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Bidenomics: A Recipe for Disaster

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Bidenomics: A Recipe for Disaster
President Joe Biden delivers remarks on the economy after touring the Volvo Group Powertrain facility in Hagerstown, Md., on Oct. 7, 2022. (Mandel Ngan/AFP via Getty Images)
Antonio Graceffo
11/11/2022
Updated:
11/16/2022
0:00
Commentary

The failure of a red tidal wave to sweep the midterms is concerning, because it means that the nation is in for at least two more years of reckless spending.

The sum expenditure in President Joe Biden’s three signature economic plans is just shy of $5 trillion. That number is larger than the GDP of any nation in the world except China.

Biden’s three signature economic plans—the American Rescue Plan Act of 2021, the Consolidated Appropriations Act of 2021, and the Inflation Reduction Act of 2022—cost a combined nearly $5 trillion dollars. They contain contradictory policies and goals, which will waste money, increase the debt, pump up the deficit, and make inflation worse.

Shortly after assuming office in 2021, Biden shut down the Keystone pipeline. Roughly one year later, his plan for dealing with skyrocketing gas prices was to urge gas station owners to cut their prices. Even basic economic students know that the price of anything is dependent on supply and demand. Shutting down pipelines decreases the supply of oil and drives up prices. Democrats argue that because the Keystone pipeline hadn’t yet begun operation, the oil supply was unaffected by the shutdown. But they’re missing the point: When OPEC cut production to drive up prices, the Keystone could have helped keep prices down in North America—if it had been available.
Miles of unused pipe, prepared for the proposed Keystone XL pipeline, in a lot outside Gascoyne, N.D., on Oct. 14, 2014. (Andrew Burton/Getty Images)
Miles of unused pipe, prepared for the proposed Keystone XL pipeline, in a lot outside Gascoyne, N.D., on Oct. 14, 2014. (Andrew Burton/Getty Images)

Democrats have been pushing for a $15-an-hour minimum wage, which would be destructive to small businesses. Wages consume 20 to 35 percent of revenues for most businesses, and more than doubling the minimum wage would completely decimate any profits. This could cause all but the largest retailers, like Walmart, to shut down. Those that remain open would have to dramatically increase prices to compensate for higher costs. At the same time, Biden’s plan for fighting inflation was to tell businesses to “lower your costs, not your wages.”

Is it possible that the president doesn’t know that wages are a cost? Or, does he not understand that a basic profit calculation is revenue minus cost? Does he not realize that since companies are in the business of trying to earn more profit, they’re constantly cutting costs and trying to find ways to operate more efficiently? It’s hard to believe that anyone hearing his message would go back to their company and introduce cost-cutting measures that no one had thought of before.

Another cost-increasing Biden policy is the greenhouse gas pollution reduction target released in April 2021, calling for a 50–52 percent reduction in pollution by 2030. Biden claimed that using federal money to curb pollution will create “good-paying, union jobs.“ It’s unclear how he knows that the jobs created will be union jobs or even be ”good-paying.” What we do know from past experience is that increased pollution requirements will raise costs for most businesses. These costs will be passed on to consumers, as will any government debt incurred implementing these policies.
In 2021, Biden passed the $1.9 trillion American Rescue Plan to restore some of the businesses and private incomes his COVID-19 lockdowns and vaccine mandates destroyed. The lockdowns caused nearly 10 million Americans to lose their jobs, while small businesses suffered almost 200,000 extra closures. In June 2021, 6.2 million Americans were still unable to work because their places of employment had been shut down.
Protesters from Reopen NC protest COVID-19 lockdowns in Raleigh, N.C., on April 14, 2020. (Logan Cyrus/AFP via Getty Images)
Protesters from Reopen NC protest COVID-19 lockdowns in Raleigh, N.C., on April 14, 2020. (Logan Cyrus/AFP via Getty Images)
The American Rescue Plan, which was meant to create jobs, included extended unemployment benefits. These wouldn’t have been needed if the administration could actually create jobs or if Biden hadn’t destroyed the jobs in the first place.

The American Rescue Plan also continued eviction and foreclosure moratoriums—something that would have also been unnecessary if Biden had just let people work. Additionally, the program subsidized COVID-19 testing and vaccination programs, which, in many instances, became a requirement for participating in public and economic life, further dampening the country’s economic recovery.

The spending in the American Rescue Plan came in addition to nearly $900 billion of stimulus included in the $2.3 trillion Consolidated Appropriations Act of 2021. The enhanced unemployment benefits covered in the act added $300 per week of federal money, on top of state unemployment checks, for up to 79 weeks. Unemployment benefits vary from state to state, but most states pay a maximum benefit equal to 50 percent of income for a maximum of 26 weeks. With the additional $300, low-income workers were receiving more than they would have if they had been working. On top of this, they received stimulus payments. People were being paid to stay home for an extended period of time, which is why businesses are now suffering from a shortage of labor.

The Inflation Reduction Act of 2022 will cost more than $700 billion. It’s meant to decrease inflation by increasing government spending. Inflation is caused by government spending, government debt, and the government printing money, so it’s unclear how spending more government money will fix inflation.

In 2021, the Biden administration ran a deficit of $2.8 trillion. This is money that will be added to the national debt, now standing at more than $31 trillion. In 2022, the deficit is expected to be about half of what it was in 2021—a success Biden is touting. However, although he has solved part of the problem that he essentially created last year, the economy is in a more dismal condition than it was before. This year’s deficit should come in at about $1.4 trillion, which exceeds any deficit between 2009 (under Obama) and 2020.

If Biden were taking an Economy 101 exam, he would receive an F for his answers on how to fight inflation.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
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Antonio Graceffo
Antonio Graceffo
Author
Antonio Graceffo, PhD, is a China economic analyst who has spent more than 20 years in Asia. Mr. Graceffo is a graduate of the Shanghai University of Sport, holds a China-MBA from Shanghai Jiaotong University, and currently studies national defense at American Military University. He is the author of “Beyond the Belt and Road: China’s Global Economic Expansion” (2019).
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