Memo to the American Middle Class on the Harm Inflicted by Biden’s Economic Policies
Memo to the American Middle Class on the Harm Inflicted by Biden’s Economic Policies
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Executive Summary:
-Joe Biden’s Executive Orders on the Keystone Pipeline, Leases and Permits for Oil and Natural Gas Fracking on Federal Lands and reentrance into the Paris Climate Accords destroys jobs and increases the costs of energy while doing little to actually help the environment or reverse global warming.
-Joe Biden’s Executive Orders halting deportations and border wall construction magnify the negative externalities of immigration which are particularly harmful to more vulnerable portions of the US population.
-Joe Biden’s $1.9 trillion dollar stimulus plan includes wasteful spending that increases deficit spending which will place a long term drag on economic growth.
-The proposed $15 per hour Federal Minimum wage will destroy over 1.5 Million Jobs and claims it will elevate 900,000 Americans out of poverty are therefore specious.
-Increasing corporate tax rates back up to 35% will cause multinationals to stop investing in the USA, force domestic businesses to close while contributing to an extended period of high unemployment.
-Bipartisan legislative compromise would produce better economic policies that could address Covid-19 relief, the environment, fund government investment in infrastructure while reducing poverty in America.
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“If one truly cares about the well-being of humanity, then the best thing one can do is to bolster free societies’ ability to develop prosperity and pursue happiness through a free market by keeping taxes low, regulation light and opportunity abundant. Leaders do this not through the passage of laws or by raising new taxes but by modeling the way and helping to build a culture of compassionate accountability and personal responsibility.” – Theodore William Johnson
President Joe Biden has been busy over the first four weeks of his presidency. As someone who during his years of service in the Senate was a champion of the Blue Dog wing of the DNC, and someone who ran for president as a self-described moderate, his official economic policies as illustrated by his executive orders, proposed legislative agenda and public statements are alarmingly radical, contrarian to sound economic principal and present a direct threat to the economic well-being of most Americans as his policies likely would reduce the wealth of the citizenry at all tax brackets while increasing poverty rates amongst America’s most vulnerable populations. Upon assuming office, Joe Biden nearly immediately set about paying back environmental special interest groups that supported his campaign by using executive orders to cancel the Keystone XL Pipeline, freeze leases and pause permits for new oil and gas exploration on federal lands and re-entered the Paris Climate Accords. By executive order, Joe Biden has already paused construction and the obligation of funds for the Southern Border Wall while ordering a moratorium on deportations regardless of criminal convictions or authentic public safety concerns while making it easier for economic migrants to enter, remain and compete for limited jobs in the US while specious claims of asylum are considered. Joe Biden has rejected efforts at a smaller and more focused bi-partisan Covid-19 Relief bill instead pushing forward and enacting a massive $1.9 trillion dollar stimulus bill funded almost entirely through new debt that provides direct payments even to wealthy Americans unaffected by the pandemic, student loan relief even to graduates with high paying jobs and bailouts to wealthy States like California and New York. Included in the $1.9 Trillion Covid-19 Relief/Stimulus Bill is a proposal to increase the Federal Minimum wage to $15/ hour. In the late stages of Biden’s presidential campaign Biden committed to repealing Trump era tax cuts, meaning his Administration intends to increase Corporate Tax Rates from 21% back up to 35% at the nearest legislative opportunity. While there may be good intentions behind the Biden Administration’s executive and legislative actions, this populist left wing economic agenda is detached from sound and well proven economic principal and will adversely impact the economy in both the near and long-term, harming the very people President Biden is purported to be helping. President Joe Biden’s Economic Policies will create short-term asset bubbles, near-term inflation, prolong higher unemployment rates, suppress median income and work force participation, and place a drag on long-term growth while increasing the risk of a severe recession over the next decade.
