Monthly Archives: March 2024

Fact Check 3.

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            The media and the academics they consult have not reached a perfect consensus on the cause or causes of the recent inflation.  Professor Tarek Hassan of Boston University offers the most straight-forward explanation.  “The pandemic of 2020-2022 causes massive disruptions to supply chains around the world…This caused what we call a cost-push inflation in all major economies,…”[1]  Professor Campbell Harvey of Duke University casts a wider net.  He points first to the Federal Reserve Bank’s purchase of $3 trillion worth of private and public bonds to counter the deflationary effects of lock-downs and lay-offs during 2020.  Second, the Trump administration joined with Congress to spend trillions of dollars on payments to businesses and individuals.  These were financed by expanding the deficit.  Third, says Professor Harvey, housing costs (sale prices and rents) jumped, with the median price of a home rising by 14.6 percent.[2]   

            Foreign policy elites, the people so disdained by President Donald Trump, appear to doubt that his continuation in office after January 2021 would have forestalled either of the current wars that dominate the headlines. 

In the case of Ukraine, it is argued that Vladimir Putin’s drive against an independent Ukraine has deep roots unrelated to who occupied the White House.  These range from his belief that the collapse of the Soviet Union was a world catastrophe, to his belief that Ukraine formed a part of historical Russia, to his resentment against the expansion of the North Atlantic Treaty Organization (NATO) toward the steppe region of Western Asia.  Putin clearly rejected the Ukrainians’ own sense that they belonged to the “West.”  As circumstances have shown, Ukrainians have no desire to return to close links with Russia.  An earlier attempt to short-circuit movement toward the European Union had ended in a Ukrainian revolt against a pro-Russian government.[3]  The same scholars and diplomats argue that a President Trump might have urged Ukraine to surrender and certainly could not have mobilized a coherent response from the NATO countries.[4] 

In the case of the Israel-Hamas war in Gaza, it is argued that Trump’s Middle East policy marginalized, rather than attempted to solve, the Palestinians question.[5]  Furthermore, Trump’s policies did not stop Iran from continuing to aid and arm Hamas. 

“The ball is round and the game lasts ninety minutes.  All else is theory.”—Sepp Herbeger, coach of the West German national soccer team, 1954. 

[1] Quoted in Angelo Fichera, “Trump Imagines Alternate Reality of World Where He Didn’t Lose,” NYT, 18 March 2024. 

[2] It may be difficult to tease-out the causes of rising home prices and rents.  The substantial creation of money could have contributed to this rise in addition to the displacement of many people that followed from work-from-home policies.  Then, these analyses focus on the Trump administration and say nothing about the further increase in the deficit from spending in the early Biden administration. 

[3] See the moving documentary “Winter on Fire: Ukraine’s Fight for Freedom.” Winter on Fire: Ukraine’s Fight for Freedom | Full Feature | Netflix (youtube.com) 

[4] A 2022 poll reported that 62 percent of respondents believed that Putin would not have invaded Ukraine if Trump had been president.  This may be more of a commentary of a commentary on President Joe Biden in the aftermath of the widely misunderstood withdrawal from Afghanistan. 

[5] By inference, this may have given Hamas a greater motivation to attack Israel on a scale that would compel the world to re-engage. 

Fact Check 2.

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            The Biden administration’s Inflation Reduction Act (2022) includes tax rebates and other subsidies to encourage “clean energy” industries in the United States.  These include wind and solar power, and the battery industry.  The spending stretches over ten years and amounts to $370 billion.  The IRA also includes “Made-In-America” provisions that are intended to reverse the long-running “off-shoring” of dull, dreary, and occasionally dangerous manufacturing jobs to low-wage foreign countries.[1]  In particular, the IRA targets China, pushing American companies to move production either to home or to other foreign trading partners.[2]  One possible brake on the IRA’s effectiveness lies in China’s possession of the sources of some minerals that are critical for the transition to renewable energy.[3] 

            Social Security and Medicare face long-term problems with their financing.  Social Security payments come from a federal tax on payrolls.  For many years, workers paid in more than was paid out to beneficiaries.  This created a surplus that has been held in the Social  Security “trust fund.”  More recently, as “Baby Boomers” have shifted from labor force to the uneasy leisure force, more money has been paid out to beneficiaries than has been paid in by workers.  As a result, the “trust fund” is being depleted.  Medicare is financed in a similar way and confronts a similar problem.  The Medicare trust fund is predicted to be exhausted in 2031 and the Social Security trust fund in 2033.  After the trust funds are exhausted, the government will be able to pay beneficiaries only what comes in from current payroll taxes.  This will lead to a reduction in payments.  Payments would be reduced by about one-quarter.[4]  Unless,…

            Various Republicans—individuals and groups—have proposed “solutions.”[5]  One is simply to raise the retirement age to 70.[6]  Two to four more years of paying into the systems at their peak earning phase of life plus two to four years less of drawing benefits could help balance the books.  Others, including Ron DeSantis and Nikki Haley, have proposed creating a two-tiered system.  People over 40 would continue to receive their current deal, while those under 40 would face a higher retirement age and—probably—a different financing scheme. 

