October 3, 2021
The Writing Is
On the Wall
In May of 2020 many economists were predicting a monumental crash as early as that summer, but over the past year and a half since, the government has been able to do their magic tricks to continue getting away with creating tons of money and giving it away more so than ever before and in a whole new ways as a result of the pandemic. This has resulted in more people in a psychologically unhealthy welfare mindset and refusing to go back to work using the excuse of Covid, part of the many unique things going on now in this hidden civil war that are building up to a crash that will be far more complex. The writing has been on the wall and now even some politicians are seeing the cracks forming in the economy caused by political and monetarily greedy economic mistakes, and they are worried and insisting the cost of Biden's economic package be cut in half. His current package has some economic remedies, including making everything in the US to undo having been dependent on other countries and ending up where we are now with shortages, but that will probably be the first to be cut because they aren't his priority. Money for climate change and more welfare are his priorities. Socialism is non-sustainable. The Pilgrims figured this out. Republicans know this and are standing on the sidelines watching the infighting between progressives and moderates over the President's package. "Rep. Ted Budd called the infrastructure bill "a Trojan horse to get us more socialism,' suggesting Biden had misled when he campaigned as a moderate during the 2020 presidential election."
Some Democrats see the problem with creating more money and 'playing a larger role in Americans' lives'. Biden's 'care economy' bill creates new jobs with great pay and benefits but the new people on welfare don't want to come back to work. The damage this year's new kind of welfare has done is staring him in the face like writing on the wall but he can't see it. And this is only one of the issues that have built up to this very complex, tangled up, angry place where no one is willing to give up what they want or don't want.
Recent news articles have done an excellent job of summarizing what is going on.
"Democrats are trying to come up with another way to raise the debt limit after Republicans blocked their latest effort Tuesday. The U.S.is now heading toward default in just a few weeks, which could have catastrophic economic consequences, government officials and economists warn.
"Senate Majority Leader Chuck Schumer on Tuesday called for unanimous consent from the Senate to hold a vote to increase the debt limit with just a simple majority of senators. He argued Republicans have been insisting Democrats act alone to raise the debt limit, so a unanimous consent vote fulfills that demand. But Senate Minority Leader Mitch McConnell objected — forcing Democratic lawmakers to come up with another plan.
"'There is no chance, no chance the Republican conference will go out of our way to help Democrats conserve their time and energy, so they can resume ramming through partisan socialism as fast as possible,' McConnell said.
"Treasury Secretary Janet Yellen told Congress early Tuesday, the government would be unable to pay its bills if Congress does not act by October 18.
"To include the debt limit in the reconciliation bill, Democrats would have to go back and revise their budget resolution to include raising the debt limit, a move that faces both political hurdles and poses timing challenges with their current agenda.
"House Majority leader Steny Hoyer on Tuesday afternoon tweeted that he was asked about reconciliation as an option to address the debt limit but that it was 'certainly not the best option, nor the option we're pursuing.' Later in the day, Hoyer told reporters that it was 'possible' the House might hold two separate votes, one on the debt ceiling and one on the continuing resolution to keep the government running. He suggested the measures might originate in the Senate.
"Though Republicans are refusing to help address the debt limit, they also say the country must not go into default.
"'Of course the debt ceiling has to be raised. They have a way to do it,' McConnell said earlier Tuesday.
"Raising the debt limit allows the federal government to pay its debt obligations, not new spending. While Republicans are attempting to derail the Democrats' $3.5 trillion reconciliation package, even without new spending, the debt will continue to mount due to past legislation including bipartisan COVID relief, as well as the Republican 2017 tax cuts."
Excerpt from The Washington Post
"What's happening in Congress right now will have a big impact on the economy and American families"
"WASHINGTON - What's happening right now in Congress has major implications for the fate of the U.S. economy - and many Americans' pocketbooks.
"There are four big things happening at once, which is what makes this so complicated and consequential. First of all, Congress needed to approve a budget so the federal government can keep operating after Sept. 30. Lawmakers did that Thursday, avoiding a government shutdown by only a few hours. The second issue is the "debt ceiling." If that isn't lifted by Oct. 18, the government will run out of money and will not be able to pay all of its bills, a scary situation for bondholders, Social Security recipients, military members and more. Republican are refusing to help lift the debt ceiling.
"The third item is the infrastructure bill. This has bipartisan support, and it already passed the Senate, but liberal Democrats in the House don't want to approve it unless Congress also votes on President Joe Biden's roughly $3.5 trillion climate and "care economy" bill. Right now, liberal and moderate Democrats don't agree on what should be in the "care economy" bill and what the final price tag should be. Republicans are staunchly against the "care economy" bill because it includes tax increases on the rich and large corporations, and because it would greatly expand government funding of social problems.
