The economic policy of the bipartisan “uniparty” has been an abysmal failure. In fact, Bidenomics and Trump-O-Nomics are just two sides of the same deficient coin. They amount to the inflationary accommodation of powerful constituencies which have captured control of policy—-Wall Street for the GOP, domestic spending constituencies for the Dems and the military/industrial/intelligence complex for both.
The bottom line doesn’t lie, however. Real economic growth during the uniparty regime of Trump/Biden has averaged barely 2.0% per annum—notwithstanding an outpouring of monetary and fiscal stimulus that had never before even been imagined. Still, the economic growth rate since 2016 is just a fraction of the 5.0% average during the Kennedy-Johnson era and 3.5% under Ronald Reagan.
And, yes, these figures are more than fair comparisons because the results for the Trump/Biden era of borrow, borrow and borrow some more are currently overstated. That’s owing to the fact that there is still another recessionary shoe to fall.
So average in the impending six quarters ahead of negative GDP growth and/or stagflation and the uniparty will have achieved eight years of the weakest economic growth since WWII. And by a long shot at that when compared to the average growth of 3.2% for all presidents—good, bad and indifferent—during the seven decades between 1947 and 2016.
The cause of the problem is not mysterious. The Washington uniparty has become addicted to borrowing and printing. Between them, Trump and Biden have raised the national debt by nearly $13 trillion. That’s 40% of all the money that’s ever been borrowed by presidents since George Washington.
Likewise, the money-printing story at the Fed is actually worse, and neither POTUS has uttered so much as a cross word about the tsunami of fiat credit tumbling off the digital printing presses in the Eccles Building. Accordingly, during the last six and one-half years of uniparty rule the Fed’s balance sheet has swollen by $4 trillion. That’s 48% of all the money that’s ever been printed by the Fed since it opened its doors for business in the fall of 1914.
Needless to say, all of this egregious borrowing and money-printing has hit middle class America right in the economic solar plexus. Since December 2016 the smoothed CPI (16% trimmed mean CPI) is up by 24%. But where it really hurts main street is at the grocery store, with prices up by 27%, and at the gas pump and utility meter, with energy prices higher by 37%.
In everyday family budget terms, in fact, food and energy prices have risen more in the last 6 years than they did during the prior 12 years. Owing to all this cumulative inflation, therefore, real average hourly wages have risen by barely 3.5% since December 2016.
Inflation-Adjusted Average Hourly Wage, December 2016 to June 2023
Needless to say, the above depicted stagnation of US worker incomes did not apply to the wealth of the top 0.1% of households. During the same six and one-half year period, the inflation-adjusted net worth of the 130,000 households at the tippy-top of the economic ladder has gained 30% or nearly ten-times more than average real wage gains.
That is to say, the unhinged stimulus bacchanalia conducted by the Washington uniparty has showered the already rich with unearned asset inflation, buried future generations in unspeakable public debts and left the vast bulk of the electorate scrambling to maintain their standard of living in the face of the most virulent inflation in forty years.
Inflation-Adjusted Net Worth of the Top 0.1% of US Households, 2016 to 2022
Self-evidently, the time to abandon the inflationary and inequitable economics of the uniparty has long passed. Yet these baleful policies are rooted in the fact that both parties have been captured by powerful interest groups that are not about to part with the spending, borrowing and unpaid for tax cuts that have fostered the current economic mess. Nor is the Fed’s capture by the Wall Street gamblers and Washington spenders alike going to give way to sound money on the watch of the uniparty, either.
Needless to say, Robert F. Kennedy Jr. is the only candidate on the 2024 horizon who has both the capacity to think independently and to act courageously in opposition to the uniparty consensus. So the question recurs: Is there any conceivable economic platform that he could plausibly embrace that would make a decisive break with the status quo, but also have even a remote chance of being embraced by a historic Kennedy Democrat, who needs to remain a viable contender in the Democrat primaries—with all the political constraints that implies— if his candidacy is to make any difference at all.
Well, that’s a tall order.
To wit, sweeping change in national economic policy yet not merely a blueprint brimming with academic idealism that wouldn’t have a snowball’s chance in the hot place of gaining traction on the national political stage.
We’d suggest that the only way to thread that needle is with a set of sound planks on core economic policy matters that have present day political resonance owing to affiliation with historic verities of the two parties and/or association with man-on-the-street common sense. Our candidates for such exacting requirements are summarized below.
