The Outlook for President Joe Biden

I am a non-ideological (registered independent) fiscal conservative and social moderate.   I believe that our biggest domestic problem (by far) is out-of-control national debt.   Our biggest international problem is the rise of China, now our greatest autocratic rival.

Here is how I evaluate the Biden Presidency after a year in office:

  • His plunging poll ratings reflect his inability to deal effectively with either the coronavirus pandemic or rapidly rising inflation.  There’s not much he can do about Covid-19.   The red states are handling it better than the blue states that have relied too heavily on lockdowns and mask mandates.   However, it is Congressional blow-out spending, strongly encouraged by Biden, which has tripped off inflation.
  • The Federal Reserve is prepared to address inflation by both raising interest rates and reducing its eight trillion dollars in bond holdings (see chart). This will necessarily slow down economic growth and perhaps even cause a recession.   So Biden is faced with a combination of rising inflation and likely economic slowdown.   His favorability ratings could get even worse in the coming months if stagflation (inflation plus recession) takes hold of the economy.

  • For this reason, it is likely that a red wave will sweep the country in November 2022.   The Republicans will almost surely take the House of Representatives.   If they also take the Senate, then Congress will be able to exercise badly needed fiscal responsibility and significantly shrink federal deficit spending for the following two years.
  • GOP Congressional control starting in 2023 still leaves President Biden in charge of the Executive Branch of government until after the presidential election in 2024.  It is very important that he do a good job with foreign policy until then.  His main goals should be clear: dissuade China from trying to capture Taiwan, protect Ukraine from Russian domination, and prevent Iran from acquiring nuclear weapons.   The success of democracy worldwide requires American leadership against our autocratic rivals.   This requires a strongly bipartisan foreign policy, implemented intelligently by a capable chief executive.   We should all hope for President Biden to succeed in this way.

Conclusion.   President Biden is floundering in domestic policy because of too many errors and is unlikely to recover sufficiently in the next few months to avoid a political red wave next November.   But he is still President until 2025 and therefore in charge of foreign policy.   So far his policies towards our biggest competitors: China, Russia, and Iran, are on the right track.  Hopefully,  bipartisan support will continue to prevail on these issues.

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Calm Down, America!

When I was growing up in the 1950s and my brother, sister, and I were getting too wound up, my father would say “Calm down!” in a loud voice.  He was the authority figure and so it worked.

I am not an authority figure but I would like to say the same thing to America:  Calm down!  Things aren’t really that bad and, by becoming too excited, we risk making things worse.

Consider:

  • The pandemic. The Omicron variant of the coronavirus, infectious but with mild symptoms, should be viewed as the transition from the pandemic state to an endemic state.  The pandemic is turning into a routine flu illness for which we may have to get vaccinated every year, as many of us do already.  You don’t need to get tested unless or until you have flu-like symptoms.
  • January 6. The Capitol riot was disgraceful but hardly an insurrection.  Two simple steps can assure that it will never happen again.  Strengthen the Capitol Police Force, which is already being done, and either repeal or modify the ceremonial Electoral Count Act which Vice President Pence was implementing on January 6, 2021.  Hopefully, in the near future, the progressive left will lower the volume of its rhetoric in complaining about this one-off event.
  • Civil War. Too much dwelling on insurrection and violence has now led to predictions that the U.S. may be headed into a new Civil War.  This is frankly, ridiculous, with the very strong civil institutions we have in this country.  Fortunately, there are many other voices who are poo-pooing such talk.

  • Is President Biden a uniter or a divider? Elected President in 2020 along with the thinnest of Congressional support, Joe Biden started out saying that he wanted to unite the whole country.  But in his recent Georgia speech about voting rights, he declared that “the (Senate) filibuster has been weaponized and abused” by the Republicans.  Senators will now “declare where they stand, not just for the moment, but for the ages.”  All this for new Georgia voting procedures which are less restrictive than those in Delaware and New York State!

Conclusion.  Democracy is thriving in the United States.  Yes, we are highly polarized but our 234-year-old Constitution (ratified in 1788) is performing brilliantly.  We are the strongest and most prosperous country in the world with huge political and economic influence.  We will likely continue to play our strong worldwide leadership role for many years to come.

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The Real Cause of Higher Inflation: Blowout spending by Congress

Inflation is now increasing at an annual rate of 6.8% as of November 2021.  The Federal Reserve is getting serious about not only ending new bond purchases (quantitative easing) but also about beginning to raise interest rates as soon as March 2022.  Raising interest rates is, of course, the main tool the Fed has for combatting inflation.

