion, and debt held by the public $22.5 trillion. So, with a huge deficit overhang, taxes cover just 65 percent of what Congress is spending. Do you see the problem?
Like an airframe in a steep dive, reality comes up fast, or else your nose does – with all the associated pain. We should hope on the nose coming up, but there is no sign – no cost-cutting, debt reduction, painful austerity, trust in the private sector. Instead, we have debt indifference and runaway spending. See https://www.cbo.gov/topics/budget.
Second, unchecked spending – How much excess federal spending do we have? Stunning already, stunning proposed. Beyond $4.9 trillion in “regular” spending (non-COVID) and $6 trillion in previously unappropriated or emergency supplemental (COVID) spending last year, Biden added $1.9 trillion in 2021 for COVID, despite economists arguing more debt will slow the economy. Already, “regular” spending (mostly “entitlements”) nearly doubled from 2008 to 2021, just over $2.5 to nearly $5 trillion. See https://www.thebalance.com/current-u-s-federal-government-spending-3305763.
Now, we hear Biden’s White House and Democrats calling for “trillions more” in federal spending – so-called “infrastructure” ($2.3 trillion, defined as anything), “American family” programs ($1.2 trillion, more anything), and “immigration” (quarter of trillion, money for those inside the US illegally), foreign aid (for those sending illegal aliens north), and one-party electoral monopolization (complete with DC statehood). How much debt is contemplated? The zeros would make a new paragraph. Even the New York Times puts new spending at $6 trillion – over where we are! See, e.g., https://www.nytimes.com/2021/04/28/us/politics/biden-spending-plans.html; https://finance.yahoo.com/news/1-key-u-senate-democrat-142826733.html; https://www.cbsnews.com/news/biden-american-families-plan-900-billion-cost/; https://www.washingtontimes.com/news/2020/sep/21/inside-the-beltway-the-biden-plan-20-million-illeg/; https://www.reuters.com/article/us-usa-election-biden-idUSKCN2AT3T4.
In short, Biden thinks US taxpayers – and struggling small businesses – should bankroll a huge increase in federal spending on things most Americans neither need nor want, at a time when revenues fell 35 percent shy of covering last year’s spending. Make sense? Hardly.
Third, higher inflation – This is where predicting is easy. With mass debt, spending, and indifference, the dollar’s value falls. More paper money chases less wealth, as new spending means more debt and taxes, sucked from the productive private sector into the non-productive public.
Prices will rise sharply – at home and for foreign inputs as the dollar falls. Just check gas prices, as Biden spends more and pinches energy. Or check Jimmy Carter’s track record – when inflation ran away. Even liberal economists cannot duck it – inflation is about to roar. See, e.g., http://theeconomiccollapseblog.com/get-ready-for-the-most-painful-inflation-since-the-jimmy-carter-years-of-the-1970s/; https://www.msn.com/en-us/money/news/gas-prices-top-243-in-pa-to-hit-highest-point-in-two-years-how-much-higher-will-they-go/ar-BB1gu5rC?ocid=uxbndlbing; https://www.bloomberg.com/opinion/articles/2021-03-29/faster-inflation-is-coming-how-bad-will-it-be.
Lest you think this an exaggeration, the federal government “produces” nothing, while a dollar left in the private sector has an estimated 16-fold “multiplier effect” – one producer passing to the next, 16 times. Who will inflation affect? You and me. Average Americans, small businesses, older Americans on fixed pensions, younger on fixed wages, those paying loans with variable interest rates – are all in trouble.
Fourth, higher taxes – Biden and Democrats have set the spike. To “pay for” new spending, they push higher taxes on “the rich” – conveniently pushing class warfare, forgetting that in America, merit is what makes people rich, and anyone can become rich with hard work, ingenuity, luck, and lower taxes. No, they aim to “punish” – so watch out, they are coming for small business, which could mean your job. See https://taxfoundation.org/joe-biden-tax-plan-2020/.
Fifth, higher interest – Of course, another easy prediction is how the Federal Reserve reacts to inflation. They raise interest rates to “slow” the “overheating.” Higher rates reduce borrowing, hurt debt holders, increase payments on the national debt, and slow the real economy – the inflation aside. See, e.g., https://www.forbes.com/sites/steveforbes/2021/01/21/warning-higher-interest-rates-are-coming/.
Sixth, higher unemployment. Unfortunately, when taxes and interest rates go up, when the cost of borrowing, inflation worry, federal debt, spending, and overall uncertainty rises, consumer spending, business investment, and employment fall. That means – as it did under Carter – higher unemployment.
Seventh, hype. Now we come to the irony. President Biden is either oblivious or buys into socialist centralization, mass spending, inflation, unemployment, and the debt dive. Biden avoids discussing these problems, framing debt as an investment (despite the net drain on the private sector), pretends taxing the rich is good (only if you ignore upward mobility), and spins bad as good.
Last week, Biden blamed bad employment numbers on Trump, then pushed them as good news since they justify more unemployment benefits and federal spending. Bizarre, but what else can you do if you are driving the economy into a ditch – or are asleep at the wheel? See, e.g., https://townhall.com/tipsheet/katiepavlich/2021/05/07/biden-attempts-to-spin-disastrous-jobs-numbers-n2589122.
Short story: The private economy – left alone – would roar out of COVID. Instead, Biden and Democrats are hitting it with mass debt and spending, setting up higher inflation, taxes, interest, and unemployment. Radar blips are clear – and getting closer. Americans should plan and then tell every public official to stop spending their money.