So, inflation is on the rise and we're still facing a high level of unemployment. Economists used to say these two conditions could not co-exist, but the lessons of the 1980's now tell us otherwise. Given these two conditions, what do the brilliant democratic politicians want to do? You got it, throw even more money into an already heated economy.
Now I'm not at all saying that $550 million of the $1 trillion bill just cleared the Senate is not warranted. This spending is not only warranted, it is a necessary and long overdue response to the crumbling of America's infrastructure. This component taken alone goes a long way (well at least a first step) towards fixing the long neglected infrastructure that keeps America running. In fact, I submit, even more money should be thrown into such projects as fixing our roads and bridges, repairing/upgrading/expanding air and rail service, and upgrading an outdated electrical grid which is poised to fail sooner than later.
Yes, as an American patriot, I am all for Congressional spending on items that can be deemed traditional infrastructure projects, These are the projects that do good for the economy - they fix and repair items necessary for America to function, and, standing alone create jobs. Republican's, recognizing the good in this 'Democratic Phase One' legislation joined in and it passed the Senate. But are the Democrat's satisfied? Of course not. Time to turn on the money machine America if the Left gets it's way!
Now that they've tasted success with winning on the $1 trillion actual infrastructure bill, they want more and at a huge price tag. So the Progressive/Liberal/Socialist Left, in its infinite wisdom, now is pushing 'Democratic Phase Two" the so-called 'Human Infrastructure Bill'. Only $3.5 trillion more - to the Dem's, money grows on trees (or at least from the Treasury's printing presses).
Are any of the components of 'Phase Two' of the Democratic Plan necessary to fix America? Personally, I think not, but here is a list of some of the things 'Phase Two' addresses. You can decide for yourself.
- Expansions of paid family and medical leave
- A buildup of child-care programs
- Extensions of household tax credits, including the enhanced child tax credit implemented during the pandemic
- An expansion of Medicare benefits to include dental, vision and hearing, and a reduction in the Medicare eligibility age
- An extension of increased Affordable Care Act subsidies
- Universal pre-K
- Tuition-free community college
- Tax incentives and grants to encourage adoption of green energy, manufacturing and transportation
- Polluter fees on methane and carbon
- Consumer rebates to encourage clean energy and weatherization in homes
- Funding to increase the number of electric vehicles in the federal fleet
[Pramuk, J. "Democrats release sprawling budget plan as Senate moves to pass bipartisan infrastructure bill". (Accessed August 11, 2021).
Not one thing on this list is traditional infrastructure, so, what are they? They are radical socialist proposals designed to transform America into a system which gives Bernie Sanders wet dreams. Unnecessary, unwarranted, and most importantly economically devastating spending.
Let's assume, arguendo, this crap passes and becomes law. The Dem's want you to believe they have everything under control - it's paid for, no individual tax increases, no rise in economic debt, paid for solely by taxing corporations and the wealthy, blah, blah, blah. Well I definitely call B.S. on the whole thing, and if it passes here's why (including the economic harm it will cause):
- The easy one first, pump $5 trillion into an already heated economy and what do you get? Right, more and intensifying inflation.
- OK, another easy one, provide all this social money to people giving them an income in lieu of working and just how does this incentivize return to work? It doesn't and unemployment remains at high levels.
- With less people working, there is a decline in productivity (which in the short run can not be cured by automation). This productivity decline results in less goods being produced for consumption. Even using Marshall's simple supply and demand model, we see that a growing scarcity of supply with fixed demand causes prices to rise. Yup, are you seeing an inflationary spiral forming? I do.
- Now this is a tricky one. As the government doles out more free money for people to stay home in lieu of work, they will become more complacent with the amount of money they have and their need to hoard cash diminishes. As the complacency grows so grows their spending in the economic system thereby increasing the velocity of money. With rising demand and falling supply and money turning over at an accelerating rate, well, its time to welcome in hyper-inflation.
- It can be said that these factors are interdependent, but I'm not sure I agree with that assessment. However, what I do see is a circle of economic duress forming where one factor feeds off the others and we go round and round in a worsening circle of inflation and unemployment. A never ending case of cause and effect perpetuating economic harm and potential collapse.
In the 1970's they said high inflation and high unemployment could not coexist (higher prices means people must return to work to survive. When working: a) unemployment rates necessarily drop; and b) more worker's means more productivity, which in turn leads to a greater available system supply and lower prices/inflation). Well as you know, they were very, very wrong.
High inflation and high unemployment can coexist within an economic system - remember stagflation of the early 1980's. I do and it wasn't pleasant.
But any view of this $3.5 trillion transformational nonsense demonstrates that the Democrat's are setting out to do major harm to America's economy. Printing and injection that huge sum of money into an already inflationary hot economy exacerbates inflationary pressures causing prices to rise across the board. And while they are at it, let's de-incentivize working to maintain and push those jobless numbers even higher. Brilliant, simply brilliant (not!).
I hate to end this piece on a doom and gloom front. But my Progressive Democratic friends leave me no alternative. If the 'Phase Two' $3.5 trillion spending spree is enacted, the American economy will be staged for a rough road ahead. By not addressing (and in fact exacerbating) the inflation and unemployment problems currently exhibited in the American economy we will be facing a possible return to stagflation. This democratic plan is clearly the wrong path to take to insure a robust American economy going forward.
No glee at all results from this ill-thought, unwarranted, destructive spending course of action proposed by the Democrats.