Government Watch / Politics

Democrat-Led Economy Tanking

economy

Biden’s economy – all distracting happy talk aside – seems to be tanking. Although reading economic crosscurrents is like tracking water flows in a whirlpool, you can feel the shift. Why?

First, as the Wall Street Journal just reported, “US hiring slowed sharply in August.” Economists predicted 720,000 in job growth – Biden got 235,000. While the “delta” variant did not help, that is only half the story. See, U.S. Hiring Slowed Sharply in August – WSJ.

As job growth slows – and has since January – labor demand is still high. Why? Obvious reason is something not right in our labor market. July labor data showed us 5.7 million jobs below early 2020.

Why? No rocket science needed. The Biden team and congressional Democrats – aiming to buy votes, widen dependency, force higher wages on struggling employers – has pumped extra federal unemployment money into the national labor market, big checks on top of state benefits.

Paying people to do nothing has had a predictable effect. With an added $600 federal benefits per month, then $300, on top of COVID checks, people stay home. While this can be reversed, Democrats seem intent on dragging the labor disruption forward for as long as possible.

Add non-income Democrat benefits, like a presidential extension of an “eviction moratorium” – struck down by the Supreme Court two weeks ago, educational loan forgiveness, federal child tax credit expansion, other free goodies, and you see why people are slow to return to work.

In this category, get ready for more distortions – as Democrats now push mega-spending bills as “infrastructure.” These so-called “infrastructure” bills are minimally roads, bridges, airports, and ports –mostly big, unjustified, unaccountable federal spending – and more federal dependence.

As Kimberley Strassel recently wrote, these bills fund “Medicare expansion, the Green New Deal, and huge new family and education entitlements,” and if law “may be the largest expansion of the federal government in US history.” See, WSJ OPINION: POTOMAC WATCH BY KIMBERLEY A. STRASSEL.

All this is bad news for the economy. On top of labor distortions and wild benefits, more looms.

Second crosscurrent: Accelerating inflation. A second-order impact of mass spending – is inflation. Call this the monster that ate your dollar. As federal spending explodes, dollars are borrowed and printed.

Currently, the US has a $28.7 billion-dollar national debt. This year’s wild spending – which cannot be covered by taxes – pushes more debt, more borrowing, on which we pay more interest, creating more debt. Inflation is the obvious effect of such irresponsible fiscal behavior, reducing the dollar’s value.

Third crosscurrent: Elevated taxes. Two kinds of tax increases are coming, obvious and hidden. The obvious is a Democrat pledge to raise taxes, pretending to cover mass spending. Problem is, no chance. As the economy slows, tax base shrinks, so that is a head fake. Taxes will not cover their spending.

The other tax is sneaky, hidden. It will hit seniors on fixed incomes, middle-class holders of credit cards, and mortgages. As spending, debt, inflation, and declared taxes rise, the indirect tax of higher inflation will come. We will pay more, fuel to groceries, dollars earned have less value. That tends to trigger panic reactions, fewer savings, and unions pushing irrational wage increases.

Fourth crosscurrent: Falling consumption. All this causes employers to pull back. They do not hire if labor costs go too high, instead of cutting hours and jobs. With fewer jobs, people earn less and what they earn is worthless.

What does that do? Think about it – it naturally reduces what the economy is producing and what people can spend. In other words, it reduces consumption, with fewer people having money to spend. That, in turn, reduces investment, further slowing public consumption, adding drag to the economy.

Fifth crosscurrent: Federal Reserve. Strangely, even as unemployment rises – putting aside the “delta” variant – the Fed will be concerned about inflation. The Fed is in a tough spot. On one hand, to stop runaway inflation, it must raise interest rates. On the other, doing so may further slow the economy.

Why? Think on it again – if you must pay more to borrow, you borrow less, slowing your economic activity. For businesses, that means slowing production and hiring, slowing the wider economy. While it might mitigate inflation in future years, the impact will be felt now.

They have another problem. Even as the Fed wrestles with rising inflation, it has a bloated balance sheet. The Fed “purchased” assets in recent years to preserve predictability in our economy and markets. Historically, they never did this, as lower interest rates caused people to borrow, invest, and grow.

