Albert Hunt adds his advice to Democrats to the scrum of pundits offering advice in his piece at The Hill:
There is a path to recovery. It starts with passing the child, heath care, climate bill — on top of the just approved infrastructure measure. Next, the party’s left wing needs to recognize the public is not with them on any radical agenda, like defunding the police or open borders. Then the centrists should stop posturing over worries about short-term deficits.
What I think that Mr. Hunt along with the Biden Administration are missing is that the Build Back Better Bill is not production; it is consumption. It reminds me of a story about Abraham Lincoln:
Few subjects have been more debated and less understood than the Proclamation of Emancipation. Mr. Lincoln was himself opposed to the measure, and when he very reluctantly issued the preliminary proclamation in September, 1862, he wished it distinctly understood that the deportation of the slaves was, in his mind, inseparably connected with the policy. Like Mr. Clay and other prominent leaders of the old Whig party, he believed in colonization, and that the separation of the two races was necessary to the welfare of both. He was at that time pressing upon the attention of Congress a scheme of colonization in Chiriqui, in Central America, which Senator Pomeroy espoused with great zeal, and in which he had the favor of a majority of the Cabinet, including Secretary Smith, who warmly indorsed the project. Subsequent developments, however, proved that it was simply an organization for land-stealing and plunder, and it was abandoned; but it is by no means certain that if the President had foreseen this fact his preliminary notice to the rebels would have been given. There are strong reasons for saying that he doubted his right to emancipate under the war power, and he doubtless meant what he said when he compared an Executive order to that effect to “the Pope’s Bull against the comet.†In discussing the question, he used to liken the case to that of the boy who, when asked how many legs his calf would have if he called its tail a leg, replied, †Five,†to which the prompt response was made that calling the tail a leg would not make it a leg.
Calling it either infrastructure or investment makes it neither.
When you produce more and save more, you can consume more. You can also borrow but borrowing to pay for operating expenses is a sucker’s bet. It increases your operating expenses. This is known in the trade as a “positive feedback loop”. Without some exogenous braking mechanism it is inherently unstable. And applying the brakes will be very, very painful.
“You can also borrow but borrowing to pay for operating expenses is a sucker’s bet.”
“In the trade” its also known as funding losses.
More broadly, the Biden Admin and the Fed have seriously mispositioned themselves. The current rates of inflation are obvious to everyone and a political problem. Real wages are down. For that to turn will probably require a massive withdrawal of people from the labor force, but then higher wage costs will get passed through.
But to put on the brakes through higher rates will probably take the wind out of the construction industry. By reducing fiscal stimulus combined with an inability to transport product to sell, a drag on the economy. Either probably puts the economy in or on the brink of recession. To reduce gasoline prices and the coming surge in home heating will put Biden at odds with the greenies.
They are boxed in due to bad policies on a number of fronts.
Given the current climate and state of misinformation, I feel it might be appropriate to mention that Lincoln was opposed to slavery. 😉
Since the George W. Julian’s memoir is quoted at length, I am compelled to point out that Julian was a radical Republican of a strong ideological stripe. He did not understand Lincoln and while there is factual basis for his take, the gulf between them was that between an idealist and a pragmatist. Julian thought that freeing the slaves at the outset would have sped up the end of the war. He saw all the inevitable positives stemming from executing his ideals and none of the negatives or uncertainties, while Lincoln counted up the balance sheet weighing plusses and minuses, such as the effect of emancipation on the support of border states and the need to maintain public support to engage in war activities. The Republicans would actually lose their majority in House in the midterms shortly after, maintaining control by relying on border state unionists.
I’m well aware of what Lincoln’s views regarding slavery were. It’s arguable that the Republican Party began as an abolition party. IMO that’s how the Southern Democrats interpreted Lincoln’s election.
As I think I’ve mentioned before my great-great-grandfather was a Republican in its very early days and met Lincoln when he was campaigning (downstate Illinois).
Well, in retrospect, freeing and integrating the slaves has been a lengthy, problematic, as as yet insoluble effort.
Lincoln thought they should go, not as a racist but as a pragmatist.
We will wallow through this for the rest of our lives.