USA 2020 Elections: Thread

[grarpamp]

Biden Admin has been caught fudging US economic reports
for political purposes in an election year.

Biden Democrats have vote bribed College Students with
debt forgiveness that does nothing but saddle them with
more national debt and inflation.

Biden Democrats have let 2.5M Illegal Migrants into the US,
angling to make them all bribed voters.

All legitimate unbiased economists say Biden's Inflation Bill is lies.

Biden's subsidized Green New Deal... EV carmakers have now
raised up prices to exactly match the subsidy.

Biden Democrats are a Total Economic Failure and are
bankrupting the US even further into negative bankruptcy.




Peter Schiff: Washington Goes Full Orwellian

https://schiffgold.com/commentaries/peter-schiff-washington-goes-full-orwellian/

An audacious communications campaign from Democrats in Washington is
currently underway that is attempting to convince the public that:

    There is no recession

    Inflation has been vanquished

    Even if inflation is still alive, targeted new Federal legislation
will kill it

As strange as these claims sound to anyone with even the most casual
grasp of reality, it is a testament to the post-factual world we now
occupy that the Biden Administration is able to attempt, let alone
succeed in, putting out such monumental fantasies.

The campaign began late in July when the Biden team attempted to
redefine the word “recession.” While the left has always tried to
redefine words (think “racism” or “gender”), it has never attempted it
so spontaneously with such a technical definition. Typically, they let
new definitions germinate in academia or policy think tanks before
trotting them out for public consumption. That was the playbook that
helped change the meaning of the word “inflation” (from its original
understanding as an expansion of the money supply, to its current
definition tied solely to rising prices). But the inflation campaign
unfolded over decades and did not require the public to completely
surrender its critical capacities.

I’ve been publicly commenting and writing about the economy for almost
30 years (and talking about it for essentially my entire six decades
on the planet). Over that time, the technical definition of
“recession” has never been in dispute. Of course, I’ve had many
arguments over what caused any given recession, why recessions may be
necessary to purge an economy from excesses and malinvestments caused
by artificially low interest rates, what government responses should
be to recessions, or why things were better or worse than a particular
political party claimed them to be. But in that time, I never
encountered anyone who quibbled with the accepted technical definition
of “recession” as two consecutive quarters of negative GDP growth.
What would be the point? Recessions affected both political parties.
Why change a definition when the original definition may suit you down
the road?

But that’s what the Biden Administration did when they claimed that
the Second Quarter GDP Report, which showed a .9% annualized decline
in GDP, following a 1.6% annualized decline in the First Quarter
(Bureau of Economic Analysis), did not mean we were in a recession.

What? That’s been the textbook definition for…like forever. If Biden
wanted to put a happy spin on the data, which is what sitting
Presidents do, he could have said, “while technically it’s a
recession, the current period shows many signs of strength that are
not typical in recessions, leading us to believe we are in much better
shape than the GDP headlines suggest, and that the recession will be
shallow and over quickly.” I would have disagreed with that, but it’s
fair game. But his approach wasn’t just to move the goalposts, it was
to take them down entirely.

What’s even worse is that the very next day after the Biden
Administration first floated its idea that “two negative quarters are
not a recession,” the point was repeated by Fed Chairman Jerome Powell
at his FOMC press conference on July 27. If nothing else, this proves
just how ridiculous claims of “Fed independence” have been over the
years. Economists like to claim that the Fed acts independent of
political control.  Would they have us believe the Fed spontaneously
changed its definition of recession precisely after the administration
did? Clearly, the Fed is taking its marching orders from the White
House.

The sad part is that outside the typical sources of right-of-center
news, the media just ran with the new definition. My favorite was the
Associated Press headline that ran after the GDP numbers were
announced, “U.S. Economy Shrinks for a Second Quarter, Raising
Recession Fear.” (7/28/22) Up until two seconds ago that would have
been reported as the official start of a recession, not something that
would simply “raise fears,” of a future eventuality. This redefinition
of terms would have been impossible when journalistic standards were
higher and institutional memory more entrenched.

