On January 4, 1965, President Lyndon Baines Johnson heralded his Great Society. He celebrated government spending.
But LBJ gave the country a guns-and-butter economy. His policies entrenched the twin culture of poverty and dependency. The culture of poverty and dependency drives out-of-wedlock births, which is
a fundamental cause of violent crime
in the United States. His reckless spending led to a lost decade of high interest rates, elevated unemployment, and stagflation.
On Tuesday, President
Joe Biden
will deliver his State of the Union address. He will brag about the January employment report. According to the Bureau of Labor Statistics, 517,000 jobs were created in January. The unemployment rate fell to 3.4%, the lowest since 1969. Biden will tout job creation and the low unemployment rate, but he will ignore high inflation.
In February 2021, Professor Larry Summers warned that the American Rescue Plan was too big and would lead to high inflation. Summers was right. According to Professor Jason Furman, former adviser to President Obama, the underlying rate of inflation is
around 4%
.
Wage inflation is running at similar levels. Wages and prices converge. The very tight labor market will make it extremely difficult for the Federal Reserve to reach its 2% inflation target without further tightening. Multiple rate increases are on deck. Biden won’t talk about that. Biden will say that GDP growth in the fourth quarter of 2022 grew at 2.9%. But he won’t disclose that real final demand stalled in the quarter, growing at less than 1%. Nor will he mention that private sector economists and the Federal Reserve Bank of Atlanta
project
that economic growth in the current quarter will be near recession levels.
Biden will talk about rebuilding America’s infrastructure. He will certainly mention funding for the long delayed Hudson River Project in the New York City area. But he won’t mention that that project will be built with high-cost union labor. He won’t mention that major construction projects in the New York City area are multiple times
more expensive
than infrastructure projects in any other major city of the world. He won’t tell the truth: unions are a cartel. They reduce employment and harm growth.
Biden will salute the semiconductor
CHIPS and Science Act
. That Act is good policy. The U.S. is almost totally dependent on Taiwan fabrication facilities for the most advanced semiconductors. U.S. national security requires that advanced fabrication facilities be located in the U.S. But Biden won’t explain that the U.S. has no semiconductor fabrication facilities that can produce the most advanced chips because it is 30% more expensive to build a semiconductor fabrication plant in the U.S. than in Taiwan.
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Finally, as the debt ceiling crisis approaches, President Biden won’t tell us that his policies through legislation and executive actions will add more than
$4.8 trillion
to the federal deficit.
President Biden, like President Johnson, will not tell us the truth.
