Photo Copyright Gage Skidmore from Surprise, AZ, United States of America, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons
In previous eras, something that Americans have been able to rely on is their political leaders adhering to reality to at least some degree. After all, a failure to do so will likely show in the next election. However, the Democrats have taken up an odd strategy by completely shielded themselves from economic realities.
Tonight President Biden perfectly illustrated this fact when he delivered his State of the Union Address to the American People. Far from acknowledging basic economic facts, he gave a meandering speech about the evils of corporations who need to “pay their fair share.” In his long address, President Biden demonstrated that he and his party are unable to comprehend inflation, tax cuts, or monetary incentives.
In regard tp inflation, President Biden demonstrated an extreme amount of ignorance at how to combat this growing problem in American life. First and foremost, he urged lawmakers to pass his Build Back Better Bill which will cost over $2 trillion. According to the Tax Foundation, this could contribute to short run inflation. Apparently, dumping trillions of dollars into the economy is not a recipe for monetary stability.
Secondly, Biden claimed that he would combat rising gas prices by freeing up 60 billion reserve barrels of oil. What he failed to mention is that this amounts to about a three days supply for the United States economy. Rather than reinvigorate U.S. production, he is happy to rely on foreign oil exports because it fits his climate agenda. Supposedly, the smoldering ruins of Kiev are the price we have to pay so that the earth doesn’t warm another 1 degree celsius.
Another area of the economy that President Biden completely failed to comprehend is tax policy. He self-righteously accused President Trump of giving $2 trillion in tax breaks to the greedy top 1 percent. He then proceeded to claim that these cuts did not have any effect on American families, which could not be further from the truth. According to Karl Smith, former Vice President of the Tax Foundation, the economy saw enormous gains due to the Trump tax cuts. He writes that “In 2016, real median household income was $62,898, just $257 above its level in 1999. Over the next three years it grew almost $6,000, to $68,703. That’s perhaps why, despite the pandemic, 56% of U.S. voters polled last month said their families were better off today than they were four years ago.” It turns out that allowing wealthy individuals to invest their money in the economy is beneficial for job growth.
Despite this proven fact, Democrats would like to shun economic literacy in favor of ideology. In 2008, for example, President Obama responded to a question on the efficacy of high tax rates by saying “Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.” The tax policies of the Democrats are not based on sound economic arguments but on their theoretical conception of fairness. However, it is hard to imagine what is fair about a government official weakening the economy for everyone in the name of fairness.
Unfortunately the economic fallacies continued. At one point President Biden praised Intel for pledging to invest in a semiconductor manufacturing plant. He claimed that all they were waiting for was for Congress to pass one of his economic bills, thereby admitting that he is paying companies who have good relationships with the government.
Apparently, President Biden believes that his powers of observation are greater than the powers of the market. Whereas he balks at tax breaks, he seems to love subsidies. This is due to the fact that he can choose who the winners and losers are. No more need to deal with the impartial hand of the market. Instead, he can impose his will on everybody while making the market less efficient.
Overall, President Biden’s speech was a hodgepodge of economic fallacies covered with the veneer of self-righteousness. It certainly doesn’t take an economics degree to understand that dumping trillions of dollars into the economy is bad for inflation, radically increasing taxes is bad for the stock market, and giving subsidies is the equivalent of a less efficient tax break. Unfortunately, the Democrats have completely shielded themselves from reality. Let’s hope they pay for it in the next election.