Only that did not work recently. Interest went to zero, but things dragged. So, they started buying assets. In time, our economy came back. Under Trump, with lower taxes and regulation, things roared.

Problem is, “we are not in Kansas anymore, Toto.” We are facing slow growth with a fat pile of assets that need to be sold. Like taking your last finger off a card house, this must be gentle. That was how “tapering” of bank holdings was expected to be done – until recently.

Now, spendthrift Democrats have messed up the process. The economy is again delicate, with huge uncertainty. The distorted labor market, stagnant employment, overspending, rising inflation and taxes, lower consumption, and a need to raise rates to confront inflation – has created jitters. In the end, these crosscurrents – relating to each other – suggest a slowing economy. Thank you, Mr. Biden and congressional Democrats.

Healthy economies do not like these sorts of currents. The predictable effect is coming “stagflation.” Nothing suggests we can avoid it. So, prepare.

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Hal
1 month ago

When is the general citizenry of this Nation going to learn that governance doesn’t give away freebees. Nothing from the government is free. Even social security draws from other funding … especially including INFLATION which is merely a tax on the citizenry that the government sits with pie on its face as if it had nothing to do with it. Federal funding and taxation is mostly just a legal form of hedging in which the politicos try to aim it where it will get them voter approval.

Bob Olden
1 month ago

I guess you can’t get re-elected by saying “We can’t afford that!” And apparently that goes for both parties, but especially the D’s. But what does that say about we the people who elect them? We don’t give them a mandate to tighten the belt until we get back to fiscal responsibility. I guess that’s the flaw of democratic government: “Once the people learn they can vote for free stuff, it’s all over.”

Only God can save this country, and He does it one heart at a time. And part of the salvation we need is to turn away from our greed, selfishness, pride, and moral corruption and ask God for forgiveness. He offers that through Jesus, the only one who can unscramble our messed up lives and our culture.

Karen
1 month ago

Great Job Joey crap head. Thanks a whole bunch for your asinine policies. Guess what? You will suffer with us in the long run. Waiting to tell you “I told you so”.

Becky
1 month ago
Reply to  Karen

No politician is going to suffer.
They’ve stolen enough from us to live out their lives in elitist comfort.

Karen
1 month ago
Reply to  Becky

I was thinking more about the diehard Dems that can’t see the light at the end of the tunnel. Yes, the politicians will live well for a time, but Communism will make sure the money will be confiscated.

Enuf Said
1 month ago

Duh–ya tink sew!!

Robert
1 month ago

Just like when Obummer dumped huge amounts of money into the economy with numerous billions flushed into “pie in the sky” biofuel boondoggle projects that have busted. The Dems throw money around like their political careers depend on it; trying to buy every potential voter with some nominal and drab incentive or trinket. Its their modus operandi. It’s similar to the southern border and the Afghan influx of illegals…..anything stay in control and keep a grip on earthly power, no matter how detrimental to their own country.

Jim Anderson
1 month ago

A small correction in the article. It states, “the US has a $28.7 billion-dollar national debt”. It’s a $28.7 TRILLION-dollar national debt. Otherwise, it’s a great article.

Hal
1 month ago
Reply to  Jim Anderson

And rising. “How high is the National debt, mama!” “It’s 4 billion higher and rising!” Johnny Cash should have made a song with those lyrics!

Denise Ledford
1 month ago

For all those in Texas, Texit is the answer. Check out tnm.me for how to Texit! Other states will follow in our wake. They all know that the federal government does not care about America or Americans.

Eddie Van Halen
1 month ago

Hey, all you ( D ) communist voters – how do you like the gas prices and being energy DEPENDENT again ? Did I forget to mention grocery prices skyrocketing ? Independent voters need to get their “heads out” and realize that this ( D ) communist party has ALWAYS been about four basic tenets –
TAX – SPEND – LIE – CONTROL.

BAE
1 month ago

I AGREE……….

Rexford Ames
1 month ago

The Democrat Led Government is getting a wake up call. All that power has issues and consequences. That’s true of all Major control issues. I’m not an economist but I do home budgeting. That requires balance. Income and output must balance and Savings is a must.
The , I Am therefore, I am Folks have a big problem. We the people do not reside or do we operate in that Big University called: Washington D.C. We are reality. It is we that live day to day doing all the things many of those folks seem to forget. Trouble is, we pay the Taxes they keep spending with an apparent attitude: We Spend and cannot be held accountable for our actions. Now that’s the issue with all those Education Systems. They, Like D.C. have the illusion that they are not accountable nor responsible for their actions. Spending, Communism, Liberalism, etc,etc. Cocoons have that effect! Reality is a very, very different thing.