Restoration Of The Carter Glass Scheme For Central Banking: The Fed is captive to both Wall Street and Washington spenders because it erroneously attempts to manipulate the main street economy via low interest rates and stock market price supports. The solution is to get the Fed out of Wall Street on a day-to-day basis by eliminating so-called “open market operations” and returning to the scheme of its original author, Congressman Carter Glass, who was later the co-author of Glass-Steagall.
Rep. Glass was a champion of the main street economy and sound money; did not want the Fed accumulating and monetizing the public debt; and insisted that the central bank operate through market-based discount windows at 12 regional banks, operating as far from Wall Street’s influence as possible.
The essential purpose of the Glassian central bank was to keep the commercial banking system liquid by means of discounting (advancing cash) against commercial bank loans collateralized by finished inventory and receivables. Crucially, the Fed was not authorized to peg interest rates at arbitrary levels ordained by a small monetary politburo, but was to charge market-based rates of interest plus a penalty spread for the privilege of using the discount window.
The scheme envisioned by Congressman Glass and his colleagues could not generate financial bubbles or main street inflation. That’s because it could only issue central bank credit (i.e. print money) based on goods already produced, thereby automatically keeping supply and demand in balance, and because the bank credit it enabled had to be convertible into gold money on demand.
Reinstatement of President Eisenhower’s Fiscal Policy Principles. Ike believed that budgets needed to be balanced over the long-haul and that the demands of the military-industrial complex needed to be sharply curtailed. He therefore reduced defense spending in real terms by nearly 40% during his early years in office and insisted that GOP-proposed tax cuts had to be earned through legislated action to cut spending or otherwise replace the lost revenue. Deficits averaged only about 0.4% of GDP during his tenure, the lowest level for any president in modern history.
Adoption of a 21st Century Supply-Side Model. America is suffering from “stagflation” in part due to a severe labor shortage, stemming from underlying demographics which are baked into the population cake. Accordingly, the work force from American born parents will actually be shrinking for many decades into the future, meaning that a large scale “Guest Worker” program is essential to support the 50% of economic growth which has historically been attributable to increased labor supply.
Increased supplies of labor and the goods and services they produce will help permanently liquidate the current inflation wave, but additional help could be achieved by eliminating the misguided Trump tariffs on goods from China and elsewhere. Much of the $75 billion per year import tax on these goods is being passed through into higher prices in markets that have become inflationary owing to stimulus swollen demand and household cash reserves that were built up during the period of Covid lockdowns and nearly $6 trillion of unhinged “stimulus” spending in Washington.
Dismantle The American Empire And Roll-Back The Defense Budget to the 1960 Eisenhower Standard. When he warned about the unwarranted influence of the military-industrial complex in his 1961 farewell address, President Eisenhower also affirmed that the then extant defense budget was thoroughly adequate to safeguard the security of the American homeland at the peak of the industrial and military might of the old Soviet Union. In today’s dollars of purchasing power this “Eisenhower standard” defense budget would total $500 billion or barely 55% of the $900 billion now being spent.
There are no remotely equivalent threats to the 1960s Soviet Empire in today’s world—so the defense budget could safely be cut to $500 billion per year based on eschewing Washington’s Forever Wars, bringing home the vast global military establishment and repairing to a Fortress America defense of the homeland as advocated by both Joe Kennedy and Mr. Republican, Senator Robert Taft, in the early days of the cold war. Shrinking the defense budget to the Eisenhower standard would save upwards of $4 trillion over the next decade.
Restore Fiscal Balance Through a Long-Term “Quarters Plan” for the Next Decade. If nothing is done about Washington’s huge structural deficit, the added public debt according to CBO’s latest (optimistic) projections will total $20 trillion over the next decade (on top of the $33 trillion we already have). But that torrent of red ink, which would bury future generations in impossible debts and cause interest rates to soar, could be reduced by 75% by coupling the $4 trillion of Fortress America defense cuts with $4 trillion each of domestic spending reductions, enhanced revenues and reduced interest expense. The required domestic spending and revenue increases would each amount to just 7% of baseline figures for each component and the $4 trillion of interest savings would automatically flow from the first three “Quarters”.
Furthermore, the 7% domestic spending cut would be achieved through means-testing all entitlements and devolving some Federal functions to state and local levels of government.
Attain Most Of The $4 Trillion Revenue Gain Through A Modest Tax on Wall Street Speculation and Trading. The net worth of the top 1% of households has been inflated by more than $30 trillion since the Great Financial Crisis, much of it due to the Fed-fueled inflation of financial asset prices. Recoupment of just one-tenth of these ill-gotten gains over a decade would be neither unjust nor a deterrent to the revival of American investment, enterprise and solid economic growth.
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