The Economic Consequences of Biden’s Executive Orders Relating to Global Warming
President Joe Biden’s executive orders canceling the Keystone XL Pipeline, freezing leases and pausing permits for new oil and gas exploration on federal lands and re-entry into the Paris Climate Accords have already destroyed high-paying jobs, increased energy costs for American families and undermined US National Security while actually contributing to an increase in greenhouse gas emissions believed to cause global warming. The cleanest and safest way to transport crude oil is through pipelines. The purpose of the Keystone Pipeline was to reduce the need for moving Canadian Crude oil by train which bears the risk of lethal explosions in the US communities through which the rail lines traverse and by truck which both carries the risk of lethal explosion and also results in a more significant emission of greenhouse gasses. The project was projected by Barack Obama’s State Department to create 22,000 high paying jobs and its abrupt termination immediately destroyed more than 10,000 high paying union jobs. The project brought significant tax revenues to both high-poverty regions of the US and also to Native American Tribal Nations. While there was significant special interest opposition to this project, careful analytics show that canceling the keystone pipeline does little to reduce greenhouse gasses and may in fact increase greenhouse gasses as a result of increased trucking and pushing global energy production to countries with lower environment standards than USA and Canada. At a time when unemployment rates are above 6.3% and budget deficits are at an all-time high, canceling the keystone project while already underway is completely nonsensical and produces devastating economic harm on the families and communities for whom the Keystone XL pipeline was an economic lifeline. Unemployment checks or specious promises of yet to be created green jobs are a boot to the face of the affected American workers and families who may have already relocated for this work, committed themselves to leases or mortgages and whose children may already be settled into new schools. This disruption will not only harm these families economically but also carry serious health consequences.
One of the great recent accomplishments of America’s scientists, engineers, entrepreneurs and workers was the massive domestic energy production unleashed by new fracking technologies. The boom in US natural gas provides America with a less expensive, cleaner form of energy that lower household expenses, reduces our nation’s greenhouse gas emissions while opening a geo-strategic opportunity to liberate Europe from its dependence on Russian natural gas currently holding hundreds of millions of people living in allied NATO countries hostage to Russian control of this vital energy source. US oil production and exportation provides US foreign policy practitioners flexibility as we reduce our reliance on oil from the Middle East and North Africa, pushing down the costs of both energy and transportation for Americans while environmentally cleaning the world’s oil supply. The lower energy costs spur economic growth, while the production creates both wealth and jobs that provides severely needed tax revenues which can be invested in infrastructure, education, public health, public safety and defense. Much of the oil and natural gas reserves ripe for extraction via these new technologies exist beneath the 640 million acres of federally controlled land or water. Biden’s executive order effectively halts this extraction, robbing our democratic republic of the benefits which include high paying jobs, energy independence, wealth creation, lower energy costs and badly needed tax revenues often benefiting regions of America with above average rates of poverty to build a more prosperous future. With Oil and Natural gas supporting 9.8 million US jobs or 5.6% of US total employment[i] and projected to contribute an increasing number of jobs over the next 5 years, Biden’s executive orders present sweeping economic damage and undermine incentives for degrees in STEM education. Previously struggling regions like North Dakota for example, which has the nation’s lowest unemployment rate and fast-growing income as a result of the fracking boom, now have uncertain futures.
Re-entry into the Paris Treaty Accords further imperils the US economy and was unnecessary since America is leading the world by example, surpassing the expectations set by the Paris Treaty Accords in terms of reductions in greenhouse gas emissions largely because of natural gas’s growing market share in US energy production. The treaty fails to hold culprits like China, who emitted nearly twice as much C02 gas as the US and built three times as many coal power plants in 2020 as the rest of the world combined, accountable while requiring US taxpayers to subsidize this adversarial governments' nascent clean energy industries[ii]. Worse still, the treaty and declaration of a climate crisis create the pretext for devastating regulations that will suffocate US Oil and Gas industries along with the jobs and wealth they create, with an analysis by the US Chamber of Commerce suggesting it would destroy $250 billion dollars in GDP and around 2.7 million jobs![iii] These regulations will harm all Americans but hit America’s most economically vulnerable hardest with Joe Biden’s proposed fracking ban for example, projected to consume 6.8% of the bottom quintile’s income[iv]. Americans have a moral obligation for environmental stewardship, but Biden’s actions risk contributing to a poverty epidemic while doing little at all, indeed the Paris Climate Accords allow China to continue increasing C02 emissions until 2030, and quite possibly worsening the dangers of human contributions to climate change as global energy productions is forced out of USA where environmental standards are high to regions of the world where environmental standards are low and auxiliary perils such as human rights abuses, arms build ups and terrorism may be funded. While policy makers should certainly be mindful of humanity’s environmental impact, the manner in which special interests have framed the debate around environmental policy is undermining better policy. In truth, Natural Gas is the fastest growing source of energy in the USA and it's much cleaner than either oil or coal and cheaper than solar, wind or nuclear. As natural gas has increased its market share, greenhouse gas emissions have gone down. While wind power is even cleaner in terms of greenhouse gasses, it still carries significant and arguably worse environment harm, mainly to vulnerable majestic north American bird populations such as falcons, eagles and hawks butchered by the thousands with anywhere from 140,000 to 500,000 birds in turbine collisions each year[v] and through the deforestation created by the logging of Balsa wood used to produce the turbines[vi]. Both solar and wind are very unreliable sources of energy as weather changes halt energy production, often at the times when energy demand is highest. To satisfy current energy demands, land use requirements would be extreme compared to natural carbon energies and bear serious harm to sensitive ecological habitats. The materials for solar still involve harmful mining and the batteries to store both forms of renewable energy bring significant ecological perils as exemplified by Bolivian lithium mining. Solar Panels only last about 25 years, and there is no plan on how to manage the waste created by these panels when they exceed their useful life. Even with extensive subsidies, the relatively high costs attached to producing energy from solar power lead at best to ultrathin profit margins (or more commonly business losses) providing for only a limited number of relatively lower paying jobs while increased subsidies increase deadweight losses. The high-quality jobs lost by canceling the Keystone Pipeline and severe restrictions on the extraction of oil and natural gas on federal lands cannot be efficiently replaced by either renewable energy or federal spending. According to Zip Recruiter, an oil rig worker, for example, on average earns nearly $100,000 per year while a solar panel technician make less than $44,000 per year on average.
