Some of us lived through President Jimmy Carter’s rocky economy of the late 1970s. In the Senate, Joe Biden must have slept through it.
Biden apparently also slept through President Ronald Reagan’s subsequent recovery.
Today, Biden insistently pursues the very sort of Carter-esque policies that caused stagflation then and are threatening to cause it now. Despite 9.1% inflation over the past 12 months and a 1.6% contraction of gross domestic product in this year’s first quarter, Biden absurdly continues to blame today’s economic mess on Russia’s war and to claim that today’s inflation statistics are “out of date.” This, apparently, is Biden’s new version of his absurd claim from a year ago that growing inflation was just “transitory.”
Fortunately, at least one group is pushing a wiser approach that emulates Reagan instead of Carter.
The venerable Republican Study Committee, a solidly but not radically conservative group in the House of Representatives, this week produced a memo called “Seven Steps to Battle Biden’s Stagflation.” The committee’s prescriptions are right on target.
Granted, a large share of the job of taming the inflation beast belongs to the Federal Reserve Board’s monetary management, which operates independently from elected policymakers. But to the extent that fiscal, tax, and nonmonetary regulatory policy affects inflation and economic stagnation, the country would greatly benefit from the committee’s approach.
First, the committee points to the obvious imperative that Biden and almost every congressional Democrat rejects, namely to rein in discretionary spending. With the nation’s debt-to-GDP ratio at a dangerous 125%, and with annual appropriations having risen by huge amounts before the pandemic and astronomical amounts afterward, there is plenty of room for reasonable savings.
Second, the committee says Biden must stop his economically insane war against domestic fossil fuel production. Identifying more than 80 specific actions Biden has taken that have contributed to higher energy prices, the committee rightly directs him to roll them back.
The committee also says it’s time to remove economically restrictive COVID-related restrictions and let free individuals take precautions to protect themselves.
Then make House Speaker Paul Ryan’s wildly successful tax cuts permanent and begin reversing new regulatory burdens imposed by the Biden administration that have added more than $200 billion in costs to the economy. Some of these regulatory actions have directly fouled up the supply chain, clogging up ports and encumbering truck drivers. (State laws, especially in California, add significantly to the latter problem and also should be changed.) Supply-chain regulatory relief would help substantially in bringing down prices.
Finally, the committee makes a great point that Biden and his fellow Democrats have continued to roll back work-and-training requirements from federal welfare laws. This runs against more than 30 years of experience showing that such provisions are invariably successful in making welfare-type systems what conservatives once described as “trampolines, not hammocks.” In other words, when time limits and work incentives are included with federal dole plans, recipients put in the effort to bounce back from misfortune rather than get accustomed to incapacity. Biden’s policies, though, ask for no effort in return for assistance.
As in the Carter-Reagan era, most of the fiscal and regulatory ailments in the U.S. economy lie in the supply side of the equation. Biden and the Democrats have throttled back the supply side in many ways, all while joining the Federal Reserve Board in flooding the economy with devalued fiat money. That’s why the overall economy is shrinking even as prices rise enormously.
The Republican Study Committee is exactly right to chart the opposite course.