"The infrastructure and "care economy" bills would play a big role in shaping the U.S. economy for the next 10 years. They would be a huge part of Biden's legacy. Many Democrats say they must pass these bills now while their party has a slim majority in Congress and Biden is pushing for more-equal recovery. But centrist Democrats are worried about the substantial increase in government spending, and Republicans do not want the government playing a larger role in Americans' daily lives.
"The debt ceiling is the biggest worry for the economy. Failing to lift the debt ceiling would be a big deal. It would almost certainly cause financial markets to plunge and could easily lead to a recession and millions of job losses. It's telling that former treasury secretaries of both parties have been urging Congress to act ASAP on this.
The debt ceiling is the limit on how much the United States can borrow. In theory, it's supposed to prevent Congress from overspending. In reality, it hasn't worked that way in years. Both Republicans and Democrats have overspent and added to the national debt to pay for wars, tax cuts, recession relief and more. Congress spends the money and then, months later, has to lift the debt ceiling to pay for all the spending it already approved. It's a quirky system. Other countries don't do it like this. Many people compare it to spending on a credit card and then Congress acting shocked when the bill is due.
Republicans are refusing to raise the debt ceiling this time, because they say they've been boxed out of the debate over the new Democratic spending package. So they allege Democrats should have to deal with the difficult debt-ceiling vote on their own. GOP lawmakers also blame Democrats for seeking too much new spending, but the reality is Republicans also ran huge deficits under Trump, including enacting a nearly $2 trillion tax cut that now has to be paid for.
If Congress does not lift the debt ceiling before Oct. 18, the Treasury will not have enough cash on hand to pay all of its bills because it won't be able to borrow any more money. That means someone won't get paid. The government could stop paying Social Security or members of the military. Or it could opt not to pay bondholders, which affects many retirement funds. The bottom line is potentially millions of people won't get the money they expected. It would mark the first time the United States has not paid all of its bills on time.
When there's a default, it triggers a chain reaction of pain. Bondholders demand higher interest rates on U.S. debt going forward. That raises costs for the government and for Americans trying to get loans, since loan rates are often based off government bond yields. All of this is likely to cause panic selling in the stock market and make consumers hesitant to spend during a crisis, hurting growth across the country. If the default stretches on for weeks, a recession and big job losses are a real possibility. In a warning sign, bond yields started rising Tuesday, triggering a 569 point drop in the Dow Jones industrial average. Wall Street analysts say that's a mild taste of what would happen if the nation gets really close to default - or actually does default."
"Key Inflation Measure Soars to 30-Year High"
“'Supply chain concerns are growing beyond electronics and chips into most other commodities. Lead times are extending, shipping lanes are slowing, and we will not see an end to this in 2021,' one respondent said in reference to backlogs and delays still plaguing his sector in electrical equipment, appliances and components, according to CNBC.
"Much of the price index data from the last several months has validated the argument that inflation may not be a transitory phenomenon this time around. However, some economists and financial analysts cited by the White House to justify their $3.5 trillion spending bill still believe inflation will subside as soon as market disequilibriums balance.
"Until recently, Federal Reserve leaders projected that inflation would temper and approach pre-pandemic levels of 2 percent or less by the close of 2021, but continued supply and labor shortages have changed that outlook. Fed Chairman Jerome Powell commented earlier this week that he finds the unrelenting inflation “frustrating.” He said he can foresee the possibility in which the shortages, and therefore inflation pressures, persist until next summer.
"The Fed’s inflation target has long been a 2 percent average over the long run. To compensate for past quarters of inflation target undershooting, the Fed has tolerated inflation running above 2 percent for a number of consecutive quarters. In the event of spiraling inflation, a monetary instrument the Fed has at its disposal to slow it down is to hike interest rates, but not without the risk of triggering new recessionary effects."
Another summary of the complex circumstances written by someone who explains what some of the politicians are seeing needs to be done and are voting and not voting accordingly.
"America faces supply-chain disruption and shortages. Here’s why"
"There’s a quiet panic happening in the US economy. Medical labs are running out of supplies like pipettes and petri dishes, summer camps and restaurants are having trouble getting food, and automobile, paint and electronics firms are curtailing production because they can’t get semiconductors. One man told me he couldn’t get a Whopper meal at a Burger King in Florida, as there was a sign saying 'Sorry, no french fries with any order. We have no potatoes.'
Imagine that, no french fries in America.
The problem seems to be getting worse, as the shortages pile on top of each other like a snake eating its tail. For instance, the inability to fix trucks means that truck drivers can’t haul boxes of goods, which might actually contain the parts needed to fix the trucks, and so forth.