The Economic Consequences of Biden’s Executive Orders Relating to Immigration
Joe Biden’s open border policies have the potential to harm vulnerable American families by increasing housing costs, increasing competition for limited job openings, driving down wages, restricting access to healthcare, overcrowding classrooms while stressing both infrastructure and natural resources. While the USA has benefited from immigration and should continue to benefit from a well thought out immigration policy supply demand curves don’t lie and real harm is created for many American families by open border policies that allow for unfiltered immigration. As the US population increases, demand increases for housing, jobs, healthcare, education and resources. Immigration increases the population. The increased demand for housing resulting from immigration drives up housing prices. This is why in my San Jose zip code (95134) where more than 50% of the population are immigrants, a one-bedroom apartment homes start at prices above $2100/month and frequently exceed $2700/month. When the Covid-19 pandemic largely froze immigration, rental prices collapsed by more than 20% when the 8% reduction in rent and two-month free concessions were combined. While a wide range of persons who either work or are invested in real estate may benefit from these increases in pricing, many Americans have been dislocated by the rapid increases in housing prices that resulted from mass immigration to cities like San Jose, CA. Many, if not the majority of my peers have moved out of the Bay Area either to the Sacramento area, Southern California or out of state where housing prices are lower. While some have left the Bay Area by choice to pursue new opportunities, in my lifetime, hundreds of thousands and likely millions of persons born the Bay Area were forced to leave the Bay Area because of rapid increases in housing costs and other expenses which without the factor of mass immigration simply would not have happened. The dislocation created by skyrocketing housing prices has disproportionately impacted black families who have seen their percentage of Santa Clara County’s population continue to decline. One of the primary reasons that lower skilled Americans with lower levels of education have struggled so much in America over the past 30 years has been intense competition for limited jobs with recent immigrants. This reality is particularly harmful to minority communities, who historically have not had as much access to higher education or pathways to a mercantile class that has benefited from lower labor costs provided by the increased labor supply of mass immigration. Often overlooked is the reality, that even college educated Americans struggle to compete for jobs at a major tech firms with foreign workers from nation’s like China and India where national education policy guided them into an education developed to target these jobs. While US workers could be trained to fill these jobs, the training would require investment from big tech companies and upon completion of training, would likely require higher compensation to retain and so permissive immigration policies have allowed big techs to instead import foreign labor either as employs or as contacted “consultants.” While tough for those Americans looking for jobs in big tech, but too be fair there has been significant economic gains from facilitating the migration of high skilled workers to fill these jobs, there is need improve labor regulations and tighten enforcement to prevent exploitation of legal loopholes so that we to be sure these tech companies are hiring qualified US applicants before they turn to foreign labor.
When immigration is unfiltered, economic migrants tend to come in mass from poor regions of the world with weak or broken states where access to higher education and even high school level education is very restricted. These immigrants are unlikely to have the prerequisite education or grasp of the biological sciences to proportionally work in the medical fields, reducing the proportion of qualified doctors and nurses to the population. For the US citizenry, this means longer waits for medical care and treatments which can devastate health outcomes as treatable fatal illness go undiagnosed until it is too late. Paying for the medical care of poor immigrants diverts limited resources away from vulnerable American families who could have benefited from the financial support for medical care. More immigrants have chosen to move to California than any other state and the lack of English language skills among these immigrants along with higher student to teacher ratios have lead to a deterioration in the quality of California’s elementary, middle and high school public education, which now ranks 38th among the 50 states despite more funding per head and a top ranked public university system. Larger class sizes have a huge role, but the sad statistical truth is that English learners create the greatest drag on educational progress that is highly predictive of future criminality and welfare dependence. Unfiltered immigration pushes up student to teacher ratios and swells the percentage of students who speak English as a second language who are more likely to struggle to keep pace with educational goals and often slow down the pace of learning for the entire class.
