On this blog, I write about important national issues, and, of course, this includes politics.  Recently, I have said that both major presidential candidates have huge liabilities, see here and here.  Overall, I think that Biden’s biggest hurdle to reelection is his misguided economic policies, i.e. Bidenomics.

Consider:

• Debt and deficits. CBO has just increased its deficit estimate for FY 2024 from $1.5 trillion to $1.9 trillion.  Adding up the deficits from Biden’s four years, from FY 2021 to FY 2024, produces a total four-year deficit of $7.9 trillion, which represents Biden’s contribution to the total national debt of approximately $35 trillion.  As the debt goes up, interest payments on the debt also go up, compounding the problem.

  

• It is well understood that excessive government spending, especially the $5 trillion in Covid stimulus spending, is the immediate cause of our current round of inflation which took off in March 2021, shortly after Biden signed the so-called American Rescue Plan of $1.9 trillion.  Although inflation has dropped to 3.3% as of May 2024, prices have now risen almost 20% since Biden took office and are still going up.

  

  

• High interest rates. The Federal Reserve has only one tool to bring the consumer price index down to the desired level of 2%, namely by increasing short-term interest rates to try to slow down the economy.  High interest rates not only make our debt that much worse, but cause other problems as well, such as raising mortgage rates.  This tightens the housing market, both for new home purchases, as well as for rentals.

  

• Treating the symptoms rather than the underlying problem.  The Biden Administration is responding to inflation, not by cutting federal spending, but by, for example, forgiving student debt and proposing to forgive medical debt.  This does not reduce inflationary forces but rather increases moral hazard: just borrow more money for college or skip adequate health insurance.

Conclusion:   Biden’s careless economic policy of reckless deficit spending has not only made our national debt problem much worse than before but has also tripped off a new round of inflation that makes life more difficult for millions of people.  His Administration badly needs some competent economic help.

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