Originally published at The Daily Economy.
Driven by progressive policies that stifled growth and burdened Americans with skyrocketing debt, elevated inflation, and economic malaise, has President Biden’s administration cemented its economic legacy as a failure? Despite promises of a “build back better” economy, the results are troubling, with policies rooted in overspending, overtaxing, and overregulating, pushing many Americans further from prosperity. Under President Biden, the national debt grew substantially, especially without a war or pandemic, surging past $36 trillion — a staggering $10 trillion increase since 2020. This debt explosion stemmed from massive spending initiatives, including the American Rescue Plan Act, the so-called Inflation Reduction Act, and many other reckless spending packages. Far from stimulating growth, this spending fueled inflation and undermined economic stability. The Federal Reserve, charged with combating inflation, was forced to hike interest rates at a record pace, raising the federal funds rate from near zero to over five percent in just two years. These hikes directly responded to the monetary inflation crisis created by the Federal Reserve and exacerbated by Biden’s profligate fiscal policies. While interest rates have come down some over the last year, Americans face higher borrowing costs for homes, cars, and businesses, squeezing family budgets and discouraging investment. Though there are signs of an economic recovery, real weekly earnings have declined by two percent since Biden took office as inflation outpaced wage growth for most of his presidency. This decline in purchasing power disproportionately hurts low- and middle-income households, the very groups progressive policies claim to champion. Adding to the economic woes is a labor market hampered by a declining labor force participation rate. While the unemployment rate appears low at around four percent, this masks the reality that millions of Americans remain out of the workforce. Policies that disincentivize work — such as enhanced unemployment benefits, expanded welfare programs, and increased regulatory burdens on businesses — have created a perfect storm of lower productivity and higher dependency on government programs. Regulatory overreach has further compounded economic challenges. According to the American Action Forum, the Biden administration issued $1.8 trillion in costly final rules, making it one of the most regulatory-heavy administrations in US history. These rules, which include onerous environmental regulations, expansive labor mandates, and restrictions on energy production, acted as a hidden tax on us. They drove driven up costs for businesses and consumers. The administration’s war on artificial intelligence (AI) and corporate mergers were among the most damaging regulatory efforts. The Federal Trade Commission (FTC) and Department of Justice (DOJ) aggressively sought to stifle innovation and business growth under the guise of protecting competition through antitrust action. Instead of fostering a dynamic economy, these agencies created a climate of uncertainty that discourages investment in new technologies and impedes market efficiency. AI, which holds transformative potential for economic growth, was targeted with heavy-handed oversight that risks driving innovation overseas. One of the most glaring examples of regulatory overreach was the Biden administration’s stance on mergers and acquisitions (M&A). The FTC and DOJ adopted a hostile posture toward M&A activity, essential for fostering business growth and increasing efficiency. By blocking mergers without sound economic justification, these agencies undermined businesses and sent a chilling message to investors. Such interference in private-sector decisions contradicted free-market capitalism and harmed the economy by stifling growth opportunities. Similarly, the administration’s push for sweeping regulations on artificial intelligence threatened to derail a promising industry. Instead of embracing AI as a tool for economic advancement, the administration appeared intent on imposing burdensome compliance requirements that would discourage innovation and reduce America’s competitiveness on the global stage. The path to reversing this economic malaise lies in rejecting the overspending, overtaxing, and overregulating policies that define Bidenomics. President Trump and Congress must prioritize fiscal discipline by cutting government spending to at least pre-pandemic levels and limiting it to sustainable levels. This should be done through a strict fiscal rule that caps expenditure growth at a maximum rate of population growth plus inflation. Spending less can alleviate the debt burden that threatens future generations. Second, tax reform should focus on lowering tax rates, broadening the base, and simplifying the tax code to incentivize work, investment, and innovation. High taxes discourage productivity and entrepreneurship, while a pro-growth tax system can unlock the potential of American workers and businesses. Third, regulatory reform is essential to restoring economic freedom and unleashing the full potential of the private sector. This includes reining in agencies like the FTC and DOJ, which have overstepped their bounds in pursuing ideological goals at the expense of economic progress. It also means adopting a balanced approach to AI governance that promotes innovation while addressing legitimate concerns without stifling progress. The economic legacy of Bidenomics will be remembered as a cautionary tale of how progressive policies undermine prosperity. The administration’s decisions imposed significant costs on the American people, from an explosion in national debt to inflation, higher interest rates, regulatory overreach, and declining real wages. Voters chose a different direction with Trump. The better approach is returning to the principles that have historically driven American prosperity: limited government, fiscal responsibility, and economic freedom. By embracing these principles, we can chart a path toward sustainable growth, higher living standards, and greater opportunities for all Americans.