More immigration also means more people in cars, driving from place to place which contributes to greater amounts of traffic, problems that plague the cities with disproportionate amounts of immigration. This increased traffic congestion not only causes pollution, it also forces families to be apart for longer and together less. California is already facing severe water shortages which imposes harsh costs on Californian families and farmers. In San Jose, CA for example, rates for water have increased by 60% since 2015 and under a new proposal would increase an additional 30% over the next four years[vii]. Imbalances between supply and demand are at root in these rate increases and immigration has had a significant contribution to this demand imbalance. Immigration has overpopulated California and has been the most significant driver of water shortages.
There are many benefits to immigration including faster GDP growth and labor supply, not to mention the extensive individual contributions of many immigrants to our State and Republic. We are indeed an immigrant nation and my purpose is certainly not to stoke anti-immigrant sentiment, rather to point out the very real negative externalities of unfiltered immigration and illustrate the importance of taking them into account as immigration policies are formulated and enforced to benefit the US economy at large while protecting vulnerable American families from acute economic harm. Trump’s rhetoric may have been counter-productive to this discourse and while immigrants on the whole are actually less likely to engage in crime than natural born citizens and asylum recipients less likely to engage in acts of terror, it is important to recognize the extreme violence and public harm that has been perpetrated by the drug cartels who prosper from human and drug smuggling facilitated by open border policies and the very real danger of terrorists seeking to exploit open borders and weak immigration law enforcement to forge terrorist attacks on the US Homeland. Biden’s immigration related executive orders protect convicted criminals from deportation and leave vast swaths of our border open to drug and human smugglers. These orders are immoral because they will lead to tens of thousands of American families falling victim to violence, crime (including human and drug smuggling) and drug deaths. Biden’s immigration policies will also likely lead to continued dislocation of generational Bay Area families and both higher rates of unemployment and lower wages for low skilled American workers which will create particularly intense harm on black communities. Drug deaths, addiction and crime also result in serious economic harm as families are robbed of wage earners, labor productivity declines and consumer confidence undermined.
The Economic Dangers Presented by the DNC 1.9 Trillion Covid-19 Stimulus Plan
Instead of focusing on ending arbitrary lockdowns and reopening the US economy, allowing for organic wealth and job creation that would drive up median wages, the Biden administration has pushed massive, unnecessary, un-targeted stimulus spending that drives up deficits that will create a drag on future growth by diverting revenues towards the costs of servicing debt and also will create dangerous pricing bubbles and market distortions that will lead to inflation and risk as opposed to encouraging the productivity that generates real wealth as better crafted stimulus would do. The USA is still recovering from the Covid 19 pandemic and a severe recession and there should be relief for those families and businesses that have been most severely harmed. However, the recession is artificial, and thanks to the strong economic foundation of low taxes and lean regulation, recovery would be imminent if lockdowns were ended and our schools reopened. When you compare health outcomes in areas like Florida and Texas where lockdowns measures were more limited to states like New York and California where lockdowns were extensive, the economic harm of the strict lockdowns remains empirically unjustified as they failed to reduce the spread of Covid-19 with any quantifiable significance compared to social distancing, hand washing, self-quarantining and mask usage (when social distancing is not possible or difficult). Even as businesses reopen, many parents have been unable to return to work since schools are closed and they need to stay home to help their children with distant learning. The costs of making our schools and businesses safe and financial assistance to persons facing continued unemployment is not 1.9 trillion dollars.
