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President Biden’s decision to stand down has flipped the Blue-Red Presidential betting odds. This seismic change has left Democrats jumping for joy. But their elation is premature. Yes, Vice President Kamala Harris has slightly better odds. But the election is three months away. Relying on Trump and Vance to keep shooting themselves in their heads is a prayer, not a winning strategy.
Historic Record of Accomplishment?
Go to Harris for President and read:
The Biden-Harris administration has achieved a historic record of accomplishment, including: bringing our economy back from the brink of disaster to create nearly 16 million new jobs; investing over $1 trillion in infrastructure projects like repairing roads and bridges, removing every lead pipe in America, improving public transit, and expanding access to high-speed internet; strengthening the Affordable Care Act and lowering health insurance premiums …
Let’s Get Real
Washington’s Presidency was historic. Lincoln’s Presidency was historic. Roosevelt’s Presidency was historic. Kennedy’s Presidency was historic. Biden’s Presidency was not historic. It’s been marked by big economic pluses and minuses, the most important of which, employment and inflation, as well as their rates under Trump have had little to do with Trump, Biden, Harris, or Congress.
As the following St. Louis Fed chart shows, COVID and its associated lock-down temporarily killed millions of jobs. The reopening of the economy coupled with reduced COVID mortality and morbidity — due to the pandemic’s natural progression and the rapid development of vaccines by scientists, not politicians — restored millions of jobs.
President Trump can’t be blamed for most jobs lost at the start of COVID. Neither can President Biden nor Vice President Harris be credited for most jobs restored as COVID’s danger waned. Both Administrations took major, highly successful, if terribly expensive steps to keep the economy running. Both deserve praise for their actions, if not for many aspects of policy implementation.
Inflation Was Mainly Caused by COVID, Not Deficit Spending Nor the Fed
COVID produced massive global shortages and supply-chain bottlenecks. The ensuring cumulative 20 percent inflation wasn’t, in the main, caused by Trump or Biden. Nor was it caused, in the main, by excessive deficit spending by either Administration. Yes, the Fed could have raised interest rates by a lot more and done so a lot sooner. But hitting an extremely weak economy over the head with a sledgehammer would have hurt more than helped. Instead, the Fed has, arguably, been setting its interest rate to accommodate, not control inflation. In the end, tens of millions of businesses set prices, not a single person even with the title of Federal Reserve Chairman.
Just the Economic Facts
The economy was in deep trouble under Trump. It remains in deep trouble.
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The country is bankrupt. Read the CBO’s long-term budget outlet. Federal debt held by the public (not monetized by the Fed) is now 97 percent of GDP, heading to 166 percent of GDP by mid century. This fiscal path promises to destroy our children’s economic futures.
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The deficit captures only those obligations Congress puts on the books. Take Social Security’s off-the-books, long-term $63 trillion unfunded liability. That’s not 97 percent, but 217 percent of this year’s GDP!
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Healthcare spending is 17 percent of GDP. This is the highest share spent by any major industrialized nation, yet it’s delivering 15th-best results.
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Median real weekly earnings are just 10 percent higher than they were a half century ago. Yet real compensation per worker has risen by a factor of 5! Clearly, we’ve had a massive rise in wage inequality.
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Our hodgepodge of 500 plus federal and state fiscal policies is locking the poor into poverty — generation after generation. One-in-four are in 60 percent or higher marginal net tax brackets!
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Median marginal net tax rates facing high-earners are already close to 60 percent. Billionaires are an entirely different story. They are paying little to no taxes and are generally doing so through entirely legal means.
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We’re spending close to $16K per student on public education, but rank 34th in math scores worldwide.
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The foreign born share of the population is close to the post-1850 high. That has both massive economic benefits and massive economic costs.
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The $1.2 trillion, 2021 10-year infrastructure bill represents less than 0.7 percent of projected 10-year GDP. This is the lowest share since 1950, not the biggest thing since sliced bread. Yes, it’s better than where things were heading under Trump. But this bill is nothing to write home about.
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Federal defense spending as a share of GDP is at a postwar low whereas global threats are at a postwar high.
Harris needs to articulate new economic answers, not run a victory lap. And these answers need to be consistent with enhancing national security and restoring long-term fiscal solvency. She can achieve both by making policy far more efficient while respecting her core principles and achieving her core goals.
New Economic Directions
Pledge to:
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Appoint an economics team of non-partisan technocrats who have not been associated with the Clinton, Obama, or Biden Administrations.
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Junk undefined deficit accounting, which is as ill-defined in economic theory as time is in physics theory, and pass the bi-partisan INFORM ACT, which measures our nation’s true long-term fiscal condition and the fiscal burden it implies for our children.
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Reform the fiscal system to make it fully inflation neutral (including the taxation of Social Security benefits) with monthly, not annual inflation adjustments.
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Appoint a non-partisan panel of economists, with not a single politician, to design a new, progressive federal tax-benefit system meeting three requirements: All Americans, including billionaires, pay their fair share. All Americans, including the poor, have the same incentives, at the margin, to work and save. All future Americans face the same lifetime net tax rates as do current generations.
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Phase out the existing Social Security system while paying off all accrued obligations to existing retirees and current workers and replace it with a fully funded, progressive retirement account system along the lines of Singapore’s. (See the Personal Security System.)
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Require Social Security to end its financial abuse of seniors by establishing an 18-month clawback stature of limitations on Social Security’s roughly 3 million annual overpayments.
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Eliminate Social Security’s Earnings Test, which is trapping tens of millions of early retirees into poverty at a huge loss in federal tax revenues and national output.
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Fill the Department of Education’s website with multiple, free, online K-12 courses covering every subject and taught by the best teachers in the country. This will, at essentially zero cost, provide universal education. Provide all school systems with free headsets and other equipment for students to spend a portion of the day, per each teacher’s choice, to receive, without disruption, the same and best education our country has to offer.
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Raise defense spending to 5 percent of GDP and strongly pressure all NATO members to do the same.
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Adopt the Better Care Plan, which provides uniform, universal affordable healthcare by competing healthcare providers at a much lower share of GDP than our current balkanized system of employer-based care, Medicare, Medicaid, and Obamacare. This will gradually lower federal healthcare spending by roughly 5 percent of U.S. GDP, providing an enormous contribution to fiscal sustainability. Employers who wish to continue to provide health insurance can do so, but will need to accept non-employees into their plans.
Vice President Harris shouldn’t commit to any of these proposals. She should simply raise them as proposals she is considering. As a group, they demonstrate her commitment to national security, fiscal sustainability, fundament tax and welfare-system reform, providing universal high-quality education, affordable, competitive universal healthcare, improving the welfare of the elderly, radically reforming our dysfunctional, insolvent Social Security system, and ending out fiscal policy’s decade’s long practice of locking the poor into poverty.