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Overview The Trump administration, supported by a Republican-led Congress, has a pivotal chance to reverse the damage inflicted by the Biden administration's misguided antitrust policies. This report outlines the path to unleashing America’s tech potential through innovation, competition, and free-market principles. Key Points
Conclusion The report highlights a roadmap for the Trump administration and Congress to promote free-market policies, secure America’s technological leadership, and prioritize innovation and economic growth. Confirming regulatory leaders who support these principles is vital to achieving these goals. Your browser does not support viewing this document. Click here to download the document. As President Biden’s term ends, we see a flurry of last-minute legislation. Meanwhile, President-elect Trump is gearing up for his inauguration next week, setting the stage for a new chapter in national politics. The policy landscape is heating up at the state level as legislative sessions get underway. In Texas, the 89th Legislative Session kicks off tomorrow, and I’ll be closely monitoring key bills.
In this week's episode, I discuss these topics and more. You can watch it on YouTube below, listen to it on Apple Podcast or Spotify, or visit my website vanceginn.com for more information. In the Energy News Beat - Conversation in Energy with Stuart Turley, Dr. Vance Ginn is interviewed about various pressing economic and political issues. They discuss the recent presidential debate, the state of the U.S. economy, the implications of red-state policies on job growth, and the impact of high energy costs on inflation. The conversation also covers the importance of school choice, immigration reform, Supreme Court rulings on free speech, the Chevron Supreme deference Court decision on regulatory issues, and the challenges of achieving net zero emissions amidst global economic shifts. Dr. Ginn emphasizes the need for sound financial policies and reducing government spending.
Please follow Vance on his substack HERE: https://vanceginn.substack.com/. It is a great source of finance and political insights. Vance, I would like to have you back and on the 3 Podcasters Walk into a Bar with David Blackmon and Rey Trevio. - Thanks again for your time, and talk soon - Stu Originally published at AIER.
The US economy faces numerous challenges, exacerbated by policy uncertainty and excessive government intervention. Milton Friedman famously said, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” This sharp observation underscores the inefficiencies often associated with government intervention. Instead, we should advocate for free-market solutions that empower individuals and businesses to drive innovation and growth. Election years heighten policy uncertainty, driving economic volatility. Businesses and investors become cautious, waiting to see which policies will prevail. This hesitation can slow economic activity, affecting job creation and investment in new projects. More than half of Americans think we are in a recession even when the headline data say otherwise, reflecting a disconnect between reported statistics and personal experiences. Policy uncertainty during election years exacerbates these issues. The upcoming elections could significantly impact economic policies, depending on the direction taken by the administration. Whether it’s Biden’s continued interventionist policies or a shift under Trump, the stakes are high. Businesses, investors, and consumers are left guessing, which stalls responsible decision-making and hampers economic growth. The recent meeting of the Business Roundtable highlighted these concerns as both Biden and Trump pitched their economic visions. According to the Tax Foundation, Biden’s tax plan, which includes increases on corporations and the wealthy, could reduce GDP by 2.2 percent and eliminate 788,000 jobs over time. On the other hand, Trump’s tariff proposals that hike taxes on Americans would have economic consequences, increasing consumer prices and reducing household incomes. The Federal Reserve’s decisions also play a crucial role in shaping the economic landscape. Recent hikes in interest rates to curb inflation have added another layer of uncertainty. Higher borrowing costs can dampen consumer spending and business investment, slowing economic growth. The Fed’s policy trajectory remains uncertain, contributing to a cautious outlook among businesses and investors. Biden’s regulatory approach further complicates matters. His administration has introduced numerous regulations affecting various sectors, from energy to finance. While intended to address climate change and market stability, these regulations often have significant compliance costs and operational challenges. The regulatory burden can stifle innovation and deter investment, particularly in industries struggling with economic headwinds. Another key aspect is the role of institutions. Friedrich Hayek, in his seminal work “The Road to Serfdom,” cautioned against the overreach of central planning. He emphasized that central planning often leads to inefficiencies and a loss of individual freedoms. His insights are particularly relevant today as we navigate the complexities of modern economies. To truly flourish, governments should embrace free-market capitalism and resist the creeping influence of socialism. This principle applies across sectors. By focusing on the efficient use of resources, reducing regulatory burdens, and fostering competition, we can build a more prosperous future. The bottom-up approach ensures better utilization of resources and empowers entrepreneurs, businesses, and local communities. Policies such as eliminating unnecessary regulations, reducing corporate tax rates, and promoting school choice are vital. These policies drive economic growth and ensure that resources are used where they are most needed. Policy uncertainty during election years can create a precarious economic environment. Given the numerous issues in Washington, states must lead the way in our system of federalism. The increasing divergence between red and blue states on taxes, labor, and education highlights this trend. Red states cut taxes and promote business-friendly policies, while blue states often expand government programs. This divergence allows states to set examples of effective governance through free-market principles. By reducing regulatory