Only $825 Billion of the $1.9 Trillion is actually spent on Covid related provisions[viii]. Borrowing money to make direct payments to fully employed persons or families with comfortable earnings is unnecessary and while it may spur short-term consumer spending there is sparse data suggesting this stimulus is either necessary at this point in time or the most efficient form of stimulus since many of these families will save the money, pay down debts or invest it in speculative bubbles like GameStop shares or crypto currencies. There is not enough money going towards compensating the harm inflicted by governments during the pandemic on small landlords or family-owned restaurants by eviction moratoriums and capricious lock-down orders. Overall, the liquidity pumped into the market throughout the pandemic has certainly wrought benefits as our stock markets are at historic highs, unemployment is already down to 6.3% and the unemployed enjoyed more generous unemployment benefits than they would have normally received alleviating the financial pain created by health policies they did not choose to enact. There is, however, a genuine incentive problem created by these generous unemployment benefits: they discourage the unemployed from returning to work even as job opportunities open. Even more concerning is how detached market capitalizations are from an important driver of actual value: productivity. The benefit from stimulus spending diminishes when unfocused and excessive and as deficits grow and inflation accelerate, the costs begin to be magnified which when paired with dangerous asset bubbles begin to imperil prosperity with potentially catastrophic systemic dangers. The evidence for this is best exemplified by the recession of 1937-1938 which resulted from the costs of servicing the debts attached to FDR’s New Deal spending during the Great Depression. Furthermore, it is an injustice, that less wealthy states who did not enjoy the privilege of shelter in place or stay at home orders are now being asked to provide bailouts to wealthy states like California and New York who should instead be held accountable for years of reckless spending and the consequences of state government policy decisions. It is well established that the costs of servicing debt accrued from deficit spending diverts tax revenues away from productive government investment in its populace which often places a drag or slows future GDP growth, which in turn further reduce tax revenues available for productive investments in education, infrastructure or defense. To cope with servicing these debts, governments often print more money to deflate the costs of the debt but also leading to inflation that punishes savers and challenges economically vulnerable families. Also, governments tend to keep borrowing rates artificially low to manage the costs servicing these debts which disincentivizes savings making American families more vulnerable when the next pandemic, disaster or economic crises arises. While stimulus spending will push stock markets up and function as economic painkillers to many Americans enduring the economic harm of the pandemic, the damage will undoubtedly catch up with American families in the long-term and burden our posterity with real and significant costs including higher inflation, significant debt servicing costs, slower GDP growth and very possibly recession, depression and/or even national insolvency.
The Potential Economic Harm that would result from a $15 Federal Minimum Wage
President Joe Biden’s 1.9 trillion dollar stimulus plan also, at least in some versions, includes passage of a nation-wide $15 minimum wage which is projected to destroy 1.5 million jobs, undermine job creation, further business closures, drive up costs across the board while actually inflicting economic harm on many workers and could actually expand poverty rates. Minimum wage laws are decent inventions and when unemployment is already low and GDP growth robust, they can push up standards of living while simultaneously increasing tax revenues without imposing significant harm to businesses. When unemployment is high and many small business owners are already struggling to recover from either the serious economic harm of the pandemic, still paying for investments to improve the safety of their workers and customers or damages and lost inventory from riots or other crime, the costs of an artificially high minimum wage in many cases will make it impossible to continue to operate profitably and cause employers to exit the market while others will cope with the added hourly labor costs by either operating with a smaller staff or by reducing hours, or alternatively by increasing prices paid by customers. $15 is over 31,000 per year on a 40 hour work week, and excessive in many parts of America, particularly for low skilled jobs often manned by teenagers still living with their parents and in college or by members of households where they are only secondary wage earners. Markets are more effective at finding fair labor rates with minimum wage rates better optimized at local levels of government that can consider local costs of living and employment rates in their policy formation. There is no science or sense behind a national minimum wage of $15, it is merely a number of art that sounds good to voters who make less than that. The reality is that many jobs will be destroyed by such a high minimum wage and other poor workers will see a decline in their total earnings if their hours are reduced to manage the costs of the wage increase. A $15 minimum wage would disincentivize both productivity and investment in education leading to a less productive and lower skilled workforce. Most importantly, opportunities for employment and career growth will be closed. For example, when I first took a job as a leasing consultant on a temporary basis, I was only paid $12 an hour but it allowed me to get my food in the door and the experience on my resume. Now, for essentially that exact same job I earn well over $100,000 per year and my employer helped pay for my MBA degree and provides a significant discount on my apartment. The implementation of a $15 minimum wage would also accelerate the adoption of automation and AI which will further harm the employment prospects of low skilled workers. It would also likely encourage outsourcing of a wide range of lower skilled jobs from manufacturing to customer support. Periodic increases in the minimum wage are fine, but it should happen only when unemployment is low and be based on measurable increases in the cost of living. The $15 federal minimum wage as proposed is a really bad economic policy that will result in business closures, higher costs for American families and an extended period of high unemployment.
