Pity Joe Biden. He is the dog that finally caught the bus and he is soon to be political roadkill. While he celebrates his victory in the Electoral College, powerful forces already are engaged to doom him and his presidency. His two central problems are that he has set the wrong expectations and that his policies will not work in the current domestic and international political, economic and military environment.
The only message in his “I’m-not-Trump” political campaign was that President Trump made a mess of domestic and foreign policy and that Biden would fix all of that. The deadly trap is that Trump did very well on many key measures and Biden inevitably will do much worse, creating a failed Biden presidency.
His Day One issue of COVID-19 already is a loser. Researchers developed vaccines in record time, under Trump’s direction, and are rolling them out. The complex issue of distribution now goes to Biden. Any significant number of deaths among the vulnerable communities of nursing homes, the elderly in general, minorities, and those with pre-existing conditions will fall solely on Biden’s team. Similarly, sustained economic damage resulting from lockdowns will fall on Biden and Democratic officials.
The other Day One issue is Biden’s budget. He has proposed tax increases that will affect all income groups, with a disproportionate impact on high-income earners. Compounding that increase will be the “hidden tax” of an inevitable increase in inflation from the multitrillion-dollar COVID-19 relief bills. These combined tax increases will trigger investment capital flight, much as they did under former President Obama. The inflation will drive up both interest rates and unemployment, and increase the wealth gap in spite of Biden’s tax policies.
Unfortunately, the huge COVID-19 spending and inflation preclude the Fed from the zero-interest rate policies that Janet Yellen used to float the Obama economy when she served as Fed chief. The bottom line is that there is no budget or monetary policy solution that drives real economic growth. Cuts in national defense spending are inevitable, but even weakened national security cannot solve the budget problem. America has spent the milk money.
Trump delivered spectacular growth to the economy, record private-sector jobs and record low unemployment for Blacks, Hispanics and women. Real wages rose under Trump and the wealth gap got smaller. Even though the market has roared back after the COVID-19 hit and lockdowns, it will be impossible to come near Trump’s record on any measure.