burdens, passing sustainable budgets, and fostering competition, states can mitigate some national policy uncertainties that stall economic progress. The next big step in federalism involves states innovating beyond traditional policies. For instance, states should focus on restraining government spending, eliminating bad taxes like income taxes, and reducing onerous regulations. Policies promoting school choice can also drive education reform and better outcomes, ensuring that all children have access to quality education regardless of their socioeconomic background. In addition, more freedom in technology and innovation should be ensured to support the next big revolution that improves our lives and livelihoods. To move forward, we must build from our past experiences and rise to overcome obstacles. We can foster innovation and resilience by acknowledging and learning from our failures. It’s essential to recognize that failure provides valuable lessons and opportunities for growth. Expanding government intervention in response to failures often stifles this learning process and leads to greater inefficiencies. Policy uncertainty during election years can create a precarious economic environment. States must lead the way in our system of federalism, setting examples of effective governance through free-market principles. By passing sustainable budgets, reducing regulatory burdens, and fostering competition, states can mitigate some national policy uncertainties that stall economic progress. Let’s leverage the strengths of the free market, prioritize efficiency, and ensure that our policies truly benefit Americans. By embracing free-market principles, reducing regulatory burdens, and fostering competition, we can pave the way for a stronger and more prosperous America. Together, we can build a future where smart policies and strong institutions that support life, liberty, and property pave the way for economic resilience and growth. Don’t miss the latest economic news in 9 minutes:
💸New CPI inflation report shows a 3.4% increase over the last year, while real average weekly earnings have dropped 4.4% since Biden took office. The Fed must act faster to cut its balance sheet, as I discussed on Fox Business with Cavuto. #Bidenomics #Inflation 📈Biden's tariff practices are a tax hike on those earning less than $400K, despite promises. Join me on the Sean Hannity Show, Lars Larson Show, and NTD News where I discussed the high costs and the failure of Bidenomics. #Tariffs 📚Government schools in Texas are fully funded, NOT UNDERFUNDED like some are saying! Despite declining enrollment and failing test scores, progressives still push for more funding. It's time for universal ESAs to empower parents and lower property taxes. #SchoolChoice 💬 Like, subscribe, and share my take on key economic issues every week. For more info, subscribe to my newsletter at vanceginn.substack.com and check out vanceginn.com. Originally published at Econlib.
Through the Consumer Financial Protection Bureau (CFPB), the Biden administration has proposed a regulation to cap how much credit card companies can charge us when we’re late on a payment to just $8. This sounds great on the surface, right? Lower fees mean less stress when we’re struggling to make ends meet, as inflation-adjusted average weekly earnings have been down 4.2 percent. But, as with many things that seem too good to be true, there’s a catch. This well-meaning price control could make things the most challenging for those it’s supposed to help. First, why do credit card companies charge late fees? It’s not just about making an extra buck. These fees support more credit available for everyone and encourage us to pay on time, which helps the credit system run smoothly. Now, the CFPB is shaking things up by setting a price ceiling on these fees at $8. While it could save us some money if we slip up and pay late, credit card companies will find ways to compensate for this lost income. And how do they do that? Well, they might start charging more for other things, tightening who they give credit to, or increasing interest rates. That means, in the end, credit could be more expensive and harder to get for all of us. Not just individuals who could feel the squeeze, but small businesses, too. Many small businesses rely on credit to manage their cash flow and growth. If banks start being pickier about who they lend to or raise their fees, these small businesses will find it more costly to get credit. This isn’t just bad news for them; it’s bad news for everyone, as the result will be higher prices for consumers, lower wages, and fewer jobs for workers. Remember that small banks and credit unions are a big deal for the local economy. These institutions often depend on fees to keep things running. If they can charge less for late payments, they might not be able to lend as much. This could hit communities hard, making it tougher for people to get loans for starting a small business, buying a home, or building a project. Economists have long warned about the dangers of well-intentioned but poorly thought-out regulations. By setting a one-size-fits-all rule for late fees, the government would make credit more expensive and less accessible for everyone. The idea is to protect us from unfair fees, but the real-world result would be different if access to credit were limited for those who need it most. History proves that often the biggest challenge is to protect consumers from the consequences of government actions. In trying to shield us from high late fees, the government will set us up for a situation where credit is harder to come by and more expensive. This doesn’t mean we shouldn’t try to protect consumers. Still, we need to think carefully about the consequences of our actions and let markets work, which is the best way to protect consumers as they have sovereignty over their purchases. While capping credit card late fees sounds like a simple fix, the ripple effects would be complex and wide-reaching. It’s crucial to keep credit accessible and affordable, support small businesses, and ensure the financial system remains robust. Let’s look at the implications of this price control regulation before rushing into it. Price controls never work as intended, as history has proven. Instead, we should ensure people in the marketplace determine what’s best for them rather than the Biden administration’s top-down, one-size-fits-none approach. Originally published at AIER.
