In just four months, the Biden economic wizards have made several major economic mistakes, some of which were contained in the American Rescue Plan (ARP).
First, there’s that pesky $300 per week supplemental unemployment insurance that is most definitely making it harder for small businesses to hire back staff and limiting job growth. That the Biden team insisted on including an extension of those payments in the ARP was an early indication that they are ignorant of how real-life businesses function.
Next up is the ARP itself, and subsequent proposals to spend another $4 trillion. The White House’s $1.9 trillion stimulus bill that passed in March was too big and too inflationary; talk of trillions more on the way alarmed the public even as prices on everything from soft drinks to diapers began to rise.
Growth during the first quarter, when the bill was crafted, approached 6.5 percent; after-tax personal income rose 13 percent. Spending was primed to soar; last year consumer net worth rose 10 percent, to $130 trillion, thanks to rising stock and home prices, and Americans held an estimated $2 trillion of excess savings.
Though there were still millions of people unemployed, it was clear that thanks to vaccines, businesses reopening and past giant stimulus bills, the economy would boom, and job creation would follow. Dropping $1.9 trillion of extra stimulus into the mix was excessive and has contributed to surging inflation, which is even now souring consumer optimism and possibly dulling the vibrant snap-back.
The third major economic goof of Biden’s first four months in office – also related to the ARP – was highlighted recently in Krugman’s own paper with the headline: “New Worry Over State Revenues: They’re Soaring.”
Rising state incomes should not be a negative, unless you’ve just sent an unnecessary $350 billion in taxpayer dollars to those swollen state coffers, which is what Biden and his trusty experts did in the ARP.
Even NPR!! QUOTE:
But there’s piece of economic data reaching levels not seen in 40 years: inflation. And that’s an issue that Biden and his White House have struggled to address.
On Thursday, new data showed consumer prices are up 7.5% from where they were a year ago. Inflation is at its highest point since 1982 as the cost for food, electricity and shelter soar.
Biden didn’t focus on inflation during his Virginia trip — despite the new data
Shortly after the inflation data was released, Biden traveled to the Virginia district of Democratic Rep. Abigail Spanberger. She was first elected in 2018 in a former Republican stronghold by a narrow margin, and Republicans are working hard to flip the district in November.
Democrats like Spanberger in vulnerable districts have urged the White House to spend less time on its proposal for massive spending on the social safety net and more time on inflation and other economic issues.
While Biden briefly acknowledged that food and gas prices are up, he kept his focus on his plan, known as Build Back Better — arguing that it would lower costs for things like prescription drugs and childcare.
h/t Digital mix guy