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The State of the Union - Economic Voodoo (Vol. 42)

mse | Mar 09, 2022

Biden, the Ostrich, was Dead Wrong and Misleading in many areas

The State of the Union address is always full of good information, great sounding platitudes and a lot of PBS (political bull s--t).  Biden’s economists are very capable, but when they work for the government, they become ‘political economists’, not ‘objective economists’.  

 

Economically, there were many misleading statements and false claims in this one (and some glaring omissions), let’s examine some.   

 

“Seventeen Nobel laureate economists support my plan (Build Back Better) and it is not inflationary.” Read the fine print. It was predicated on being fully paid for by increases in taxes and improvements, if any, were in the future, long term. But: not the case, objective analysis shows a 3 Trillion increase in debt (not fully paid for). This either slows the economy down or increases inflation, possibly both (See No Spin #16,  Formula for Economic Progress and No Spin #27, on Inflation, Causes, and Impacts).  And if we did take a lot of money from the rich in taxes, that implies the government will efficiently use that money, and the rich aren’t capable of efficient investing. NO, not buying that either.  

 

Lower costs, not wages.  What??? That platitude is inexplicable. Wages have gone up, that is the supply and demand for labor at work. But that is increased costs for businesses.  And material and energy costs are increasing. Increase minimum wage, sounds good, is bad.  (See No Spin #12, Raising the Minimum Wage).  Is there some magic wand that we can wave to make prices go down when almost all costs are increasing? I think not.  

 

Blame business for limited competition, increasing prices  - the same businesses that are limited in number because of government regulations?  Or the same businesses that for 20 years were competitive, and suddenly they are not?  Come on, man.  

 

Buy American. First, everything we need isn't made here. And the reason inflation has been held in check in recent years is that we did NOT buy American - we bought internationally where the cost was lowest. In economics, that is known as Comparative Advantage.  International trade is good, not bad. A better plan is to eliminate tariffs, and buy more, cheaper. That actually would help reduce inflation. 

 

We added 6 million jobs, the most ever. True. This was supposedly the result of government stimulus.  But, this is after losing 9 million jobs as a result of the pandemic, and less than was projected to be added as we recovered, without the stimulus (the projection was for 10 million new jobs with the stimulus) . More PBS.  

 

The tax cuts of 2017 benefited only  the top 1%. Yes, they benefited, but so did the average American. An average family of 4 saved $2,800. And it increased the Child Tax Credit for all. Everyone benefited. 

 

No one earning less than $400,000 will pay a penny more in taxes with my tax increase plan.  Even the liberal Washington Post gave that 3 Pinocchios. There may have been small increases in income taxes for those folks, but many other taxes fell on everyone, such as increasing excise taxes, and increasing Corporate taxes impact all prices and make us less competitive. And the inflation his policies cause is a tax on everyone - and hits the lower income folks the hardest.  

 

And nary a word about energy that would help lower the price by increasing output (gas prices up 60% due to government restrictions on supply, before the recent problems in the oil markets), nor how we could cut regulations which are very, very costly to all. Or the crony capitalism Biden seems to support. Or the subsidies which interfere with the market economy causing price distortions which  cost us all, and encouraging wrong economic decisions. Nor does he mention the WHITE ELEPHANT in the room -  the dire financial condition of the country.  He says we are cutting the deficit in half, to only a Trillion dollars. True, but not as a result of his policies, just a result of eliminating the extraordinary COVID-19 expenses, his policies are not even close to reducing the deficit.  OUR DEBT IS THE MOST SERIOUS PROBLEM WE FACE 

 

There is more, but I think that is enough to get the picture. Think for yourself, don’t listen to the PBS. 

 

BOTTOM LINE

 

 Smaller Government + Less Government Interference in the Market = Faster Economic Growth (and a higher standard of living for all)

 

It’s common sense, Econ 101.  Leave more money in private hands for investment, and grow faster.  Hard Stop.

 

LEARN ECONOMICS, THEN VOTE SMART