President Biden blames inflation on price gouging by businesses such as meat- packers.  But businesses have to respond to market forces.

The real cause of inflation is that consumer demand is growing faster than usual while supplies are less than normal.  Why is this happening?  It is largely because of actions taken by Congress during the past two years of the pandemic.  In fiscal years 2020 and 2021, deficit spending totaled about $3 trillion each year (see chart).  Much of this spending went to individuals in the form of direct payments into their bank accounts.  Unemployed workers also received an extra federal unemployment stipend of $300 per week which served as an additional disincentive to return to work.  Furthermore, a more generous child allowance also created a disincentive to work.

These cash payments to tens of millions of individuals plus the additional disincentives to return to work helped create the imbalance between (increased) demand and (reduced) supply, exacerbated by too few workers.

There is still a 3.6 million worker gap between February 2020, right before the pandemic started, and the present, December 2021 (see chart). This worker shortage will be harder to make up because the unemployment rate (as of December 2021) has shrunk to 3.9%.  In other words, there aren’t a whole lot of workers now looking for jobs.

The demise (if it holds) of the Administration’s Build Back Better social spending plan will help to get sidelined workers back into the labor market.  The current level of almost 11 million job openings is also a big contributor to the supply chain breakdown.

Conclusion.  Inflation is harmful to the economy for many reasons.  It is a tax on the poor as well as making our national debt problem much more serious.  It has now been kicked off by blowout Congressional spending.  The Federal Reserve will have to intervene forcefully to stop inflation, risking a severe recession in the process.

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Outlook 2022: Light at the End of the Tunnel

Although I am mostly an optimist about the future of the United States, I do recognize that there are immediate serious problems that need to be addressed.  For example:

  • The Omicron variant of the coronavirus. Right now the Omicron variant is surging in the U.S. and around the world.  It is highly infectious but also has quite mild symptoms especially for those who are vaccinated, as are 80% of U.S. adults.  Moral: get vaccinated, go about your business, exercise reasonable precautions, and stop worrying about catching Covid-19.
  • Global warming is a serious problem, but we need to respond to it in a realistic manner. Although carbon emissions are decreasing in the U.S. and Western Europe, they are increasing worldwide.  Developing countries are the biggest culprits (especially China) because of their massive use of coal in order to industrialize.  In short, the world needs to de-carbonize, not de-fossilize.  This means emphasizing nuclear energy as well as carbon capture and storage.  We won’t start making (worldwide) progress on global warming until we adopt such a realistic strategy to do so.
  • Inflation and debt. Right now the annual inflation rate in the U.S. is 6.8% (in November 2021).  If it continues much longer at this rate or higher, the Federal Reserve will be forced to raise interest rates.  The higher they go, the more likely it is that our rapidly increasing national debt (now about $28 trillion) will trip off a new fiscal crisis.  Until annual deficit spending (which is what creates debt in the first place) is greatly reduced, such a new fiscal crisis will loom on the near-term horizon.  This problem, of course, can be solved if only there is a national will to do so.
  • Political polarization. Besides inflation, this is our country’s biggest political problem at the present time. The red states and blue states take very different approaches on many major issues such as abortion and gun control.  The solution is to stop expecting national consensus on our most divisive issues such as these and to let the states go their own way, as long as they act in ways that are consistent with the U.S. Constitution.

Conclusion.  The reason I am optimistic about our country’s future is that our most serious problems, as described above, are not only solvable in theory, but are likely to be resolved by our very strong and firmly established democratic traditions and procedures.
Americans are incredibly lucky to live in such a strong and prosperous country with such widely accepted democratic norms.  We are more than capable of resolving our current serious problems.  I believe that America has a long and glorious future to look forward to.
Much more later on the particulars of how all of this is likely to unfold!

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Americans Are Too Pessimistic about the Future II. Some Particulars

A couple of weeks ago I wrote that Americans are too pessimistic about the future and listed many ways in which things are going well in the U.S.  Of course, I also included one very negative trend: our rapidly increasing national debt and the possibility that the current surge in inflation could lead to a new fiscal crisis in the near future.

But, setting aside debt and inflation for now, consider some particulars on the positive side:

  • The Pandemic is weakening into endemic status.  The Omicron variant is more infectious than the delta variant, but the symptoms are also much milder, especially for those who are vaccinated.  The pandemic is not going to just disappear someday but more likely will settle into a low-level steady-state like the ordinary common flu, which is dealt with in a routine manner that does not disrupt society.