In George Orwell’s 1984, the totalitarian State of Oceania, where the
action takes place, is always at war with another empire. Sometimes
against Eurasia, and sometimes against Eastasia. But when the
antagonists switched positions, as they often did, it served the
government’s interest that the public forget that any other enemy ever
existed. It required citizens to say, “We have always been at war with
Eurasia,” even if that war just started yesterday. In the same vein, a
recession has never been defined as two consecutive quarters of
negative growth!

Following up on this easy rhetorical victory, the Biden team decided
to keep the ball rolling by claiming that there was “zero inflation in
America in July.” That may come as a surprise to a select group of
Americans, say those who have shopped at stores in the past month, but
the claim went largely uncriticized in the press.

To tell this whopper, Biden had to talk only about month-over-month
inflation, and ignore the year-over-year data, which still shows a
hefty 8.5% inflation rate in July (down slightly from the prior
month). (U.S. Bureau of Labor Statistics) In all my years following
economic news, I can say with extreme certainty that I never saw
anyone hold up a month-over-month number as proof of anything. So yes,
gas prices came down in July, possibly as a result of the release of
millions of barrels of oil in the U.S. Strategic Reserve (though food,
rent, and service prices continued their relentless rise). But oil
prices could very well be up in September. Should we expect Biden to
place great weight on that eventuality as well?  Don’t hold your
breath. In reality, after so many months of blistering price
increases, a cooler month should be expected. The trend lines remain
unbroken.

This “zero inflation” claim, repeated by Administration spokespeople
dozens of times, is the kind of huge lie that would have elicited
waves of head-smacking coverage during the Trump Administration. But
Biden is getting a pass, he’s even being congratulated for his
rhetorical boldness and courage in standing up to the “right-wing spin
machine.”

But the best piece of doublethink comes with the Democratic Party’s
passage of the 2022 “Inflation Reduction Act.” In the long history of
misnamed pieces of legislation, this title might be the most
egregious. Nothing in the gargantuan Bill was conceived with the aim
of reducing inflation and nothing in the Bill will actually accomplish
that goal. In truth, many of the plan’s provisions will make inflation
even worse.

On some level, you must admire the audacity. The Democrats took a
bunch of terrible ideas that they couldn’t pass in the Build Back
Better Bill (either in the original $3 trillion version or the slimmed
down $1.3 trillion version) and jammed it into a new package which
they rebranded the Inflation Reduction Act. It didn’t bother them that
all the elements of the Bill were conceived before inflation was
considered a major national priority and were not designed with
inflation reduction in mind. They know that inflation is a high
priority to voters, so they want to look like they are doing something
about it.

The Bill, which will pass both Congressional houses without a single
Republican vote, proposes $764 billion of new revenue (including new
taxes and greater enforcement of existing tax law, and savings
resulting from lower prescription drug prices paid by Medicare) and
$517 billion in new spending, with the difference going toward Federal
deficit reduction.  Unfortunately, the variety of healthcare,
environmental and social welfare spending, combined with new taxes and
beefed-up IRS enforcement, will hamstring the country’s economic
vitality, and tend to increase both budget deficits and inflation. And
as a result, the plan will do far more harm than good. Let’s look at
the contents:

The Bill looks to raise revenue by:

    $265 Billion – Allowing Medicare more leverage in negotiating
lower drug prices paid to pharmaceutical companies. This is the
government’s primary example of the Bill’s anti-inflationary bona
fides as it intends to lower costs for consumers. But this type of
price control has a very poor track record in fighting inflation. The
government will mandate lower prices, which may limit supply of
current drugs and discourage the research and development of new
drugs. The savings will likely be far smaller than the government
expects.

    $222 Billion – Minimum 15% corporate tax for companies with more
than $1 billion in annual income. As with all such provisions, this
policy does not take into account how corporations will alter their
structures and practices to avoid the tax. As a result, the take will
be lower than the government expects. Also, companies will deal with
higher tax and accounting burdens by reducing output, raising prices,
and cutting salaries. This is not anti-inflationary. Worse, money that
is paid in taxes is not available to finance capital investment. The
result will be a reduction in supply, putting greater upward pressure
on prices.