There are multiple arguments about why the problem is as bad as it is. Everyone agrees that the Covid pandemic and chaotic changes in consumption habits have caused inevitable short-term price hikes and shortages. As people go on vacation less and do outdoor sports more, the price of, say, airline tickets should drop, and the price of bicycles will go up. But some point to government spending and money printing at the Fed as worsening the problem, while others suggest it is temporary and will resolve on its own.
Both arguments have merit. But what we’re experiencing is also the net result of decades of policy choices starting in the 1970s that emphasized consumer sovereignty over citizenship. The consolidation of power into the hands of private equity financiers and monopolists over the last four decades has left us uniquely unprepared to manage a supply shock. Our hyper-efficient globalized supply chain, once romanticized by men like Tom Friedman in The World Is Flat, is the problem. Like the financial system before the 2008 crash, this kind of economic order hides its fragility. It seems to work quite well, until it doesn’t.
The specific policies that led to our supply constrained world are lax antitrust, deregulation of basic infrastructure industries like shipping, railroads and trucking, disinvestment in domestic production, and trade policy emphasizing finance over manufacturing.
Take biopharmaceutical equipment necessary to make vaccines. There’s a shortage of fancy plastic bags that you mix chemicals in to make medicine, which isn’t surprising in a pandemic. But the reason for the shortage isn’t just Covid but a merger wave; over the last 15 years, four firms bought up the biopharmaceutical equipment industry, without any antitrust agency taking meaningful action. These firms now have market power, and dominate their competitors, by ensuring their bags can only interoperate with their specific mixing machines. It’s like not having enough Keurig coffee machine pods; the shortage isn’t the coffee, it’s the artificial bottleneck used to lock in customers.
Another example is railroads. Since deregulation in 1980, Wall Street consolidated 33 firms into just seven. And because the Surface Transportation Board lacks authority, Wall Street-owned railroads cut their workforce by 33% over the last six years, degrading our public shipping capacity. The Union Pacific closed a giant Chicago sorting facility in 2019; it now has so much backed up traffic that it suspended traffic from west coast ports.
Ocean shipping is the same. The 1997 Ocean Shipping Reform Act legalized secret rebates and led to a merger wave. The entire industry has now consolidated globally into three giant alliances that occasionally crash their too-big-to-sail ships into the side of the Suez canal.
Then there’s trucking. Talk to most businesspeople who make or move things and they will complain about the driver shortage. This too is a story of deregulation. In the 1970s, the end of public rate-setting forced trucking firms to compete against each other to offer lower shipping prices. The way they did this was by lowering pay to their drivers. Trucking on a firm-level became unpredictable and financially fragile, so for drivers schedules became unsustainable, even if the pay during boom times could be high. Today, even though pay is going up, the scheduling is crushing drivers. The result is a shortage of truckers.
There are more problems that strike at the heart of our economy. The most obvious is semiconductors. Production of high-end chips has gone offshore to east Asia because of deliberate policy to disinvest in the hard process of making things. In addition, the firm that now controls the industry, Taiwan Semiconductor, holds a near monopoly position with a substantial technological lead and a track record in the 1990s and early 2000s of dumping chips at below cost.
Fortunately, policymakers have noticed. The Federal Reserve’s most recent Beige Book, a report on the economy that is published eight times a year, mentions “shortage” 80 times, and the FTC commissioner, Rohit Chopra, recently pointed out that shortages are slowing the economic recovery. The chair of the Surface Transportation Board, Martin Oberman, noted that railroads stripping down their operations to please Wall Street resulted in container congestions at US ports, a significant chokepoint for imports. And Congress is on the verge of funding tens of billions of dollars to boost domestic semiconductor manufacturing.
Even business leaders are getting it. Chemical firms are asking regulators to act. And at last week’s Intermodal Association of North America’s Intermodal Expo, where representatives from the shipping, rail, ports and drayage industries spoke, one executive said, “Without fear of regulation, I don’t know what will motivate all stakeholders to be at the table.”
This is an article summarizing what's involved in changes being made to Biden's economic package which includes everyone's priorities and the political effects of things that are dropped which has to happen to get a package through.
Excerpt from The Washington Post
"White House faces grueling choices as major cuts hang over Biden economic package
"If constrained to $1.5 trillion, Democrats could only fully fund a handful of their most important policy priorities. For instance, Democrats would already come close to reaching that number in spending if, hypothetically, their plans consisted of just three top priorities - tackling climate change, creating a national paid leave program, and extending a tax benefit that alleviates child poverty.
Together, those three initiatives would represent a substantial expansion of the American welfare state, as well as a significant step toward Biden's goals for combating climate change. But a package that contained only those initiatives would jettison an enormous number of priorities many Democrats campaigned on, including universal prekindergarten, free child care, more affordable housing, and a dramatic expansion of government-funded health care.