  • The U.S. is not abandoning Ukraine which wants to be free and identifies with the West. Russia is threatening to invade and, obviously, the West does not want war.  But the U.S. is not abandoning Ukraine, either.  We are still providing anti-tank missiles (starting in 2018) and are also currently providing military advisory support.  It is very important for the U.S. to be visibly supporting freedom and democracy around the world, wherever they are under threat.

  • Israel and the U.S. are pursuing a common policy on Iran.  Israel has promised to support a strong nuclear deal with Iran that would permanently limit its ability to assemble a nuclear weapon.  The U.S. is willing to restore the 2015 accord that President Trump abandoned – with Israel’s support – but only if it is “longer and stronger” than the original agreement.  Iran has so far resisted such a new agreement but it is encouraging that the U.S. and Israel are working together on this important project.
  • Economic Cracks in the Great Wall of China.  Under Xi Jinping, China’s economy is systematically weakening and Mr. Xi’s priorities offer little hope for a quick turnaround. In fact. The U.S. and its allies could further compound Mr. Xi’s challenges by vigorous enforcement of trade laws, limiting Chinese access to technology and financing from the West, and imposing sanctions against China’s brutal human-rights abuses in Xinjiang and in various parts of the developing world which it is exploiting through its Belt and Road initiative.

Conclusion.  I have been quite critical of President Biden’s overall record but he is doing some things right, especially in foreign policy where he is largely continuing policies started under President Trump.  In particular, we now have effective bipartisan policies for dealing with our main adversaries: China, Russia, and Iran.

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The Progressive Left Is Becoming Paranoid

Almost the entire issue of the January/February 2022 issue of the Atlantic Magazine  is devoted to anti-Donald Trump trash talk.  Consider the titles of several articles:

  • Imagine The Worst: how to head off the next insurrection
  • January 6 Was Practice
  • The Small Lie: to support the Republican myth that our elections are rife with fraud, someone needs to take the fall
  • I Remember Conservatism: the rich philosophical tradition I fell in love with has been reduced to Fox News and voter suppression

Yes, American democracy had a stress test after the 2020 elections, but it survived brilliantly. The Trump organization filed over 60 lawsuits to overturn election results and not a single one was upheld.  The January 6 Capitol break-in, even though wrongly encouraged by Trump, had no prospect of overturning the results of the 2020 election.

A quick review of Trump’s four years in office:

  • 2017 tax reform lowering the corporate tax rate from 35% to 21%.
  • Putting three highly qualified conservative justices on the Supreme Court.
  • Achieving an unemployment rate of 3.5% for the six months preceding the pandemic
  • After the outbreak of Covid-19 in late February 2020, supporting American drug companies in developing effective vaccines at “warp speed”

Compare this record with Joe Biden’s first year in office:

  • A disastrous withdrawal from Afghanistan, leaving over 60,000 U.S. allies at the tender mercies of the Taliban.
  • Our open southern border. Illegal immigrants, with temporary asylum permits, are now pouring into the U.S.
  • Inflation. Because of blowout Congressional spending as well as supply chain bottlenecks caused by millions of absent workers, inflation has now reached an annual rate of 6.8% in November.  Low-income workers are getting hefty pay raises but they are more than eaten away by inflation.

If Trump is a candidate for reelection in 2024, he will surely receive the Republican nomination.  Will he be a viable candidate for reelection?  His poor performance on January 6 is a negative factor.  But Biden’s very poor performance to date, if it doesn’t improve, will give Trump a big boost.  In other words, the outcome of the 2024 presidential election will depend on what happens politically and economically in the U.S. between now and then, not on bogus claims of voter suppression.

Conclusion.  The progressive left should calm down and take more interest in the substance of the Biden presidency rather than Donald Trump’s shenanigans.  This is what will influence the outcome of the 2024 presidential elections.

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Americans Are Too Pessimistic about the Future

There are lots of serious problems in the U.S., both foreign and domestic, and many Americans are pessimistic about our country’s future.