Recently, the Biden administration handed $1.5 billion to the nation’s largest domestic semiconductor manufacturer, GlobalFoundries, the biggest payout from the CHIPS and Science Act of 2022 so far. The argument for this corporate welfare is America is too dependent on chips from China and Taiwan so more should be made domestically. Instead of seeing how America should reduce the cost of doing business for all semiconductor businesses here, some businesses will be picked as winners and others as losers. The cost of this form of socialism gives capitalism a bad rap and should be rejected. This move echoes a broader trend of governments worldwide intervening in their economies through industrial policy. A cocktail of targeted subsidies, tax breaks, and regulatory tinkering, industrial policy aims to sculpt economic outcomes by favoring specific industries or firms, all for the supposed benefit of the national economy. Industrial policy puts business “investment” decisions in the hands of government bureaucrats. What could go wrong? While its champions tout its potential to boost competitiveness and spur innovation, the reality often tells a different story, especially in light of massive deficit spending. In practice, industrial policy tends to fan the flames of higher prices and sow the seeds of economic destruction. Politicians too often meddle with voluntary market dynamics by artificially bolstering favored sectors through subsidies and tax perks, resulting in the misallocation of resources and distorted prices. Moreover, the infusion of government funds to bankroll these initiatives with borrowed money can contribute to the Federal Reserve helping finance the debt, increasing the money supply, and stoking inflation. The nexus between deficit spending and prices looms large over industrial policy. When politicians resort to deficit spending to bankroll industrial ventures, they put upward pressure on interest rates by issuing more debt and competing with scarce private funds. Elevated interest rates disturb private investment, ushering in a likely economic slowdown. Suppose deficit financing leans heavily on monetary expansion, whereby the central bank snaps up government debt. In that case, it fuels inflation by flooding the market with money that chases fewer goods and services. The national debt is above $34 trillion, and the Federal Reserve has already monetized much of the increase in recent years. Racking up even more deficits is insane: repeating the same mistakes and expecting a different result. Excessive spending and money printing have landed us with above-target inflation for over three years running. The repercussions of industrial policy ripple beyond inflation to encompass the broader economic landscape. Excessive government meddling in specific industries crowds out private investment and entrepreneurship. When particular firms enjoy subsidies and preferential treatment, it distorts the competitive landscape and deters innovation. This stifles economic vibrancy and impedes the rise of new industries or technologies crucial for sustained growth. For a cautionary tale of how Biden’s recent move could play out, look no further than Europe. Nations like Sweden, heralded by the West as a utopian example of big government yielding big benefits, spent the last year grappling with economic strife driven by dwindling private consumption and housing construction. Europe’s penchant for industrial policy, marked by subsidies, high taxes, and regulatory hoops, has contributed to its economic stagnation. To sidestep the dilemma of industrial policy missteps, policymakers should stop propping up their favorite sector or industry and instead unleash people to flourish by getting the government out of the way. Politicians should foster an environment conducive to entrepreneurship, innovation, and competition. This entails cutting government spending, reducing taxes, trimming red tape, and championing trade by removing barriers to private sector flourishing. By allowing market forces to determine resource allocation and rewarding entrepreneurship and risk-taking, people here and elsewhere can unleash their full potential and adapt to changing circumstances more effectively than under industrial policy frameworks. Biden’s billion-dollar amount to one company may seem like a lot, but that’s just a drop in the bucket of what’s to come from the CHIPS Act. Instead, these funds should be eliminated, preventing Congress from taking us further down the road to serfdom. Last week, the Texas Association of Business, Fort Worth Chamber of Commerce, Longview Chamber of Commerce, U.S. Chamber of Commerce, and American Bankers Association sued to block the Consumer Financial Protection Bureau’s (CFPB) final rule to lower the credit card late fees cap to $8.
