Quick Take: This Will Hurt

The economy is poised for a swan dive. The President and his party are without a clue

The End Times are upon us! Another glass of wine…?

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Joe Biden’s speech to the AFL-CIO was a sorry piece of work. Once again, the runaway inflation that’s busting family budgets from coast to coast and border to border was anybody and everybody’s fault but his and his administration’s. If it’s not V. Putin, Big Meat, greedy corporations or rapacious energy companies, it’s those dastardly ultra-MAGA Republicans in Congress who are blocking the additional trillions in government spending that would “lower costs for American families.”

Okay, sure, it’s true enough that not all the drivers of inflation can be put down to the Biden Administration’s policies. The Russo-Ukrainian War and supply chain problems are partly to blame. But a significant percentage of the inflationary spike we’re experiencing—perhaps as much as half—is due to profligate government spending. It was reckless and irresponsible of Biden and the Democrats to pass both a gigantic infrastructure bill and a totally unnecessary round of so-called pandemic relief spending on top of the trillions of pandemic-related spending already sloshing around in the economy. That excess spending has magnified the impact of all other factors that drive inflation. And spending even more, as Biden proposes to do, would make a bad situation incomparably worse.

There’s something particularly galling about a president and a party who make excuse after excuse for their failure to manage a problem of modest dimensions while assuring us that it has a handle on such mind-bendingly complex projects as the greening of the entire American economy. Here I’m thinking of the baby formula shortage. This, though a serious problem, is not a particularly complicated problem. Surely the federal government, with all of its resources, is capable of managing and ultimately solving it in a timely and efficient manner.

But no. When safety concerns at one plant manufacturing formula drew the attention of regulators, they swooped in and closed the place down. No one seems to have asked how that closure might affect the overall availability of formula. No one seems to have considered whether it would have been possible to keep the plant operating while the safety issues were addressed. No one seems to have wondered whether potential formula shortages could be mitigated by suspending the regulations that make it difficult to import formula from abroad. And no one seems to have informed the President that yet another debacle was bearing down on him and his administration.

Only when the shortage was causing panic among families with infants dependent on formula, only when it became a big story, only when it was yet another blot on the Biden Administration’s copybook, was action taken—belatedly and for the most part ineffectually.

So even if Joe Biden did have some master plan to whip inflation now, its probability of success would be zero. Our box-checking federal bureaucracy, which has become almost Austro-Hungarian in its amalgam of complacence and incompetence, can’t manage manageable problems, much less global ones. That’s beside the point, however, because as Biden’s speech yesterday showed, he really has no plan. On the contrary, the President seems to have convinced himself that if he just raises his voice and gets mad, good things will happen. And probably for lack of a better idea, his White House minions and his party have taken their cue from that.

But no three-hundred-page economic plan to combat inflation is really needed. Here’s what would work: across-the-board personal and corporate tax increases, cuts in government spending, a program of interest-rate hikes. The problem is too much money, and that’s how you sop up the excess to bring demand back into line with supply. Or to put it in Marxist terms (Comrade Sanders and AOC would no doubt approve): The thesis is inflation; the antithesis is recession; the synthesis is a cooler, more stable economy.

Biden & Co. would never do it, of course: Both politically and ideologically, the trade-offs involved are intolerable to them. Imagine the White House informing the Squad that Modern Monetary Theory is bunk! No matter, however. The self-identified adults to whom we so ill-advisedly entrusted the government of this country have lost control of events—the clown car has entered a terminal skid. So now, things are automatically going to happen. And it’s going to hurt.