The Economic Harm of Raising Tax Revenues Increasing Corporate Tax Rates from 15% to 35%
While footing the bill for pandemic relief and fiscal stimulus is unlikely to be paid for with offsetting spending cuts to future budgets set by a Congress that perennially runs deficits and already incurred over $27 trillion dollars in debts that cost more than $385 billion dollars to service annually, increasing corporate tax rates from 21% back up to 35% at a time of high unemployment would be a particularly harmful way of pursuing increased government revenues that would slow economic recovery and growth, extend periods of high unemployment, push multi-nationals to restructure investment and job creation outside of USA while forcing an increased number of business bankruptcies which could harm credit markets and threaten the solvency of institutional lenders. When the Trump Administration dropped taxes to 21% they did so knowing that it would stimulate significant job creation, GDP growth and wage growth as supply side economic policies had for the Kennedy (and then Johnson) and Reagan Administrations. For the multinational corporations, they often choose where to invest and build based on corporate tax rates so when US corporate tax rates are higher than other nations, international conglomerates build new offices, invest in new equipment and create new manufacturing plants through their subsidiary corporations in the countries where the corporate taxes are lower and as a result the US government doesn’t capture any of the tax revenues, enjoy any of the job growth or the benefits of investment that may benefit an entire ecosystem of domestic businesses from construction workers to equipment supplies. The low corporate tax rates in the Arab Emirates (0%) is largely why this nation has enjoyed a fast growing economy and become one of the wealthiest nations per capita in the history of humanity. Tax rates in Germany are only 15% and most of western Europe were well below the rates of the USA. At a 35% corporate tax rate, the USA was not competitive with low corporate tax nations and so multi-nations were dissuaded from expanding in the USA which was costing America investment, job creation and tax revenues. The second reason the Trump Administration cut corporate taxes, had to do with what corporations already operating in America, many of them small businesses owned and operated by middle class American families, would do if they could keep 14% more of their profits: they would spend it on business growth that would create jobs, push up wages and drive GDP growth. Whether a company spent that added 14% of profits (provided by the 14% corporate tax cut) on hiring new employees, offering pay raises to retain top performers, building new office space, investing in new equipment, hiring researchers for the development of new products or increasing marketing budgets, all of these purposes provide greater GDP growth and productivity gains then government spending would. Shortly after the tax cuts came into effect both unemployment rates and poverty rates dropped to the lowest levels they had been in over 50 years. Unless you are an economics denier you need to recognize the corporate tax rate cuts contributed significantly to these positive outcomes. These corporate tax cuts; however, did not create enough growth to immediately make up for the lost tax revenues, meaning that while the corporate tax rate cuts reduced poverty by creating jobs and wage growth in the short term, they did expand budgetary deficits as they were not paired with spending cuts. Even prior to the Covid-19 pandemic, US Federal government was spending 8 times as much as Germany each year, and to compare scale, US Federal Government spends 20% of its GDP, compared to the German government which only spends 13% of its GDP[ix], so clearly USA could cut spending if it found the political wherewithal to do so but so long as the DNC controls both houses and the presidency this is very unlikely to occur.
Joe Biden committed to repealing Trump era tax cuts at the nearest opportunity despite the pandemic and resulting recession. Even if the Trump Administration overshot with their tax cuts, increasing corporate taxes back up to 35% now, in a time of high unemployment when many of these corporations are restaurants and businesses that have been forced closed by lockdowns and are struggling to remain solvent, would certainly accelerate the number of corporations declaring bankruptcy and/or exiting the market, destroying jobs in the process. This could hit credit markets hard but will be softened by ample liquidity and higher cash reserves in place after the last recession. The transnationals will limit investment and expansion in the USA to what is necessary and more manufacturing jobs will be outsourced with national security implications. The small businesses that are the great job creators, wealth creators and drivers of US GDP growth will not be able to expand or hire new workers as they were doing after the tax cuts were put into place and there would be a very distinct risk of recession and potentially even depression if tax increases force corporations to freeze hiring and investment. At minimum, unemployment rates would remain high for an extended period of time while median wages would either drop or fail to grow as quickly as during the first three years of the Trump Administration since labor would be in higher supply and lower demand. An immediate repeal of Trump’s Corporate Tax cuts would capriciously punish small business, prolong periods of high unemployment and potentially bear significant economic harm to America’s Middle Class and workers as domestic business are forced to close and multinational corporations elect to expand in nations offering more enticing tax and regulatory environments.
