Tag: economy

The Bankruptcy of Bidenomics

President Joe Biden spent much of his third year in the White House trying to brag about what he’d done for the American economy.

In February, speaking to a chapter of the International Brotherhood of Electrical Workers in Maryland, he declared, “For the past two years, we’ve been carrying out my economic plan that grows the economy from the bottom up and the middle out, not the top down.” Biden then recited a laundry list of economic indicators. The unemployment rate was 3.4 percent. Gas prices had dropped by $1.60 per gallon. In his first two years in office, he said, “we created 800,000 new manufacturing jobs.” Inflation was down from its peak, and take-home pay was up. “We’ve got more to do, but I’m telling you, the Biden economic plan is working because of you all,” he said, pausing for applause. “And I really mean it.”

This was typical of Biden’s prepared public remarks. In at least a dozen speeches and statements in 2022 and 2023, the president referred to either “my economic plan” or “the Biden economic plan,” crediting himself and his administration with the state of the economy. “My economic plan is showing results,” he said in a prepared statement in November 2022. “My economic plan is working,” he said in July 2023.

In summer 2023, Biden finally gave that plan a name. Or rather, he adopted the name his critics had already used to describe his policies: Bidenomics.

The term had begun as a derisive label for the president’s economic foibles. An unsigned July 2022 editorial in The Wall Street Journal bore the headline “Bidenomics 101.” It took issue with Biden’s public demand that “companies running gas stations and setting prices at the pump” bring down their prices—a sort of Nixonian jawboning where you respond to inflation by trying to bully companies into keeping prices low. The president, the editorial charged, “doesn’t appear to know anything about how the private economy works.”

Nearly a year later, in a speech in Chicago, Biden set out to claim Bidenomics as his own. The president framed his approach as “a fundamental break from the economic theory that has failed America’s middle class for decades now.”

Rather than “trickle-down economics” that helped only the already well-off, Biden said, he was pursuing an economic agenda that rejected the “belief that we should shrink public investment in infrastructure and public education.” He touted his record,crediting three major laws he’d signed—the American Rescue Plan (ARP), the Infrastructure Investment and Jobs Act, and the Inflation Reduction Act—with helping to set the U.S. economy on a better track. “Guess what?” he said. “Bidenomics is working.”

Biden’s speeches were defensive in tone, and for a reason: Voters have consistently reported broad unhappiness with the economy. Surveys find low support for Biden’s handling of economic policy across nearly every demographic, including the younger voters and minorities who are typically Democratic stalwarts. The president’s embrace of Bidenomics was an attempt to convert skeptics into believers by arguing, more or less, that the economy was actually pretty great and that this was because of him and his policies.

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Record number of Americans are homeless amid nationwide surge in rent, report finds

A growing number of Americans are ending up homeless as soaring rents in recent years squeeze their budgets.

According to a Jan. 25 report from Harvard’s Joint Center for Housing Studies, roughly 653,000 people reported experiencing homelessness in January of 2023, up roughly 12% from the same time a year prior and 48% from 2015. That marks the largest single-year increase in the country’s unhoused population on record, Harvard researchers said. 

Homelessness, long a problem in states such as California and Washington, has also increased in historically more affordable parts of the U.S.. Arizona, Ohio, Tennessee and Texas have seen the largest growths in their unsheltered populations due to rising local housing costs. 

That alarming jump in people struggling to keep a roof over their head came amid blistering inflation in 2021 and 2022 and as surging rental prices across the U.S. outpaced worker wage gains. Although a range of factors can cause homelessness, high rents and the expiration of pandemic relief last year contributed to the spike in housing insecurity, the researchers found. 

“In the first years of the pandemic, renter protections, income supports and housing assistance helped stave off a considerable rise in homelessness. However, many of these protections ended in 2022, at a time when rents were rising rapidly and increasing numbers of migrants were prohibited from working. As a result, the number of people experiencing homelessness jumped by nearly 71,000 in just one year,” according to the report.

Rent in the U.S. has steadily climbed since 2001. In analyzing Census and real estate data, the Harvard researchers found that half of all U.S. households across income levels spent between 30% and 50% of their monthly pay on housing in 2022, defining them as “cost-burdened.” Some 12 million tenants were severely cost-burdened that year, meaning they spent more than half their monthly pay on rent and utilities, up 14% from pre-pandemic levels.

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Pirate Streaming Sites Cost Hollywood $30 Billion Annually

“[P]iracy involving illegal streaming services as well as file-sharing costs the US economy about $30 billion in lost revenue a year and some 250,000 jobs,” reports the far-left Bloomberg.

That estimate comes from the U.S. Chamber of Commerce’s Global Innovation Policy Center. “The global impact,” the report adds, “is about $71 billion annually.”