I am, however, mostly an optimist.  I believe we will weather our many problems and continue to enjoy the benefits of being the world’s leading democracy for many years to come.  Consider:

  • The pandemic is essentially over. Yes, 800,000 Americans have died from Covid-19 and there are active coronavirus variants such as Delta, Omicron, and perhaps more to come.  But three million Americans die every year and so we’ve had an additional 12% deaths for the past two years.  Overall, our own free-enterprise drug companies have rescued us by delivering effective vaccines in less than a year’s time.
  • American democracy is thriving. Our democratic institutions had a major stress test after the 2020 election and survived brilliantly.  There is even a solution on the horizon for polarization and divisiveness.
  • The Chinese threat is overstated. China has many problems and its current leader, Xi Jinping, is making lots of enemies around the world.  It is unlikely that China will try to take Taiwan by force.
  • The American economy and military are very strong. For example, of the ten top companies in the world, seven are American (two are Chinese and one is Saudi Arabian).
  • The American Dream is Alive and Well. Wages for the typical worker have grown by 20% (in real terms) in the past three decades.
  • The American way of life is the envy of the world. Thanks to American leadership, freedom, and democracy are flourishing around the world.  And, yes, America is still the envy of the world.
  • Inflation and Debt. Although I’m an optimist in general, I despair about our debt problem.  It was already very bad before the pandemic and now it is worse.  And, as we know, inflation is heating up (6.8% annual rate in November).  It is precisely inflation that will kick off our coming debt crisis by forcing higher interest rates and therefore much higher interest payments on our accumulated debt.  This whole sequence of events may now happen sooner rather than later, which is a silver lining in disguise!

Conclusion.  Many things are going well in the U.S. today and Americans should generally be optimistic about the future of our country.  Unfortunately, our debt problem is growing steadily worse.  It may well require a huge new crisis for our national leaders to address it seriously.  Our currently worsening inflation could cause this to happen fairly soon.

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American Life Has Become too Polarized and Divisive. We Need more Pluralism and Decentralization!

 

My last two posts, here and here, are concerned with one of the most serious problems facing our nation.  It is the rampant polarization and divisiveness affecting both our political institutions and social culture.

George Friedman says that the two dominant cycles in American history, the eighty-year institutional cycle and the fifty-year socio-economic cycle, are both coming to a head and renewing in the mid-to-late 2020s and this will produce a storm before the ensuing calm.

David French says that the quest for moral, cultural and, political domination by either side of our national divide risks splitting the nation asunder.  Both sides must surrender the dream of domination of the other side by embracing increased pluralism which would make our country even more decentralized than it already is.

According to Mr. French:

  • The Republican Party won the Civil War and then dominated American politics for 50 years. Conversely in the 1930s, the Democratic Party won and dominated American politics for roughly the same amount of time.
  • The quest for uniformity is futile, and the restrictions of liberty that are so tempting to those who seek uniformity are far more inflammatory and divisive than they are edifying or unifying.
  • To embrace pluralism, citizens truly need only to embrace two limitations on their quest for ultimate ideological victory. First, if you are a citizen of a liberal republic, you need to defend the rights of others that you would like to exercise yourself.  Second, if you are a citizen of a pluralistic, liberal government, you should defend the rights of communities and associations to govern themselves according to their own values and beliefs.

  • To go forward, we must go back. If the Bill of Rights represents tolerance of individual difference and a diverse civil society, federalism represents tolerance through self-governance and community autonomy.
  • We now have decades of experience with the enormous bloat of federal government. Under healthy federalism, American citizens would enjoy guaranteed civil liberties that don’t waiver or vary from state to state and they would enjoy a much greater degree of local control.  The only downside is that the rebirth of federalism necessitates the death of very particular dreams – the dream of dominance and the dream of utopia.
  • Federalism is simple. It has profound appeals.  Healthy federalism is a system of protected customization.  It lowers the stakes of national politics.  It removes the sense of helplessness and distant alienation that all too many of us feel.
  • Here are two significant possibilities for federalism in action: give blue states more freedom to restrict gun rights; give red states more freedom to restrict abortion rights. If you don’t like what is happening in your own state, then move to another state where you are more comfortable.

Conclusion.  Federalism recognizes that there are fundamental differences between red states and blue states.  It returns power to the states which has been usurped over time by the federal government.  It has the potential to greatly reduce the polarization and divisiveness which is now afflicting our country.

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How Do We Solve Our Divisiveness Problem? II. What Is Needed Is More Pluralism

America has a highly polarized and divisive political atmosphere at the present time.  Current events, such as the Kyle Rittenhouse trial and acquittal, just seem to make things worse.  How will this contagion hopefully play itself out and eventually end?  None of us know but we can still speculate.

My last post, starts a discussion of this issue by describing a cyclic theory of American history as developed by the geopolitical analyst, George Friedman. Mr. Friedman explains how a repeating 80-year institutional cycle and a likewise repeating  50-year socioeconomic cycle will both be renewing in the mid-to late-2020s and how the resulting clash will likely result in a “storm” before the ensuing “calm.”

