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The Biden administration has already won its place in the history books, writes NRO. Rather than quibble with anyone’s point of reference, here’s the record: Joe Biden’s presidency is the worst ever since the 1970s. Or Joe Biden’s presidency is the worst ever on record.
The Biden Administration’s Magical Thinking
In SpecatatorWorld, Oliver Wiseman cites “egregious” examples of the Biden administration’s “magical thinking” approach to economics.
- The president’s insistence that there is no relationship between public spending and inflation
- The related nonsensical notion that a massive multi-trillion-dollar spending package will actually help bring prices down
- Perhaps the most notorious, inflation-related mistruth: that it would only be a short-term blemish on an otherwise booming economy.
- The risible idea that, by virtue of the fact that most emergency pandemic spending automatically expired on Biden’s watch, Biden deserves to be viewed as one of the toughest book-balancing budget hawks in US history.
All These Crucial Traits Are Likely Wrong
They’re all plainly wrong, continues Mr. Wiseman.
- In many cases, subsequent developments would quickly prove that to be the case. But bogus economic arguments aren’t exactly unusual in Washington.
- Their more distinctive characteristic is their outlandishness. There’s economic salesmanship, and then there’s the kind of completely unserious spin Team Biden indulges in.
How to Determine Recession
From the White House Council of Economic Advisors:
“How do economists determine whether the economy is in recession?”
What Is a Recession?
While some maintain that two consecutive quarters of falling real GDP constitute a recession, that is neither the official definition nor the way economists evaluate the state of the business cycle.
White House Not Expecting Good News
Instead, both official determinations of recessions and economists’ assessment of economic activity are based on a holistic look at the data — including the labor market, consumer and business spending, industrial production, and incomes. Based on these data, it is unlikely that the decline in GDP in the first quarter of this year — even if followed by another GDP decline in the second quarter — indicates a recession.
How Right Was Ronald Reagan?
Ronald Regan ran for the White House in the 1980 election with the goal of curbing the roaring inflation he inherited from President Jimmy Carter. Ronald Reagan succeeded. By the time he left office in 1989, year-over-year inflation was down to 4%, according to Joseph Sullivan in NRO. Sound high? That was a third of the 12% inflation swamping the U.S. economy when Reagan took office in January 1981.
On economics, nowhere is Ronald Reagan’s famous mantra – “if you’re explaining, you’re losing” – truer than on economics, writes Mr. Wiseman.
White House hype will not make up for the price being paid by American households for its management of the economy. In fact, it may make the political consequences of a souring economy worse. After all, a guaranteed way to anger voters anxious and frustrated about rising prices and a souring outlook is with unconvincing insistences that everything is, in fact, just fine.
Given the recent inflation news, the question is not whether or not the Fed will raise rates, of course, but by how much. Most Fed watchers expect a 0.75 percent increase. It’s a reminder that, for all that Americans are already feeling the impact of rising prices and the medicine to fight those rising prices, a great deal of the hit is yet to come.
And if Biden officials think that quibbling over the definition of inflation can soften the political blow of that economic pain, they are in for a nasty shock.
Is Inflation Government’s Fault?
To paraphrase Milton Friedman, inflation always and everywhere is a monetary phenomenon. Inflation is a result of too much money, or a more rapid increase in the quantity of money than an output.
An important next step is to recognize that today, governments control the quantity of money. As a result, inflation in the United States is made in Washington and nowhere else.
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