Politics And The Economy

Politics And The Economy

– By Lisa Rutherford –

With the election just around the corner or perhaps upon us already, there’s a lot of information flying back and forth about issues and political positions on those issues.

A friend who is a staunchly conservative Republican wrote to me about his concerns about our economy under Biden and how things have deteriorated since the 2020 election and administration change.

There have been changes. That is true. But it’s the reasons for those changes that I question. While my friend blamed it all on Biden and his policies that the Dems support, for the most part, I have a different take on it. Let’s back up a bit.

When Trump took office in January 2017, the official start of his administration, the Dow was at 19881.76, having risen from the depths of the Great Recession by 11707.03 points from 8174.73 when Obama took office in January 2009. When Trump left office in January 2021, the Dow was at 30937.04, an 11055.28 increase over just four years. My friend gave no credit to Obama for the improvement seen during his eight years, even though it was a heavier lift in my opinion, but rather gave all the credit to Trump who was fortunate to ride Obama’s coattails.

That brings us to the current situation. Biden inherited an economy where the Dow was 30937.04 in January 2021 when his administration began. As I write this article the Dow is at 30272.05, a loss of 664.99. Given all the grief that Biden is getting you’d think it would be far lower. There have been some serious market dips during his one-and-a-half-year term, and I’m not dismissing the concerns of those who have lost in the market. I, too, have lost. And, the stock market does not tell the whole story because many of the companies in the market have had stellar performance during the past quarter while many people’s personal finances have been suffering.

My friend made the point about how “Biden’s” and the Democrats’ economy has hurt so many through high gasoline prices and high interest rates affecting home buying and food prices. This, too, concerns me. But, folks, this was not all due to the policies of the Biden administration or actions by Congress, although, as I will explain, monetary infusions by Congress are not without blame.  Basic supply and demand played in because when demand is high, prices will follow. Some will say that Biden’s covid lockdown affected this, and that may be true to a certain extent. But many of us, myself included, locked ourselves down to prevent getting and possibly dying from covid. Many ignored the lockdowns anyway. But, in the final analysis, fewer were traveling and production slowed. When activity picked up, supply chains weren’t able to keep pace and some refineries closed. With oil company profits soaring, are they contributing to the problem, too, by not ramping up quickly enough? Some are asking that the Federal Trade Commission, Department of Justice, and the Department of Energy investigate this.

It can be debated whether lockdowns help or hurt. Perhaps under a second Trump term we would not have had the level of lockdown that we had under Biden, because Trump often repeated “no lockdown.” Back in January 2020, then-President Trump did declare a public health emergency under the Public Health Service Act. By then the Dow was at 29348.10 but by mid-March 2020 the Dow was down to 19173.99. At that point, he apparently became more concerned with getting people spending again and helping the economy. So, on March 30 he stated, “Stay Calm, it will go away.” But by October 5, shortly before the election, the U.S. death toll passed 210,000. In October 2020, right before the election, as covid cases and deaths were on the rise, he stated, “Don’t be afraid of covid” still hoping to allay fears. During his term in office the nation saw over 25 million confirmed coronavirus cases resulting in over 400,000 deaths. Following his term, we’ve had, with the new more contagious variants an additional 600,000 plus deaths, even with lockdowns.

Some point to the amount of money that President Biden and the Democrats have infused into the economy to help, but they were not alone in these efforts. On March 26, 2020, in support of the Senate’s passage of the third relief bill during covid, Trump said, “Congratulation America!” He had already set the tone for helping Americans during the trying time.

March and December 2020 stimulus packages, combined, under Trump, provided $1800 for each qualifying adult and $1100 for each qualifying child. The March 2021 package under Biden provided $1400 for each qualifying adult and $1400 for each qualifying child. The March 2020 CARES Act, again under Trump, provided additional money—$600 per week in unemployment benefits for thirteen weeks. Under Trump, the December 2020 package extended that with $300 per week for eleven weeks. Both were under Trump’s administration since he did not take office until January 2021. The March 2021 unemployment package under Biden provided $300 per week for twenty-five weeks. A lot of money was infused into this nation’s pockets during the past two years, and that has done a lot to increase inflationary pressure and done by both parties, not just one.

As for inflation, this has been headed our way for some time. No one was eager to raise interest rates when so many were feasting on the low-interest banquet. But there comes a time to pay the piper, and that is now. This situation is not as dire as that back in the 70s and 80s, but it still hurts many people.

Admittedly, also contributing to our economic problem are Biden’s sanctions on Russia due to the war in Ukraine. The question is, “Would Trump have done the same if he were in office?” We know he was friendly with Russia, and, in fact, praised Putin’s takeover of Crimea. But would he have supported Putin’s current aggression? If not, we would be facing the same problem with gasoline problems under his administration. But letting Putin have his way is a dangerous game to play. How far would he ultimately go? When would a Trump administration have to deal with him, and would it be too late?

Some are questioning Biden’s latest effort to help the economy by releasing oil from our Strategic Petroleum Reserve to help lower gasoline prices. Since the 80s, this has been done many times. It’s not something new but it has sent the strategic reserve to its lowest level since 1984. That said, we all rely on gasoline, at this point, to move our products to market and many rely on it to get them to work and elsewhere. High gasoline prices driving up the cost of goods hurts all but particularly those with less disposable income.

Blackouts were also mentioned by my friend who asserted that because of Biden’s focus on renewable energy and efforts to wean us off fossil fuel energy the situation has become worse. But transitioning us to renewable energy sources must be done, and blackouts and brownout are not new to this nation. 1970 and 2003 saw massive blackouts even as we were in the depths of reliance on fossil fuel. Outages cost between $18 billion to $33 billion per year in the U.S. The U.S. Department of Energy sites weather as the leading cause of power outages in the U.S. along with aging infrastructure. Now is the time to transition and improve our infrastructure at the same time, not turn back the hands of time.

Finally, housing is a challenge for many. But, again, this problem has been growing for a long time. Low interest rates put pressure on the housing market. More people buying homes put upward pressure on home prices fueling inflation and driving home prices to levels unattainable by many. Now we are dealing with a situation that should have been dealt with long ago. In our area, where there are many wealthy people moving in, that, too, helps to drive up home prices and drive down inventory. When builders are building homes for the wealthy to make as much profit as possible, home prices throughout the area are affected.  Material supply disruptions and increased material costs due to inflation also contribute.

Many issues face this nation as we decide whom we will vote for. It’s difficult to separate ideology from reality but letting ideology rule can lead to even more problems. Yes, “It’s the economy, stupid” as someone said. But the economic issues we face now are not the creation of one man or one party.

Will the democrats or the republicans help us through this mess? As readers consider President Biden’s current situation and ponder their financial futures under Democrats or a Republicans, consider that economists Alan S. Blinder and Mark W. Watson reviewed economic performance from Presidents Harry Truman to Barack Obama’s first term, and inflation was lower under Democratic leaders, real GDP growth was higher, and unemployment lower, too. A more current NY Times article backs this up asserting that Democrats are bolder when dealing with problems. Just something to consider.

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