This lawsuit challenges the Biden Administration's terrible price control idea that would hurt Texans. Given the entities that sued to block this rule and the effect on Texans, the case should continue in Texas instead of moving it elsewhere as the CFPB would like. Credit card late fees, what some call “junk fees,” are the cost of someone paying their bill late. Nothing is free, so there’s a charge for paying late, as it also influences the expected cash flow of credit card companies. It’s not a price gouging scheme; it’s simply a way to take the risk of giving credit to those in need while keeping cash flow for profitability. This is not only important for businesses, but it also provides an incentive for people to pay their bill online. Without a market-based credit card fee, the cost will be on those who need credit the most as they won’t be able to get it or pay much higher interest rates. The Wall Street Journal Editorial Board wrote: “Even the CFPB acknowledges, the lower penalty may cause more borrowers to pay late, and as a result incur higher ‘interest charges, penalty rates, credit reporting, and the loss of a grace period.” Many Texans depend on credit card access to pay their living expenses. There are more than 3 lines of credit per user in Texas. More than 3 million small businesses also rely on access to credit to grow and expand. Some card issuers most impacted by this rule, including Citi, Chase, and Synchrony, have extensive operations in Texas. JCPenney, based in Plano, offers one of the country's most popular co-branded credit cards through its partnership with Synchrony. The retailer, which employs more than 2,000 Texans, is just a few years removed from bankruptcy and stands to lose big if this misguided rule is allowed to stand. Reports indicate late fees account for 14 to 30 percent of department store credit card revenue. Given the current state of credit card delinquencies at a 10-year high, the CFPB’s rule would exacerbate an already dire situation. This would have far-reaching effects on our community and economy, particularly as consumers and small businesses increasingly rely on credit to navigate lower inflation-adjusted average weekly earnings by 4.2% since January 2021. Most of the plaintiffs in this lawsuit are local organizations that recognize the importance of defending and preserving access to credit. Texas is the rightful venue for this battle. Originally published at Washington Times.
In President Biden‘s recent State of the Union address, he painted a rosy economic picture, touting what he called “Bidenomics” as the driving force behind what he claims is a robust economy. He pointed to a low unemployment rate, the absence of a recession, and a lower inflation rate as evidence of success. Reality, however, tells a different story. And Mr. Biden’s recently released irresponsible budget sends the federal government and America further toward bankruptcy. Despite the president’s assertions, the economy and inflation remain top concerns for most Americans. The disconnect between the headlines and the lives of ordinary citizens underscores the profound challenges facing the nation’s economic landscape. This sense of malaise can be directly attributed to the flawed principles underlying Bidenomics, as outlined in his latest budget. These include excessive spending, taxation and regulation. Each is destructive, but together, they are catastrophic. The result has been stagflation and less household employment in four of the last five months. There have also been lower inflation-adjusted average weekly earnings by 4.2% since January 2021, when Mr. Biden took office. Rather than fostering economic growth and prosperity, Bidenomics has stifled innovation, investment and job creation. At its core, Bidenomics represents a misguided attempt to address complex economic issues through heavy-handed government intervention. While the administration may tout short-term gains, the long-term consequences of such policies are far-reaching and unaffordable. The reality is that excessive government spending has led to unsustainable levels of debt, burdening future generations with the consequences of fiscal irresponsibility. Similarly, excessive taxation is stifling entrepreneurship and dampening economic activity, limiting opportunities for individuals and businesses alike. Excessive regulation serves only to hamper innovation and drive up costs, exacerbating the challenges facing working families. Unfortunately, Mr. Biden’s latest budget proposal doubles down on these bad policies. Even with rosy assumptions of tax collections being a higher share of economic output over time as the tax hikes will reduce growth and, therefore, lower taxes as a share of gross domestic product, the budget continues massive deficits every year. This will result in higher interest rates, higher inflation, more investment These results have been highlighted in economic theory by economists such as Alberto Alesina and John B. Taylor. Their research has found that raising taxes doesn’t help close budget deficits because of the reduction in growth from higher taxes in a dynamic economy. The way forward should be cutting or at least better-limiting government spending — the ultimate burden of government on taxpayers. Amid these challenges, America also needs a return to optimism and flourishing. This includes leadership that inspires confidence, fosters innovation, and empowers people to pursue their dreams. We need out-of-the-box policies prioritizing economic freedom and individual opportunity, allowing the entrepreneurial spirit to thrive and driving growth and prosperity. More specifically, this means reducing the burden of government intervention through lower spending and taxes, streamlining regulations, and fostering an environment where entrepreneurship can thrive. By embracing fiscal sustainability and making tough choices, we can ensure the long-term stability and prosperity of our nation. In short, while Mr. Biden tries to spin a positive narrative about the economy, the facts speak for themselves. We cannot afford Bidenomics, no matter the headlines, what was touted in the State of the Union address, or the latest budget. The stakes are too high, and the consequences too grave, to ignore the reality of our economic situation. We need leadership that is willing to confront the hard truths and enact policies that prioritize the well-being of all Americans, fostering an environment where optimism and flourishing can thrive. Originally published at James Madison Institute.
