George Santayana (1863–1952), in The Life of Reason: Five Volume in One, wrote, “Those who cannot remember the past, are condemned to repeat it.”
It appears as if Joe Biden can’t (or won’t) remember and is going to repeat what FDR (and others) did.
Politicians (primarily Democrats such as Schumer, Pelosi, Newsom, Cuomo, and Whitmer) wrecked the U.S. economy through a completely unnecessary and wildly inconsistent power-grab. Now Biden plans to finish it off.
Ian Haworth, on 17 May, wrote “Joe Biden Thinks the Failures of Big Government Can Be Fixed By…More Big Government.” Biden actually suggested that the disastrous April jobs report is evidence to support his American Rescue Plan. Biden said, “So look, it’s going to continue to improve. Today’s report makes clear: thank goodness we passed the American Rescue Plan. Help is here, and more help is on the way, and more help is needed.”
Biden proposed a $2.3-trillion infrastructure and jobs spending package, dubbed the American Jobs Plan. Its purpose is to elevate the American economy from the COVID-19 pandemic decline with the largest “jobs investment since World War Two.” It is an eight-year initiative, requiring spending about 1% of the annual GDP to rebuild infrastructure for transportation, manufacturing, “affordable housing,” tech research and development, and other investments in job programs. About his plan, he said, on March 31, 2021, in Pittsburgh, “It’s not a plan that tinkers around the edges. It’s a once-in-a-generation investment in America, unlike anything we’ve seen or done since we’ve built the interstate highway system or the space race.” Biden claims spending on infrastructure will “help us compete with China, combat climate change, kickstart economic growth, and, incredibly, reduce the federal deficit.”
Did Biden remember when he mentioned the interstate highway system and the space race? History informs us about an infamous megalomaniac who raised his country’s economy out of the doldrums via an Infrastructure and Jobs program: Hitler. He built, among other things, autobahns and V-2 rockets.
Jim Powell, in his book FDR’s Folly, offered this:
“Jobs” programs, such as the ones FDR introduced, must be avoided because they increase the cost and burden of government, making it more difficult for the private sector to function. “Jobs” programs don’t increase the total number of jobs in the economy. By increasing the tax burden [see below], such programs reduce available funding for private sector jobs, resulting in the replacement of private sector jobs with government jobs. Additionally, government spending is driven by self-interested politicians eager to buy votes for the next election, which means the programs will end up having effects very different from what was intended.
Taxes
The Biden tax plan will:
– reduce GDP by 1.62 percent over the long term ($2.782 billion)
– result in a 1.9-percent decline in after-tax income for all taxpayers
– increase the corporate income tax to 28%
– establish a corporate minimum tax on book income
– result in the top capital gains tax rates on investment to approximately double
– drop full-time equivalent jobs by 542,000
– drop capital stock value by 3.75%
– double the global intangible low tax income (GILTI) tax rate and impose it country by country
Florida representative Vern Buchanan wrote, “President Joe Biden’s latest barrage of proposed tax increases are aimed squarely at small businesses and working-class families that are the beating heart of communities around the country. In addition to raising taxes on our nation’s small businesses, the White House is also proposing stiff new tax hikes on corporations which will inevitably hit working-class families through the increased cost of goods, services and utility prices.”
Biden has promised he won’t raise taxes on anyone making less than $400,000 a year. But…the tax he is levying upon all Americans is inflation, which will do far more harm to middle-class Americans than his proposed tax hikes. The trillions of dollars in infrastructure and jobs spending and money-printing by the Federal Reserve is already having an effect on prices. Inflation has reached its highest point in years and will probably reach the highest in two generations. Inflation was not a problem during the Great Depression. It was -1.75%.
Powell:
FDR signed into law higher taxes for everybody (he actually tripled taxes). Consumers had less money to spend. Employers had less money with which to hire people. It’s crucial to cut taxes because taxes are the biggest burden millions of people face today. Tax cuts mean an expanding economy by returning money to the individuals who earned it. People are more likely to be careful about how their own money is spent than about how other people’s money is spent, so giving individuals more control over their own money is likely to better promote prosperity. Efforts to “soak the rich” never work as planned because the investments of the rich are needed to create jobs. Tax cuts should be deep, should be for everyone, across the board, no conditions or limitations. There isn’t any evidence that government officials possess the knowledge that would justify “targeted” tax cuts, aimed at encouraging people to do certain things which are supposedly more desirable than others.
Unions
The American Jobs Plan focuses on unionized American jobs (that, in itself, means that $2.25 trillion will buy a lot less infrastructure than it could — not a hit on unions, just an economic fact). Prevailing wage laws requiring federal infrastructure projects pay union rates to workers are a known contributor to America’s outrageously high infrastructure costs. Plus “Buy American” mandates require federally funded infrastructure projects buy (usually more expensive) USA-made parts and materials (not a knock on USA manufacturers, just an illustration of “hand-tying”).
Biden: “I’m a union guy. They built the middle class. It’s about time they get a piece of the action. Not a contract will go out that I control that will not go to a company that is an American company with American products all the way down the line and American workers.” That’s what we can look forward to: bidders for unionized companies will be awarded contracts (even if they aren’t low bidders?).
Powell again:
He [FDR] saw political advantages in helping the unions. The results were the National Industrial Recovery Act (NIRA) and the National Labor Relations Board (NLRB) who saw its mission as promoting compulsory union membership. Wage rates went up for those who had jobs. But the prolonged nature of the Great Depression was the result of rapidly rising money wages. This period [1933–1939] probably had the largest sustained peacetime increase in money wages in history, during the USA’s worst depression. Consequently government mandates to use only union labor must end. Employers should be free to hire union or nonunion workers. Workers shouldn’t be penalized if they choose not to join a union. Nonunion workers shouldn’t be forced to pay union dues as a condition of employment. Nor should union workers be forced to pay for political activities with which they disagree.
Powell: “As a cure for the Great Depression, government spending didn’t work.”
But Biden is determined not to remember.
Image: Gage Skidmore via Flickr, CC BY-SA 2.0.