The problem of the current institutional cycle, beginning in 1945, is that the federal government has now become too massively incomprehensive and opaque.  This creates distrust on the part of citizens who often feel overwhelmed by policies they disagree with and helpless in trying to overturn them.

The problem of the current Reagan socioeconomic cycle is that capital has successfully expanded but has by now created too much economic inequality.  This is also a cultural issue as the now dominant internet technology has led to an assault on traditional family values.

How will these two cyclic paradigms reinvent themselves simultaneously to address the above problems?  Here I leave Mr. Friedman’s analysis (which becomes vague at this point) and turn to David French. Mr. French starts out by asking the question, “How does a functioning nation manage the challenge of faction?” Response: “James Madison has the answer – pluralism.”

According to Mr. French:

  • One of the core projects of a healthy American constitutional republic is to protect not just individual liberty, but the federalism and freedom of voluntary association that allows a multiplicity of groups and communities to flourish.
  • Pluralism is an essential part of American life and we should seek to foster a political culture that protects the autonomy and dignity of competing American ideological and religious communities.
  • The quest for moral, cultural, and political domination by either side of our national divide risks splitting the nation asunder. To embrace pluralism is to surrender the dream of domination.

Conclusion.  Factionalism is the problem.  Pluralism is the answer.  “To save America, chart James Madison’s course.” Our Republic needs to become even more decentralized than it already is.  Stay tuned for the details!

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How Will America Solve it’s Divisiveness Problem? I. Background on the Cyclic Nature of American History

Everybody knows how polarized and divisive America now is in both culture and politics.  Is there anything we can do about it?  How will it end?  My next several posts will deal with this hugely serious national problem.

As one glaring example, we all know how polarized Congress is.  But state government is also highly polarized.  In 30 states, Republicans control both legislative chambers (including Nebraska which is unicameral).  In 18 states both chambers are controlled by Democrats.  Only 2 states, Minnesota and Virginia (after the 2021 elections) have divided legislative control.

           

My views are largely based on two books which I have been reading lately.  One is “The Storm Before the Calm” by the geopolitical analyst, George Friedman.  The other one is “Divided We Fall” by David French, the editor of the newsletter “Dispatch.”

  • Friedman sees American history as described by two different cycles: institutional cycles occurring every eighty years or so and driven so far by the Revolutionary War, the Civil War, and World War II. The next institutional cycle will likely begin in the mid-2020s. There are also socioeconomic cycles that have an approximately fifty-year lifespan.  The first began with George Washington and ended with John Quincy Adams.  The second began with Andrew Jackson and ended with Ulysses S. Grant.  The third began with Rutherford Hayes and ended with Herbert Hoover.  The fourth began with FDR and ended with Jimmy Carter.  The fifth began with Ronald Reagan and may end with the president elected in 1924 or 1928.
  • The institutional cycles describe how the United States shifts the way its political institutions work. The first cycle started with the adoption of the Constitution in 1788 and the Revolutionary War.  It established the federal government but left its relation to the states unclear.  The second cycle emerged from the Civil War and established the authority of the federal government over the states.  The third cycle emerged from WWII and dramatically expanded the authority of the federal government not only over the states but also over the economy and society as a whole.
  • Every fifty years or so America goes through a socioeconomic crisis where previous policies stop working, causing significant harm instead. George Washington got things going with the original 13 colonies.  Andrew Jackson, elected in 1828, was the first president from west of the Appalachians where new lands needed to be settled.  Rutherford Hayes, elected in 1876, presided over the developing Industrial Revolution, and he backed the dollar with gold which led to massive new investment.  FDR, elected in 1932, introduced the new deal which led to our recovery from the depression.  Ronald Reagan solved the problem of capital shortage leftover from the Roosevelt cycle by shifting the tax structure, leading to massive economic growth.
  • For the first time in American history the current eighty-year institutional and fifty- year socioeconomic cycles are both ending at approximately the same time in the mid to late 2020s. “Donald Trump’s election was the first indication that the Reagan cycle is coming to an end. . . . Many see this as a sign that the country is coming apart, but in truth, it is simply evidence of a rapidly evolving country passing through an orderly change. . . . The problem of the third institutional cycle is that the door was opened for massive federal oversight of American life, without defining limits and without establishing an institutional structure capable of managing its vast authority.”  The crisis of the 2020s is the tremendous clash caused by both cycles having to readjust themselves at the same time.

Conclusion.  Mr. George Friedman’s cyclic description of American history is factually well-founded and leads to several predictions as to how our current highly fractured politics will play out in the coming years.  Stay tuned for the next installment!

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