Better Solutions and Economic Policy Would be Developed through Bi-Partisan Compromise
The purpose of this analysis is to explore economic ramifications of Biden’s executive orders and legislative agenda narrowly. The government should develop policies that help preserve a clean environment while fostering the growth of the middle class while pulling the poor out of poverty. President Joe Biden’s policies; however, are contrary to these goals. The ecosystem is delicate and the threats to our environment presented by a large and growing human population significant. Global warming is but one aspect of environmentalism and one such threat of which in my opinion there is an over focus upon. The science does pretty clearly establish that the earth has warmed since the Industrial Revolution and that there is a correlation between carbon in the atmosphere and global temperatures that predates humanity. Climate alarmists; however, tend to omit the reality that our temperatures today are well within the normal climate vacillations between naturally occurring ice ages and warming periods. The earth was likely slightly warmer than it is today at the peak of the Roman Empire and significantly warmer than it is today 10,000 years ago. Indeed, a period of global cooling contributed to the collapse of the Roman Empire and subsequent “dark ages” as Slavic, Nordic and German tribes facing colder winters and lower crop yields turned towards raiding wealthier peoples residing in warmer southern regions such as the Italian Peninsula. While human activity and the release of greenhouse gasses has contributed to global warming, at least part of the warming was naturally occurring and while scientists can model and estimate, it is not possible to resolutely determine how much warming is the result of man and how much the result of nature. Furthermore, it is difficult to determine how much global warming is actually the result of carbon, a very small molecule that is a very small percentage of our atmosphere compared to other greenhouse gasses (including water vapor) or waste products which correlate with the release of carbon (such as particulates) and may actually be the cause of the warming. Finally, there really has not been any significant public discourse about whether or not warming is actually bad for humanity, since with a fast-growing population moderate global warming expands the habitable zone and overall allows for greater agricultural production to feed this growing population. Historically, humanity has flourished and civilization peaks in times of warming while humanity suffers and civilization recesses in times of cooling. When democratic politicians speak of the needs to take expensive and drastic actions to abate climate change they use a lot of sales language, such as “creating a sense of urgency,” scare tactics and appeals to science they don’t seem to fully understand, while taking significant campaign contributions from special interest lobbying groups, investing in companies or accepting high paying board seats at corporations who would benefit from green government subsidies or the elimination of carbon fuel competitors. If these politicians were genuine in their concerns about climate change, they would avoid these obvious conflicts of interest and neither buy beach front properties nor continue galavanting around the world in private jets and SUV motorcades. If the crisis is as the Biden Administration presents it, then clearly ramping up US natural gas production and its export provides a bridge to a cleaner world. US Policy makers should instead help US natural gas continue to gain market share from dirtier forms of carbon energy both domestically and abroad by leasing federal lands and granting more permits for its extraction. Legislatively, the Congress could earmark oil and gas tax revenue for investment in next generation nuclear and fusion technologies that both use smaller and less dangerous reactors, and also continue to extract energy from what was once nuclear waste without omitting any carbon for greenhouse gasses. Unlike Wind or Solar, nuclear power, as proven by nations like France, has the potential to both consistently meet US energy needs and do so without producing greenhouse gasses while producing high paying jobs which incentivize pursuing education in the most complex and difficult sciences which will bear entrepreneurial dividends in a wide range of industries. Sadly, the President has charted a course of economic carnage, where jobs are destroyed, transportation and energy costs spiked and opportunities to generate both wealth and tax revenues squandered. As oil prices rise, the costs of commuting, distributing goods (including food) and heating homes all go up which harm poor families in fragile economic situations. It should have been the President’s moral imperative to prevent this harm, but instead he chose to pay back political support from special interest groups to the detriment of American families and workers. As far as re-entering the Paris Climate Accords, the US instead should bilaterally negotiate integrative trade and aid deals to incentivize other countries to reduce greenhouse gas emissions. By doing this, the USA could do more to lower greenhouse gasses since unlike the Paris Climate Accords, we could hold countries accountable when they fail to meet targets by pulling back aid or imposing tariffs.
The US economy would benefit from a well thought out immigration policy that addresses labor shortfalls and recruits the best and brightest from around the world. Unfortunately, Biden has elected to open the border which inflicts economic harm on vulnerable American families and facilitates a range of moral hazards including sex and drug trafficking. President Biden should instead pursue bi-partisan legislation that improves border security while establishing data driven criteria under which a multi-agency commission between the labor and homeland security departments monitors labor shortfalls and then provides visas to address them, increasing the number of visas in times of low unemployment and significantly reducing them in times of high unemployment. By cracking down on asylum fraud and reinstating Trump Administration asylum policies that required Latin-American asylum claims to be filed at US Embassies outside of the USA, the US can unclog our asylum courts and instead prioritize legitimate and more pressing asylum needs. Restoring credibility in our asylum system would help increase public support and allow for America to provide asylum to more people in the greatest need. The border wall was a worthwhile infrastructure project that both created jobs and forced transnational criminal organizations to attempt to transit drugs and people through DHS monitored border crossings where detection and interdiction is significantly more likely than in vast swaths of open and unprotected border lands. With the perils of the modern word and threats to our nation, nobody should be able to enter the USA without providing adequate documentation, being run through criminal and terrorist databases or submitting to pertinent health screenings.