“Ever since taking on Netflix Inc. at its own game, old Hollywood has struggled to turn a profit in streaming, with the likes of Disney+, Peacock and Paramount+ losing billions of dollars each year[.]” This has Wall Street living with the fear that streaming services will never match the massive income generated by cable TV. And that’s because they won’t.

“But the age of streaming has been a boon for some unintended winners,” Bloomberg found. Primarily “pirates that use software to rip a film or television show in seconds from legitimate online video platforms and host the titles on their own[.]” These “illegitimate services … rake in about $2 billion annually from ads and subscriptions.”

Because these pirate sites don’t share the burden of the costs associated with producing the movies and TV shows they stream for their subscribers, the Motion Picture Association (MPA) believes their profit margins reach as high as 90 percent.

The MPA says there are about 130 illicit streaming sites earning five to ten dollars a month from each of two million subscribers.

“Some of these pirate websites have gotten more daily visits than some of the top 10 legitimate sites,” Karyn Temple, the MPA’s general counsel, told Bloomberg. “That really shows how prolific they are.”

Within two years, starting with 2022, the cumulative losses will climb to $113 billion.

The article gives some of the two million illicit subscribers the benefit of the doubt. The pirate sites are sophisticated enough to look legitimate, so people might not know it’s illegal. Still, there is a full-court legal press to put a stop to this. Millions of unvetted illegal aliens flooding over the border? Hollywood doesn’t care. But don’t you dare not pay full price for Squid Game.

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California’s Attack on Gig Work Predictably Drove Workers Out of Jobs

California’s attempt at forcing gig workers to become traditional employees backfired by driving many of those workers out of their jobs.

In the wake of a new law (Assembly Bill 5) that was intended to reclassify many independent contractors as regular employees, self-employment in California fell by 10.5 percent and overall employment tumbled by 4.4 percent, according to a study released Thursday by the Mercatus Center, a free market think tank housed at George Mason University. In professions where self-employment was more common, the effects were more dramatic, and in some fields employment declined by as much as 28 percent after A.B. 5’s implementation.

Meanwhile, researchers Liya Palagashvili, Paola A. Suarez, Christopher M. Kaiser, and Vitor Melo reported finding no increase in the number of employees classified as full employees. In professions where there was an uptick in traditional employees receiving W-2 wages and benefits, those increases were not large enough to cancel out the number of self-employed workers who left jobs.

“These results suggest that AB5 did not simply alter the composition of the workforce as intended by lawmakers,” the four researchers wrote. “Instead, our findings suggest that AB5 was associated with a significant decline in self-employment and overall employment in California.”

That could have significant implications for the Department of Labor’s (DOL) recently announced attempt at duplicating California’s policy across the rest of the country.

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State Governments Promised Private Companies More than $10 Billion in Subsidies Last Year

Governments often make deals with private companies, offering generous subsidies to encourage development in their respective states. The year 2023 was unfortunately no exception.

According to a new report from Good Jobs First, a watchdog group that tracks economic development deals, 16 states promised more than $10 billion to private companies last year. The group counted 23 “megadeals,” which it defines as any agreement involving at least $50 million in subsidies to a private company.

The most spendthrift state was Michigan, which agreed to shell out $2.73 billion for three projects, including $1.7 billion to Ford Motor Company, the single largest economic development deal in the nation last year. The Center for Economic Accountability, a Michigan-based think tank that opposes corporate welfare, previously named the Ford subsidy 2023’s Worst Economic Development Deal of the Year.

Economic development subsidies are often sold with the promise that the state will recoup its initial investment in the form of greater tax revenues, as the development projects spur economic growth. Michigan Gov. Gretchen Whitmer pledged that the Ford project “has an employment multiplier of 4.38, which means that an additional 4.38 jobs in Michigan’s economy are anticipated to be created for every new direct job.” A multiplier of 4.38 would be extraordinarily high, and a much more realistic number would be closer to 1.5 or 2.

When broken down by the number of jobs the subsidies are supposed to directly create, the math is still unfavorable. Michigan’s $1.7 billion investment, intended to “create 2,500 good-paying jobs,” works out to a staggering $680,000 per job, for which state taxpayers would be on the hook. (Ford has since announced it would be “re-timing and resizing some investments,” which included paring back its project in Michigan and lowering its job creation goal to 1,700).

Good Jobs First noted in its report that 18 of the deals announced last year included “job creation targets,” for a total of 34,928 jobs promised. When compared against the amount of state funding promised in return, though, that works out to an average subsidy of $262,800 per job.