America’s Antitrust laws have been essential to the legal landscape for over a century. They were designed to protect competition and consumer welfare. However, the Biden administration’s onslaught on competition through flawed antitrust efforts has threatened consumer welfare and profitability. This is especially true for “Big Tech” companies that generate substantial consumer welfare and billions of dollars in economic activity. While these efforts are purportedly aimed at safeguarding the interests of consumers, they pose a major threat to free-market capitalism and, thereby, the nation’s prosperity. Understanding the origins of antitrust laws illuminates why current antitrust accusations are far from their original purpose. Antitrust laws trace back to the Sherman Anti-Trust Act’s enactment in 1890. The landmark legislation was aimed to curb anticompetitive practices. Section 1 prohibits contracts in restraint of trade, regardless of the size of the firms participating. Section 2 prohibits monopolization or the abuse of monopoly power by firms with substantial market shares. Further reinforcement came with the Clayton Act in 1914, which focused on preventing mergers that could substantially lessen competition or tend to create a monopoly. However, applying antitrust laws lacked consistency and often yielded ambiguous results, especially during the mid-20th century. Fast forward to the 1970s, legal scholars proposed a paradigm shift. Figures like Aaron Director, Robert Bork, and others delved into the legislative history of the Sherman Act, concluding that its primary purpose was to protect consumers from the harm caused by cartels without undermining economic efficiency. This approach laid the foundation for what we now call the consumer welfare standard, a critical development in antitrust enforcement. In the late 1970s, the U.S. Supreme Court recognized this standard in several cases, asserting that business conduct raising antitrust concerns must be evaluated based on demonstrable economic effects. This standard has since guided antitrust law, emphasizing a simple question: does the conduct make consumers better or worse off? If the conduct improves or does not harm consumers, the conduct is allowed; otherwise, the government can intervene. The consumer welfare standard is a seemingly straightforward approach that has been a guiding light to antitrust cases. But it has failed to hold those currently at the Federal Trade Commission (FTC) and Department of Justice accountable for their excessive efforts. In recent years, calls to wield antitrust laws to address the conduct of prominent technology companies like Amazon and Google, which some pejoratively call “Big Tech,” have gained momentum. However, these movements are misguided and pose significant risks to the principles of free-market capitalism. Expanding the enforcement powers of antitrust agencies, as advocated by some on the left and right, revives an old “big is bad” approach reminiscent of a bygone era when antitrust enforcement was highly politicized. Instead of fostering competition, such a progressive approach undermines the competitive market process. This destroys the instrumental activity that provides innovation, affordable prices, and high-quality goods and services, all critical for human flourishing. This lawsuit purports to challenge Amazon’s management of its online marketplace, alleging that sellers are forced to charge high prices and lose profit by using Amazon’s add-on services and advertisements. The FTC contends that these choices are obligatory and accuses Amazon of operating as a monopoly, leading to higher prices for lower-quality products. Numerous surveys and studies reveal that consumers are pleased with Amazon’s services, so this attack against the consumer welfare standard does not appear to be about what is best for customers despite the claims of progressive antitrust enforcers. Moreover, consumers have the agency to take their dollars elsewhere, as Amazon is hardly the only online seller. The principles that drive capitalism are rooted in competition; when competition is stifled, consumers and entrepreneurs lose. Another example of abusing antitrust is the Department of Justice’s (DOJ) lawsuit against Google. The suit contends that Google has dominated the market as the default browser on popular devices through monopolistic means and must be stopped. However, Google is the default browser via legal marketing tactics, which the consumer can easily change, as numerous search engine options can be implemented on any device. Therefore, the case fails to meet the standard of a solid antitrust law violation of making consumers worse off. Consumers still have many options when selecting a default browser, but most choose Google because they like it best. This lawsuit is emblematic of a broader issue – applying antitrust laws to preserve competition. Antitrust laws should protect consumers by evaluating whether they are better or worse off due to a company’s actions. It should not be a mechanism to stifle competition to level the playing field. Enforcing such laws without considering the diverse preferences of consumers is a disservice to the very principles on which capitalism–and antitrust laws–were founded. If we’re going to have antitrust laws rather than just letting market forces work, the consumer welfare standard is an essential framework for evaluating antitrust cases. It ensures that the focus remains on improving people’s lives rather than manipulating the market based on antitrust enforcers’ interests or political persuasions. This standard can help keep regulators from blocking innovation and economic growth by limiting their ability to pick winners and losers. While concerns about the size of large tech companies and their censorship practices may be warranted, granting more power and discretion to government bureaucrats is not the solution. Expanding antitrust laws and enforcement powers will lead to politicized enforcement, often aimed at serving the interests of big government, with a disregard for the effects on consumers and the broader economy. Such a big-government approach would curtail entrepreneurship, freedom of speech, job creation, investment, and economic prosperity. Proposals to create new antitrust laws are unlikely to address concerns related to censorship and bias in tech companies. Instead, they will usher in uncertainty as legal standards evolve, causing companies to settle such cases to avoid costly legal battles. Such settlements may not necessarily benefit consumers or the economy and will drive up entry costs, creating a high barrier for startups. At a time of elevated inflation, the labor market faces challenges, and the economy is in turmoil. Pursuing lawsuits against successful companies diverts resources from critical issues and misuses taxpayer money. The time is now to refocus on what genuinely matters, acknowledge the limitations of government intervention in regulating markets, and allow the principles of free-market capitalism to flourish. This approach should recognize that dispersed, decentralized information through people in markets is much better than through central planning. Free-market capitalism is not the enemy but the best path to prosperity and freedom. We would be wise to have more of it, not destruction by the radical Biden administration. Originally published at American Institute for Economic Research.
