This story was originally published by Real Clear Wire
Written by Akash Choguli
Real clear wire
The president may be proud of “pedagogical economics,” with its massive, seismic shift in the size and scope of government, but for voters, it represents a searing pain. Like a runaway train that has crashed into a small town square, everywhere you look, no part of the life we knew remains the same. Our life plans – well laid out and requiring hard work and a little luck – no longer fit. Every time we open our wallets and face these new tough choices — delaying our kids' calendar, forgoing our teen's college contributions, praying the minivan's tires will last another month. This daily struggle for millions of families sitting at their kitchen table trying to achieve their hopes, dreams and numbers is made much more difficult by the Biden economy.
How did this new bout of inflation begin? The president blames corporate greed, but most Americans know better. Many remember how inflation disappeared during the 1970s only after two severe recessions in 1980 and 1981, and spending cuts approved by President Reagan. For nearly forty years, Americans have enjoyed prosperity with low inflation rates.
However, both during and after the pandemic, federal spending has taken the opposite direction that it did under Reagan — it has exploded. Federal spending, which has averaged 20.5% of GDP since 1982, was 60.5% of GDP for 2020-2021, an additional 20% of GDP. President Biden released $6.2 trillion in new spending for a decade on top of the $4.8 trillion in spending expected in 2021 before the pandemic hit.
By adding an additional fifth of the economy to federal spending, has anyone added an additional fifth of goods and services to the economy? No, on the contrary, government restrictions and restrictions in some places remained in place long after the epidemic subsided. As more money circulated, inflation exploded. Since Biden took office, prices have risen 17.9%. This creates the first big problem, as wages rose by only 12.7%, so working families suffer an average of 4.5%. They need more than $11,000 more each year to maintain the lives they were living before Bidennomics and they are not achieving it. Thus, 62% of adults say they live paycheck to paycheck. Credit card payments are being delayed at the highest rate in a decade. With food now consuming the highest share of the household budget in thirty years, 59% of Americans feel “angry, anxious, or given up” when shopping for groceries.
But Biden's economics isn't just about the end of a $1 slice of pizza in New York City, or the shrinking of the dollar menu at McDonald's, or the loss of a dozen eggs for a dollar and a half. Much more damage is done. With the Fed trying to beat inflation out of the economy added by Bidenomics, higher interest rates are hitting everything. Homebuyers are paying about $1,300 more for their monthly mortgage than they did when Biden took office. 2 in 3 say high housing prices put homeownership out of reach. Commercial real estate is caught between rising interest rates and falling property valuations as workers continue to work from home. Continued high interest rates threaten recession. No wonder only 14% of voters say Biden's economic policies helped them.
Strikingly, Biden's economic advisers are praising the gains made by the University of Michigan's consumer confidence survey, claiming that the recent rises prove that “President Biden's economic plan is delivering results.” Except those recent highs under Biden match previous recession lows. Only in the recessions of 1969, 1973, 1980, 1982, and 2008 were U-M consumer readings comparable to Biden's recent “successes.” The only exception was Obama-Biden's first term when the expected strong recovery faded rather than slowed to real GDP growth of just 2.2% during 2010-2012 – the weakest post-war recovery ever.
In his State of the Union address, the president no longer denied the existence of inflation, but insisted that it and we are victims of “corporate greed” and “price gouging.” Viewers can determine whether what Biden says is fact or fiction by checking out those claims on our website named after his economy: “Bidenomics.com.”
And we must remember what Joe Biden promised America in 2020: an experienced leader who would bring the nation together. By insisting that inflation has everything to do with greed and nothing to do with excessive federal spending, he has divided the country and neglected the lessons of our efforts to beat 10%-plus inflation and build four decades of low-inflation prosperity. How can the president claim that “pedium economics is about the future” when he has forgotten America's economic past?
This article was originally published by RealClearPolicy and made available via RealClearWire.