Among the other most egregious examples on the list, Amazon received property tax exemptions worth $1 billion over 15 years for its Oregon data centers. At the time, Good Jobs First noted that Amazon—which recorded $4.3 billion in profits and $524.9 billion in revenue last year—”hasn’t said how many jobs it will create, but the program under [which] the tax breaks were approved requires just 10 jobs per project.”

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Protectionism Ruined U.S. Steel

Few people, and even fewer senators, would blink an eye at the news that the 690th most valuable company in the United States was being sold.

Unless, as is the case, that company happened to be named “U.S. Steel.”

In response to last month’s news that U.S. Steel would be purchased by Japan-based Nippon Steel, a bipartisan group of senators—including Sherrod Brown (D–Ohio), John Fetterman (D–Penn.), Josh Hawley (R–Mo.), Marco Rubio (R–Fla.), and J.D. Vance (R–Ohio)—have condemned the decision. The three Republicans have gone a step further by formally asking the Biden administration to block the deal because it represents a supposed threat to national security. As a political matter, the reactions to the sale of U.S. Steel have served as a nice reminder that the impulse to intervene in the private affairs of publicly traded companies runs across both major parties.

As a matter of economic policy, however, those senators have completely missed the point. More government intervention is not going to save U.S. Steel. Indeed, decades of protectionist policies seem to have contributed to its downfall.

“Arguably, US Steel has been a disappointment since the day it was formed,” writes Brian Potter, a senior infrastructure fellow at the Institute for Progress, in his Construction Physics Substack newsletter. “The company’s large size made it unwieldy to manage, and it was late to every major advance in steelmaking technology of the last 100 years, from continuous rolling to the basic oxygen furnace to the minimill….As far as I can tell, no major steelmaking technology over the last century came out of US Steel.”

Though U.S. Steel enjoyed global dominance in the aftermath of World War II, in no small part because the war had wrecked large portions of Europe’s and Japan’s industrial bases, it was already on the decline by the 1960s and early 1970s. After Nippon—the company now poised to buy out what remains of U.S. Steel—surpassed it as the world’s largest steel company in 1971, U.S. Steel responded “not by trying to improve their operations, but by demanding government protection from ‘unfair’ foreign trade practices,” writes Potter.

Thus began a 50-plus-year effort by the federal government to prop up U.S. Steel. Those interventions have taken many forms, including “hundreds of import restrictions; tens of billions of dollars in state, local and federal subsidies and bailouts; exemptions from environmental regulations; special ‘Buy American’ rules just for integrated steelmakers like U.S. Steel; and federal pension benefit guarantees,” wrote Scott Lincicome, vice president of the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies, in a 2021 rundown on how protectionism had failed American steel companies and their employees. Even before President Donald Trump slapped 25 percent tariffs on nearly all imported steel, about half of all anti-dumping tariffs imposed by the federal government were aimed at various types of foreign-made steel, according to Lincicome.

What has all that government aid done for U.S. Steel? Today, the company makes about one-third as much steel as it did in the mid-1950s and employs about 10 percent as many people as it did during its heyday. U.S. Steel was dropped from the S&P 500 in 2014 and ranked as the 690th most valuable company based in the United States before the Nippon purchase was announced. As Potter notes, that means U.S. Steel ranks behind the Texas Roadhouse steakhouse restaurant chain and employs around the same number of people as Chewy, the online pet care delivery service.

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‘Severe revenue decline’: California faces a record $68 billion deficit — here’s what is eating away at the Golden State’s coffers

California is dealing with a revenue shortfall partly due to a delay in 2022-2023 tax collection. The IRS postponed 2022 tax payment deadlines for individuals and businesses in 55 of the 58 California counties to provide relief after a series of natural weather disasters, including severe winter storms, flooding, landslides and mudslides.

Tax payments were originally postponed until Oct. 16, 2023, but hours before the deadline they were further postponed until Nov. 16, 2023. In line with the federal action, California also extended its due date for state tax returns to the same date.

These delays meant California had to adopt its 2023-24 budget before collections began, “without a clear picture of the impact of recent economic weakness on state revenues,” according to the LAO.

Total income tax collections were down 25% in 2022-23, according to the LAO — a decline compared to those seen during the Great Recession and dot-com bust.

“Federal delays in tax collection forced California to pass a budget based on projections instead of actual tax receipts,” Erin Mellon, communications director for California Gov. Gavin Newsom, told Fox News. “Now that we have a clearer picture of the state’s finances, we must now solve what would have been last year’s problem in this year’s budget.”

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EVERYONE LOVES A GENEROUS GOVERNMENT UNTIL THEY HAVE TO PAY FOR IT

Governments, like individuals, can spend liberally with great generosity, or they can be frugal. Everyone receiving government money loves the state’s free-spending generosity, as it is “free money” to the recipients.