Recent headlines for the January jobs report indicate a robust economy. But a more thorough look reveals challenges for Americans. One recent headline proclaimed “Voters are finally noticing that Bidenomics is working.” But just 30 percent of Americans think the economy is doing well. When asked who would handle the economy better, people give former president Donald Trump a 22-point advantage over President Biden. Challenges include increasing part-time employment in recent months, declining household employment in three of the last four months for a net decline of 398,000 job holders, mounting public debt burdens, and declining real wages, which have fallen by 4.4 percent since January 2021. Why these results? Bidenomics is based on costly Keynesian boom-and-bust policies. With so much whiplash, it’s no wonder people are conflicted about the economy. In the latest jobs report for January, a net increase of 353,000 nonfarm jobs from the establishment survey appears robust, as it was well above the consensus estimate of 185,000 new jobs. But let’s dig deeper. Last month, household employment declined by 31,000, contradicting the headlines. The divergence of jobs added between the household survey and the establishment survey has widened since March 2022. This period coincides with declining real gross domestic product in the first and second quarters of 2022 (usually that’s deemed a recession, but it hasn’t been yet). Indexing these two employment levels to 100 in January 2021, they were essentially the same until March 2022, but nonfarm employment was 2.5 percent higher in January 2024. While this divergence mystifies some, a primary reason is how the surveys are conducted. The establishment survey reports the answers from businesses and the household survey from individual citizens. The establishment survey often counts the same person working in multiple jobs, while the household survey counts each person employed. This likely explains much of the divergence, as many people work multiple jobs to make ends meet. The surge in part-time employment and more discouraged workers underscores the fragility of the labor market. Though average weekly earnings increased by 3 percent in January over a year prior, this is below inflation of 3.1 percent. Real average weekly earnings had increased for seven months before falling last month. And there had been declines in year-over-year average weekly earnings for 24 of the prior 25 months before June 2023. These real wages are down 4.4 percent since Biden took office in January 2021. As purchasing power declines, mounting debts become more urgent. Total US household debt has reached unprecedented levels, with credit card debt soaring by 14.5 percent over the last year to a staggering $1.13 trillion in the fourth quarter of 2023. Such substantial growth in debt raises concerns about the current (unsustainable?) consumption trends, business investment, and a looming financial crisis. The surge in mortgage rates to over seven percent for the first time since December and rising home prices exacerbate housing affordability challenges, particularly for aspiring homeowners. An integral component of what some consider the “American Dream,” housing affordability is a major factor discouraging Americans. The euphoria surrounding the January 2024 jobs report is misplaced. Policymakers should heed these warning signs and enact meaningful reforms to address root causes. Biden’s policy approach undergirds most of these difficulties. Bidenomics focuses on his Build Back Better agenda that picks winners and losers by redistributing taxpayer money for supposed economic gains through large deficit spending. We haven’t seen an agenda of this magnitude since LBJ’s Great Society in the 1960s or possibly since FDR’s New Deal in the 1930s. Both were damaging, as the Great Society dramatically expanded the size and scope of government, contributing to the Great Inflation in the 1970s, and the New Deal contributed to a longer and harsher Great Depression. Just since January 2021, Congress passed the following major spending bills upon request of the Biden administration:
These four bills will add nearly $4.3 trillion to the national debt. But at least another $2.5 trillion will be added to the national debt for student loan forgiveness schemes, SNAP expansions, net interest increases, Ukraine funding, PACT Act, and more. In total over the past three years, excessive spending will lead to more than $7 trillion added to the national debt, which now totals $34 trillion — a 21 percent increase since 2021. There seems to be no end to soaring debt with the recent discussions of more taxpayer money to Ukraine, Israel, the border, and the “bipartisan tax deal,” collectively adding at least another $700 billion to the debt over a decade. Record debts accrued by households and by the federal government (paid by households) are not signs of a robust economy. This will likely worsen before it improves, as household savings dry up. And with interest rates likely to stay higher for longer because of persistent inflation, debts will crowd out household finances and the federal budget. The Federal Reserve has monetized much of this increased national debt over the last few years by ballooning its balance sheet from $4 trillion to $9 trillion and back down to a still-bloated $7.6 trillion. This helps explain persistent inflation, massive misallocation of resources, and costly malinvestments across the economy, keeping the economy afloat yet fragile. Excessive deficit spending weighs heavily on future generations, saddling them with unsustainable debt levels they have no voice in. Today, everyone owes about $100,000, and taxpayers owe $165,000, toward the national debt. Of course, these amounts don’t include the hundreds of trillions of dollars in unfunded liabilities for the quickly-going-bankrupt welfare programs of Social Security and Medicare. Future generations