Instead of pushing a bloated 1.9 trillion dollar Covid-19 stimulus bill with bailouts for blue states and an ideological wage increase agenda, Joe Biden should pursue bipartisan support for a focused relief bill that helps small businesses and landowners impacted by lockdowns and eviction moratoriums, provides continued support for those who lost their jobs during the pandemic, accelerates vaccinations and supports the reopening of our schools and economy. The money for direct stimulus payments should instead be used to invest in infrastructure projects that will bring about real returns. Expanding the 5G and broadband networks, modernizing our energy grid, building nuclear power plants, improving our harbors and ports, establishing liquified natural gas export capacity, fortifying our southern border and improving our bridges and freeways all stimulate robust economic growth while improving our safety.
While tough cuts should be made in our federal budget by narrowing the scope of the Federal government and devolving responsibilities to state and local governments where services can be better tailored to community needs and provided more efficiently, cutting spending may not be enough to balance the budget and get our nation’s fiscal house back in order. Fostering investment, economic growth, job creation and improved productivity will increase revenues but Congress will likely need to do more to pay down the debts incurred as the result of the Covid-19 pandemic. It would be well justified for the Federal government to consider selling a number of assets and lands to raise revenues. Increasing fees and revenues for leases and permits related to oil and gas or other mining or lumber operations would also provide significant sources of revenues. Currently, large multinationals pay too little to sponsor foreign visas and these fees should be increased. If after these revenue increases there is still need to raise additional revenues, a value added tax on imports would be superior to corporate tax rate increases which unlike the corporate tax rate increase, would raise revenues while encouraging multi-nationals to invest in the domestic production of goods and provision of services. There are opportunities for bipartisan compromises that would help make America safer and wealthier, but thus far President Joe Biden has decided to pursue a radical economic agenda to pay back political support from the Bernie Bros, AOC’s fan-club and Special Interest groups for their support when he should be listening to the eternal wisdom of Bill Clinton’s successful 92’ Presidential Campaign: “It’s the Economy, Stupid.”
[i] Api. (n.d.). Retrieved March 11, 2021, from http://www.api.org/
[ii] Board, T. (2021, February 21). Opinion | WHY Beijing LOVES Biden and Paris. Retrieved March 11, 2021, from https://www.wsj.com/articles/why-beijing-loves-biden-and-paris-11613937344
[iii] Board, T. (2021, February 21). Opinion | WHY Beijing LOVES Biden and Paris. Retrieved March 11, 2021, from https://www.wsj.com/articles/why-beijing-loves-biden-and-paris-11613937344
[iv] Mulligan, C. (2020, September 16). Opinion | the real cost of Biden's plans. Retrieved March 11, 2021, from https://www.wsj.com/articles/the-real-cost-of-bidens-plans-11600296958
[v] Wind turbines. (n.d.). Retrieved March 11, 2021, from https://www.fws.gov/birds/bird-enthusiasts/threats-to-birds/collisions/wind-turbines.php
[vi] The wind-power boom set off a scramble for balsa wood in Ecuador. (n.d.). Retrieved March 11, 2021, from https://www.economist.com/the-americas/2021/01/30/the-wind-power-boom-set-off-a-scramble-for-balsa-wood-in-ecuador
[vii] Angst, M. (2021, February 15). 'This is outrageous': Residents PROTEST big rate increases from San JOSE Water. Retrieved March 11, 2021, from https://www.mercurynews.com/2021/02/13/this-is-outrageous-residents-protest-big-rate-increases-from-san-jose-water-company/).
[viii] Board, T. (2021, February 21). Opinion | the non-covid spending blowout. Retrieved March 11, 2021, from https://www.wsj.com/articles/the-non-covid-spending-blowout-11613937485
[ix] Compare federal spending to other Countries: U.S. Treasury Data Lab. (n.d.). Retrieved March 11, 2021, from https://datalab.usaspending.gov/americas-finance-guide/spending/country-comparison/
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