    $204 Billion – Increased tax revenue through greater enforcement.
– This is the most controversial aspect of the Bill. This nightmarish
provision more than doubles the size of the Internal Revenue Service
and adds 87,000 new agents specifically to increase the number of
taxpayer audits. While the Biden administration is pretending that the
agents will only go after the ultra-wealthy and the large corporations
(who are limited in number and who can afford to hire accountants and
lawyers), in truth the typical target will likely be small businesses
and members of the burgeoning “gig” economy. The added fear of IRS
scrutiny will cause these business owners to spend more time and money
on accounting and legal fees, devote less time and money into growing
their businesses, and invest less in increasing capacity.  All of this
will cut into output and profits, thereby putting upward pressure on
prices and downward pressure on wages. This will not help curb
inflation.

    $74 billion – Imposition of a 1% excise tax on stock share
buybacks. This provision is likely the least destructive of the
revenue provisions, but it will do nothing to lower inflation.
However, any money a corporation pays in taxes is money it no longer
has for capital investment. So, this reduces supply, the opposite of
what is needed to fight inflation.

The Bill will spend new money on:

    $369 Billion – Energy Security and Climate Change – This is the
boondoggle portion of the Bill where the government will shower
funding on a variety of Democrats’ Climate Change pet projects. My
feeling is that most of these investments will be on inefficient
energy sources that the public doesn’t want, and which are unable to
meet our energy needs. While the Bill does have a few provisions that
will encourage domestic fossil fuel production, most of these programs
will mandate the use of more expensive and less efficient energy.
Misallocation of resources will make inflation worse by limiting the
supply of energy and increasing its cost.

    $64 Billion – A three-year extension on subsidies for Affordable
Care Act health insurance premiums. Originally offered through the
2021 Covid-inspired American Rescue Plan, this extension is just
another step backwards toward a permanent entitlement of subsidized
health care. This will do nothing to actually lower the cost of health
care, but simply change who gets the bill. It is not
anti-inflationary. If anything, it will have the opposite effect, as
the more involved government gets into any industry, the less
efficient it becomes, and increasing the cost of its goods or
services.

    $80 billion on IRS Funding – This is the spending that will
supposedly enable the government to collect $200 billion in revenue,
so the net benefit to the Treasury is $120 billion. But the government
will be spending real money to go after hoped-for money. The resulting
numbers may be far less equitable for the government and provide
massive anxiety to taxpayers.

So, there you have it, the government apparently takes inflation
head-on. Except that it doesn’t. The best way to fight inflation is to
reduce government spending, thereby leaving more investment capital in
the private sector, and to reduce regulations, allowing businesses to
increase the supply of goods and services so that prices can fall.

Instead, we are currently in an environment where government policies
are artificially suppressing labor force participation and piling new
taxes and regulation on businesses, all the while keeping the
floodgates of fiscal stimulus wide open. This is a recipe for higher,
not lower, prices.

It is not accidental that earlier this month the Labor Department
reported that worker productivity fell 2.5% from a year earlier, the
largest yearly decline since 1948. At the same time, despite
deceptively low rates of unemployment, the actual number of people in
the labor force continues to shrink. These trends come as a direct
result of misguided government policies and regulations that
disincentivize work and increase the burdens on business. A shrinking
and less productive labor force does not lead to the expansion of the
supply of goods and services needed to bring down inflation. The
provisions in the Bill will add to these inflationary problems.

Also, the continuation of deficit spending far more than pre-pandemic
levels means the Fed will come under increased political pressure to
monetize the shortfall. That pressure will become particularly intense
once the recession we are pretending does not exist gets much worse.
Since quantitative easing is just a euphemism for inflation, a bill to
increase deficit spending is a bill to increase inflation.

Given the drift of the data and of government messages, I wouldn’t be
surprised if we are soon told that any “quantitative” attempt to
measure inflation is misguided, and that the phenomenon can only be
understood in qualitative subjective terms. How we feel about the
products and services we are buying means far more than what we are
actually paying. Just wait, it’s going to happen.