will be on the hook for even more national debt if Bidenomics continues and Congress doesn’t reduce government spending now. This is why the national debt is the biggest national crisis for America. We’re robbing current and future generations of their hopes and dreams. Fortunately, there’s a better path forward if politicians have the willpower. This path should be chosen before we reap the major costs of a bigger crisis. I’ve recently outlined what this should look like at AIER. In short, we need a fiscal rule of a spending limit covering the entire budget based on a maximum rate of population growth plus inflation. There should also be a monetary rule that ideally reduces and caps the Fed’s current balance sheet to at least where it was before the lockdowns. My work with Americans for Tax Reform shows that had the federal government used this spending limit over the last 20 years, the debt would have increased by just $700 billion instead of the actual $20.2 trillion. That’s much more manageable and would point us in a more sustainable fiscal and monetary direction. Together, fiscal and monetary rules that rein in government will help reduce the roles that politicians and bureaucrats have in our lives so we can achieve our unique American dreams. If not, we will have wasted many dreams on Bidenomics that can make things look good on the surface, but cause rot underneath. Healthcare Costs Are Straining Federal And Household Budgets. Here’s How Biden Can Rein Them In2/14/2024
Originally published at Daily Caller.
Soaring health care spending continues to spiral up, tightening the financial noose on households and government coffers. Families are forced to make difficult choices between paying for essential medical care and meeting basic needs while the federal government struggles to rein in spending amid mounting debt. These soaring health care costs must be addressed with market-based approaches before it’s too late. When the Affordable Care Act (ACA) was passed in 2010, it was heralded as the panacea for reining in healthcare costs. However, the law’s complex regulations and mandates have contributed to administrative bloat and increased overhead costs, ultimately driving up premiums and out-of-pocket patient expenses. Unfortunately, since then, subsequent politicians have failed to correct course. In 2024, federal spending on Medicare, Medicaid, and ACA subsidies will likely exceed the discretionary budget, posing a significant threat to long-term fiscal sustainability. Compulsory spending on health coverage in the private sector infringes upon household earnings. This exacerbates economic challenges for families whose purchasing power is already reduced, as inflation-adjusted average weekly earnings are down 3.1 percent since Jan. 2021. Moreover, the growing burden of health care spending poses a significant threat to long-term fiscal sustainability, as rising debt levels raise concerns about future economic prosperity. The Congressional Budget Office (CBO) recently released its annual Budget and Economic Update, painting a grim budget picture. The trajectory is alarming, with expenditures expected to be $6.4 trillion this fiscal year before soaring to a staggering $10.1 trillion by 2034. Also, net interest spending is poised to balloon from $1 trillion to $1.6 trillion by 2034. These projections underscore the urgent need for meaningful reforms to rein in healthcare costs and put the federal budget on a more sustainable path. To address these challenges, policymakers must prioritize fiscal responsibility and adopt measures to remove government as much as possible from healthcare. This would help to quickly get healthcare back to a relationship between a doctor and patient. Today, too many middle layers rob time between the doctor and patient and raise healthcare prices. Policymakers should make market-based reforms. It won’t be done overnight, so there will need to be some steps to get there. It would be great if just making healthcare prices transparent would solve the problem. But the healthcare system is much more dysfunctional than that, unfortunately. Many reimbursement rates are set between doctors and private insurance companies or government programs like Medicaid and Medicare. Those reimbursement rates are so different depending on which entity is negotiating that the prices won’t tell us much, other than how screwed up the system is, but we already know that. A market-based approach should remove obstacles on the demand and supply sides of the market. This should include ending the tax exclusion for employer-sponsored health insurance. There’s a long history of this exclusion, which started during WWII. But while it had good intentions, the result has been a major distortion to the healthcare market. There should also be consideration of a voucher program for Medicare and block grants to states for Medicaid with limited growth each year. These would help reduce the moral hazard and over-subsidization on the demand side. On the supply side, the federal and state governments should remove rules that restrict the supply of doctor offices by removing certificate of need laws. They can also boost the supply of physicians by reducing or eliminating occupational licenses. Unleashing supply and imposing market forces on demand will result in more innovative, affordable, and accessible care for everyone. The resulting reduction in government spending and improved timely access to quality care can help support more prosperity. This would reduce the need for people on government safety net programs. It would also help mitigate higher prices, alleviate strain on household budget burdens, and safeguard the nation’s economic future. These steps will require difficult choices and bipartisan cooperation at the federal and state levels, but the stakes are too high to ignore the issue any longer. |
Vance Ginn, Ph.D.
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