The Economy Is Teetering and Joe Biden Is the Man Without a Plan

CommentaryEven with last week’s recovery in the stock market, the losses to U.S. investors and families over the past several months have eclipsed $5 trillion. To make matters worse, nearly another $1 trillion in U.S. wealth in cryptocurrency was wiped out during the mega-selloff in May, as investors rushed for safety. This is ripping into the savings of American families and their retirement accounts with the value of nest eggs being diminished. So much for buying that second home in Florida. Business Insider calculates that Americans have lost another $3.7 trillion in earnings during the pandemic over the past two years. This is an economic siren blaring, because as wealth disappears, many other building blocks of the economy are put at risk. The ability to borrow and spend out of savings is reduced by the loss of household wealth. Consumer spending and the housing industry are already signs of slowing, and the dip is likely to get worse in the months ahead.  Major retailers such as Walmart and Target are reporting that the consumer spree may be hitting the wall. The Federal Reserve’s higher interest rates—which are necessary to combat Bidenflation—only compound the problems. Second, home mortgage lending costs are up 57 percent this year with mortgage rates blowing up to 5.5 percent from 3.5 percent this year, which drastically diminishes the purchasing power of potential home buyers. The same can be said about the ability to take a vacation, send children to a private school, or pay pricey college tuitions. Meanwhile, credit card holders are paying at least 2 percent more for debt.  The average debt of a U.S. family is $6,270. Don’t be surprised if we see more student loan defaults with higher interest rates. The average student has $25,000 to $50,000 in debt, with $1.7 trillion in debt nationwide. And, no, the answer isn’t to shift these costs to taxpayers when we already have $30 trillion in national debt. Don’t expect relief anytime soon at the gas pump. Energy costs are already up more than 70 percent this year, and over the Memorial Day weekend, gas prices hit $6 a gallon in many markets. That makes us skeptical that we’ve turned the corner on inflation, because higher energy prices ricochet throughout the economy affecting everything from food to airline ticket prices. Then add to that the front-page story in The Wall Street Journal that many large businesses are starting to put a freeze on hiring. There’s still a strong jobs market, but for how much longer? What has us worried the most is that Joe Biden is the man without a plan. He keeps pushing trillions more spending for Build Back Better and he even recently floated a $1 trillion tax increase. Meanwhile, Treasury Secretary Janet Yellen wants a global minimum tax, which will negatively affect America the most. We should be selling tax reductions, not tax increases to the rest of the world. Republicans are set to win a monster election in November, sending Democrats back to the minority in 2023. Larry Kudlow of Fox Business News likes to reassure Americans that “the cavalry is coming.” Yes, but will they get here in time to rescue our flailing economy and save our working families? Stephen Moore is a senior fellow at the Heritage Foundation and an economist with FreedomWorks.  George Mentz is CEO of the Global Academy of Finance and Management at Texas A&M University School of Law. Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times. Follow Stephen Moore is a senior fellow at FreedomWorks and co-founder of the Committee to Unleash Prosperity. He served as a senior economic adviser to Donald Trump. His new book is entitled: “Govzilla: How the Relentless Growth of Government Is Impoverishing America.”

The Economy Is Teetering and Joe Biden Is the Man Without a Plan

Commentary

Even with last week’s recovery in the stock market, the losses to U.S. investors and families over the past several months have eclipsed $5 trillion. To make matters worse, nearly another $1 trillion in U.S. wealth in cryptocurrency was wiped out during the mega-selloff in May, as investors rushed for safety.

This is ripping into the savings of American families and their retirement accounts with the value of nest eggs being diminished. So much for buying that second home in Florida.

Business Insider calculates that Americans have lost another $3.7 trillion in earnings during the pandemic over the past two years.

This is an economic siren blaring, because as wealth disappears, many other building blocks of the economy are put at risk.

The ability to borrow and spend out of savings is reduced by the loss of household wealth. Consumer spending and the housing industry are already signs of slowing, and the dip is likely to get worse in the months ahead.  Major retailers such as Walmart and Target are reporting that the consumer spree may be hitting the wall.

The Federal Reserve’s higher interest rates—which are necessary to combat Bidenflation—only compound the problems.

Second, home mortgage lending costs are up 57 percent this year with mortgage rates blowing up to 5.5 percent from 3.5 percent this year, which drastically diminishes the purchasing power of potential home buyers.

The same can be said about the ability to take a vacation, send children to a private school, or pay pricey college tuitions.

Meanwhile, credit card holders are paying at least 2 percent more for debt.  The average debt of a U.S. family is $6,270.

Don’t be surprised if we see more student loan defaults with higher interest rates. The average student has $25,000 to $50,000 in debt, with $1.7 trillion in debt nationwide. And, no, the answer isn’t to shift these costs to taxpayers when we already have $30 trillion in national debt.

Don’t expect relief anytime soon at the gas pump. Energy costs are already up more than 70 percent this year, and over the Memorial Day weekend, gas prices hit $6 a gallon in many markets.

That makes us skeptical that we’ve turned the corner on inflation, because higher energy prices ricochet throughout the economy affecting everything from food to airline ticket prices.

Then add to that the front-page story in The Wall Street Journal that many large businesses are starting to put a freeze on hiring. There’s still a strong jobs market, but for how much longer?

What has us worried the most is that Joe Biden is the man without a plan. He keeps pushing trillions more spending for Build Back Better and he even recently floated a $1 trillion tax increase. Meanwhile, Treasury Secretary Janet Yellen wants a global minimum tax, which will negatively affect America the most. We should be selling tax reductions, not tax increases to the rest of the world.

Republicans are set to win a monster election in November, sending Democrats back to the minority in 2023. Larry Kudlow of Fox Business News likes to reassure Americans that “the cavalry is coming.”

Yes, but will they get here in time to rescue our flailing economy and save our working families?

Stephen Moore is a senior fellow at the Heritage Foundation and an economist with FreedomWorks.  George Mentz is CEO of the Global Academy of Finance and Management at Texas A&M University School of Law.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.


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Stephen Moore is a senior fellow at FreedomWorks and co-founder of the Committee to Unleash Prosperity. He served as a senior economic adviser to Donald Trump. His new book is entitled: “Govzilla: How the Relentless Growth of Government Is Impoverishing America.”