            How do the Trump and Biden administrations match up on economic issues when the first three years of each are compared?[7]  Biden (3.7 percent) Trump (3.6 percent) had about the same unemployment rate.  Biden had more manufacturing jobs created than did Trump (791K v. 419K).  Biden had a higher GDP growth than did Trump (3.4 percent v. 2.7 percent).  Trump had a better experience with inflation than did Biden (2.1 percent v. 5.7 percent).  Trump had a better experience with wage growth than did Biden (+ 3.0 percent v. -2.7 percent). 

[1] See: Offshoring – Wikipedia  If successful, the IRA will have lots of American workers once again missing fingers or toes and hacking up colored phlegm. 

[2] Which it what China continues to be. 

[3] Lisa Friedman, “Republican Debate Fact Check,” NYT, 29 September 2023. 

[4] Angelo Fichera, “Candidates Sparring Over Social Security and Medicare,” NYT, 8 January 2024. 

[5] Fichera, “Candidates Sparring.” 

[6] Some of the guys in my morning work-out group have blue-collar jobs.  At least three of them have suffered bad, on-the-job concussions.  Another had a finger-tip pinched off by a piece of machinery.  One of the ladies who rings up my groceries always has on a large hand and wrist brace.  It seems indecent that people who can work into their Seventies or even Eighties because they have staffs to do much of both their work and their family responsibilities should suggest that people unlike themselves just buckle down.  What do I mean, “seems”? 

[7] Jim Tankersley and Lazaro Gamio, “Which President Can Claim These Economic Wins?” NYT, 8 March 2024. 

Fact Check 1.

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President Joe Biden claims that his administration “created” more jobs in two years than did any previous administration in in four years.[1]  Except that no “administration” is solely responsible for creating jobs.  In terms of passing legislation, both houses of Congress also participate.  In a larger sense, the actual economic actors—private enterprise in the American system—have much to contribute.  Then, there are two ways of measuring.  In straight numerical terms, the American economy added 12.1 million jobs between January 2021 and January 2023.  In terms of percentage of the labor force, the Biden Administration ranks lower than four other administrations.[2]  

President Biden claims that his administration cut the deficit by $1.7 trillion in two years.[3]  Except that most of the fall in spending came from the expiration of time-limited Covid-related spending legislation passed during the Trump administration.  During the Trump administration, widely bi-partisan votes in Congress for Covid response spending added $3.4 trillion to the deficit.  The Trump administration’s tax cuts further expanded the deficit by an estimated $1 trillion in 2018 through 2021.  In terms of legislation proposed by the Biden administration and passed by Congress, two things may be noted.  The Inflation Reduction Act cut the deficit by $240 billion over ten years.  Other legislation proposed by the administration and passed by Congress, is projected to increase the deficit by $4 trillion over the same ten years.[4]  Thus, the combination of Democratic spending increases and Republican tax-cutting is set to increase the deficit by at least $5 trillion dollars.  That comes on top of the $3.4 trillion in bipartisan-supported Covid-related deficits. 

President Biden sometimes blurs reality in his comparisons of himself to President Donald Trump.[5]  First, he celebrates his own signing of legislation that dispatched $1,400 checks to every American adult and child in March 2021.  However, in March 2020, Trump signed legislation sending $1,200 to each adult and $500 for each child.  In December 2020, Trump signed legislation sending $600 to each adult and $600 for each child.  Second, he compares job-losses under Trump to job-losses under President Herbert Hoover.  Again, this ignores the larger pattern.  When Trump was inaugurated in January 2017, 145.6 million people were working.  In January 2020, when Covid first reared its ugly head, there were 152 million people working.  That’s “a rise of 6.4 million jobs or 4.4 percent.”  Then Covid hit, lock-downs and massive lay-offs followed, and almost 22 million people lost their jobs.  That took employment down to about 130 million people.  By January 2021, employment had recovered to 142.9 million jobs.  Almost 13 million of the people who had lost jobs had recovered them before Trump left office. 

All these are just talking points in a campaign.  But many voters seem to remember the boom in job creation under the Trump administration.  Perhaps they recognize that Biden is boasting about the recovering economy he inherited. 

[1] Linda Qui, “Since 2024 Kickoff, Missing Context on Deficit,” NYT, 26 April 2023. 

[2] Jimmy Carter takes pride of place with 12.8 percent. 

[3] Linda Qui, “Since 2024 Kickoff, Missing Context on Deficit,” NYT, 26 April 2023. 

[4] For purposes of comparison, was at $3.1 trillion in 2020, at $1.4 trillion in 2022.  The Biden administration spending will push it into the area of $5.7 trillion by 2032. 

[5] Angelo Fichera, “Evaluating Biden’s Recent Talking Points on Taxes, Industry and Jobs,” NYT, 22 February 2024.