Garye
1 month ago

Mr. Charles thank you for the article.
I like how you referenced the cross currents of the useless democrats downward spiral!
These are the same 50+ years of failed socialist/communist policies pushed by democrats to create an ignorant,dependent block of voters.
Once dependant,what is the chance they’ll vote against the handouts???
The “D” in democrats stands for destruction of America!
They ALL must go!

Last edited 1 month ago by Garye
avatcns
1 month ago

28.7 trillion dollar debt!

Terry
1 month ago
Reply to  avatcns

Exactly…read that twice…and said…misprint

Marv
1 month ago

We need a lot more Robert B. Charles people who can think and understand.

RBC
1 month ago
Reply to  Marv

Thankyou Marv, you just made my day! V/R, RBC

johnh
1 month ago

MORAL OF STORY: In my house you cannot spend more than you earn each month or you will run into problems in your life. Listen to that Both Democrats & Republicans that have increased debt by $1Trillion per year for the last 12-years of Trump & Obama. Congress, what is your game plan….

BAE
1 month ago

Our economy was great with President Trump. Biden and his administration of useful idiots will destroy out economy and country. Safe bet…

Bill
1 month ago
Reply to  BAE

My business took of under President Trump now I should just close the doors and I’m seriously thinking about it.

johnh
1 month ago
Reply to  BAE

Then why did debt increase for 4-years straight……and who made money

Philip Hammersley
1 month ago
Reply to  johnh

Because Trump had to build up our defenses that Obozo let go to hell, just like Reagan had to do because of Peanut Brain!

Max
1 month ago
Reply to  johnh

Look at Obama, he doubled the national debt in his 8 years, Pres. Trump certainly didn’t.

Tim Toroian
1 month ago

Better buy paddles and chest waders rather than hip boots because it is also going to get deep!

Judy
1 month ago

Anyone who grasps what the Holy Word of God teaches, understands why this country is going by the wayside. Our country has gradually slithered down the demoralization trail for years. Human nature is our greatest enemy. For blame for our troubles, all we need to do is look in the mirror. We are all to blame in one way or another. And that is the first step God wants to see us take. Accepting responsibility for our bad choices, acknowledging it’s our fault, and then humbling ourselves before Him and asking His forgiveness of OUR sins. We need to get real with God, because He stated in His Word that those who are lukewarm He will spew out of His mouth. There may still be time, but even if there isn’t, just like the Patriarchs in the Bible stated when facing the fiery furnace, ‘Whether our God destroys us or not, we will not serve or bow down to any other God.’ So we can know in our hearts and being right with our Creator that no matter what comes, we DO have Hope of a better and perfect life ahead. Pray for the lost souls of our children and family members.

johnh
1 month ago
Reply to  Judy

Thank you for sharing this

Margaret
1 month ago

Ideas on how to survive the Democrat Socialists? Pay off credit and loans. Economize. Watch less TV from China. Talk to friends. Also Vote Out Democrats and the 17 Republicans that helped vote in this ridiculous “infrastructure” bill. DON’T FALL FOR DONATION SITES! MOST OF THEM ARE SCAMS.

Ralph S
1 month ago

Vote ALL incumbents OUT!!!! Do not vote for any candidate unless they are firmly in favor of passing a term limit amendment for ALL political offices.

CPOBill
1 month ago

Every thing a demorat touches turns to SHIFF! What doesn’t, they steal!

D.P.
1 month ago

As they say, “the proof is in the pudding…” This is the history and practice of the democratic agenda. Has been this way again and again. Look at the ebb and flow of the economy over the last 75 years and you will see the same pattern….but, it seems no one either learns or pays attention. Capitalism works when left to operate as it can…without meddlers and manipulators. The sad part is that somewhere along the way, the outcome will be unrecoverable…..and the nation will face financial collapse. Not a pretty picture, no matter how the dems spin it.

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