Democrats' health care goals alone could cost in the range of $750 billion if extended over the next decade. House Speaker Nancy Pelosi (D-Calif.) wants to spend hundreds of billions of dollars on new Obamacare subsidies, while Senate Budget Committee Chairman Bernie Sanders, I-Vt., wants to spend hundreds of billions of dollars to add dental, vision and hearing benefits to Medicare. Other Democrats, such as Sen. Raphael Warnock, D-Ga., are pushing to expand Medicaid eligibility to poor Americans in Republican-run states that so far have refused to take advantage of extra Medicaid dollars made available under Obamacare.
Health care was a key plank for Democrats in both the 2018 and 2020 campaigns, and failing to meaningfully address the issue could lead to blowback from voters in future elections."
"Budd said the infrastructure plan may have been advertised as bipartisan, but "only 10% of the 1.2 trillion" of the $110 billion would be funneled toward roads and bridges. Reports show that the measure includes a sizable amount of money for environmental provisions such as $5 billion for electric cars for the federal government fleet, $50 million for community climate incentive grants, and $1 billion for an "electrical vehicle charging equity program."
"Budd also blamed House Speaker Nancy Pelosi for the delayed vote for failing to keep an earlier pledge she made to moderate Democrats. He knew firsthand how upset Democrats were when they realized the $1.2 trillion infrastructure bill had been shelved for the moment, he shared."
"She didn't even keep her promise to them," Budd said. "So, I mean, this is just total disarray. I was talking with Democrats in the elevator yesterday in Washington, and they were ashen. I mean, they were stunned at Joe Biden coming in there and taking their own bill. So, I mean, this is just total disarray."
They set aside a package that was half the money wanting the full package to go through and when it didn't, the deadline to vote on the package was moved to the end of the month while they go back and to figure out what to do to get it to pass amongst the divided Democrats. But we are still being kept on the edge of our seats because the debt ceiling it about to be hit.
Follow up articles...
This is another very good summary of what is going on making it very clear what the Republicans are doing and why, making it clear that the Democrats can fix the problem on their own in a 2 week process but how it not being done in the bypartisan way would mess up fast tracking their very costly Democratic agenda on steroids. Both sides are very clear on what they are doing and clearly it is the Democrats who will have to give in to beat the debt ceiling deadline, doing it the more complex and slower way which will keep the Republicans record clean of having had any roll in the Democrats' dramatic increase in socialism that is a hidden 'Trojan Horse' in their agendas, among other things like the 'Going Green' details that the Republicans want to all be fully disclosed so everyone knows why they are fighting against everything at every step. CNN Politics: "Republicans use debt ceiling and infrastructure as cudgels to derail Democratic agenda"
McConnell stepped in and gave the Democrats two months to do what Republicans had told them to do months ago, debt limit legislation through reconciliation, that would keep the Republican's out of getting the momentum going on getting Biden's agenda through by handing the democrats who are backing it up a more open checkbook to do whatever they want without revealing the details, and being completely transparent, when those bills are being voted on. Now there is a new deadline, December 5th, to raise the debt ceiling. Fox News: "Democrats, Republicans near compromise on debt ceiling"
"McConnell said the deal 'will moot Democrats’ excuses about the time crunch they created and give the unified Democratic government more than enough time to pass standalone debt limit legislation through reconciliation.”
New York Post: "Mitch McConnell to Biden: ‘I stepped up’ to fill Schumer ‘void’ on debt, won’t next time""Senate Minority Leader Mitch McConnell warned President Biden Friday that Republicans will not vote to raise the federal debt ceiling in December after Senate Majority Leader Chuck Schumer delivered a rant on the Senate floor Thursday that McConnell called 'so partisan, angry, and corrosive that even Democratic Senators were visibly embarrassed by him and for him.'
Politico: "‘The president’s decline is alarming’: Biden trapped in coronavirus malaise -Democrats are ringing alarm bells and coming to the simplest of conclusions: It’s the pandemic, stupid""But Biden’s standing with Americans has plummeted, with his average approval rating plunging by nearly 15 points since late June. He's seen a drop among Democrats and even more with Republicans, but the decline has been particularly steep among independent voters. In the same time period, the president has scrambled to salvage his domestic initiatives amid infighting among Democrats over their size and sequencing. He has presided over a chaotic and deadly withdrawal from Afghanistan and faced criticism for his response to the inhumane treatment of Haitian migrants at the U.S.-Mexico border."
"But it’s the pandemic that looms over it all, making it all the more difficult for the White House to turn back the slide." "Longwell said she was struck by how similar the concerns of Democrats sounded to Republicans, and also by how little Democrats in her surveys blame Republicans for standing in Biden’s way. It’s a point echoed by nearly a dozen strategists who have compiled or reviewed research into Biden’s precipitous decline."
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References