But there is no such thing as truly “free money,” a reality discussed by Niccolo Machiavelli in his classic work on leadership and statecraft, The Prince, published in 1516. In Machiavelli’s terminology, leaders could either pursue the positive reputation of being liberal in their spending (not “liberal” in a political sense) or suffer the negative reputation of being mean, i.e. miserly, tight-fisted and frugal.

Machiavelli pointed out that the spending demanded to maintain the reputation for free-spending liberality soon exhausted the funds of the state and required the leader to levy increasingly heavy taxes on the citizenry to pay for the state’s largesse.

Once we examine this necessary consequence of liberal spending, it turns out the generous government is anything but generous, as it is eventually forced to impoverish its people to support its spending.

It is the miserly leader and state that is actually generous, for it is the miserly leader / state that places a light burden on the earnings and livelihoods of the citizenry.

As Machiavelli explained, taxes and the inflation that comes with free spending both rob everyone, while the state’s generosity is a political process that necessarily distributes the largesse asymmetrically:

If he is wise he ought not to fear the reputation of being mean, for in time he will come to be more considered than if liberal, seeing that with his economy his revenues are enough, that he can defend himself against all attacks, and is able to engage in enterprises without burdening his people; thus it comes to pass that he exercises liberality towards all from whom he does not take, who are numberless, and meanness towards those to whom he does not give, who are few.

The profligate state and leader fail, for their resources are squandered.

We have not seen great things done in our time except by those who have been considered mean; the rest have failed. A prince, therefore, provided that he has not to rob his subjects, that he can defend himself, that he does not become poor and abject, that he is not forced to become rapacious, ought to hold of little account a reputation for being mean, for it is one of those vices which will enable him to govern.

Machiavelli understood that the positive reputation generated by profligacy decays as quickly as solvency. Everyone loves getting “free money” from the state until the bill comes due: the decay of purchasing power (i.e. inflation), higher taxes and fees, and the ever-increasing burdens of interest to be paid on soaring state debts that squeezes out all other spending.

And there is nothing wastes so rapidly as liberality, for even whilst you exercise it you lose the power to do so, and so become either poor or despised, or else, in avoiding poverty, rapacious and hated. And a prince should guard himself, above all things, against being despised and hated; and liberality leads you to both. Therefore it is wiser to have a reputation for meanness which brings reproach without hatred, than to be compelled through seeking a reputation for liberality to incur a name for rapacity which begets reproach with hatred.

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Has A “Silent Depression” Already Started In The United States?

The Biden administration and the corporate media are telling us over and over that the economy is just fine, but the term “silent depression” has been going viral on TikTok.  Housing, vehicles, food and just about everything else that we spend money on is far more unaffordable today than it was during the Great Depression of the 1930s.  A realtor in Florida named Freddie Smith posted a video on TikTok with some absolutely startling numbers about the cost of living in the United States today, and that is what started the “silent depression” trend…

TikTok user Freddie Smith, a realtor based in Orlando, posted a video in September claiming that the U.S. economy is in what he calls a “Silent Depression.” In the video, which has amassed nearly 800,000 likes, Smith compares the average 2023 salary and basic costs to those of the Great Depression to highlight the growing cost-of-living crisis in the country.

“If you look back to the Great Depression, the house was only three times the average salary. Now, it is eight times the average salary,” Smith said. “The car was 46% of the salary, the car today is 85% of the salary. And here’s the craziest part, the rent was 16% of the average salary, it is now 42% of the average salary.”

Of course he is right on target.

There is a reason why 62 percent of the country is currently living paycheck to paycheck.

The cost of living has become incredibly oppressive for most Americans, and nobody can deny that reality.

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62 Percent Of Americans Live Paycheck To Paycheck And The Bottom Of The Economic Food Chain Is Already Collapsing

Thanks to a soaring stock market, the wealthy are feeling very good about things right now, but the rest of the country is really hurting.  Homelessness is rising at the fastest pace ever recorded, the number of children that are suffering from hunger is rapidly growing, and more than 60 percent of all Americans are living paycheck to paycheck.  The mainstream media continues to insist that the economy is in good shape, but how can that possibly be true if nearly two-thirds of the entire nation is just barely scraping by?  According to brand new numbers that were just released, the percentage of U.S. adults that live paycheck to paycheck has actually increased by 4 percent just since the month of March…

  • Sixty-two percent of adults in December said they live paycheck to paycheck, up from 58 percent in March.
  • Forty percent of consumers living paycheck to paycheck have super-prime credit scores.
  • Fifty-seven percent of consumers who own credit cards are living paycheck to paycheck.

Yikes!

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