Modern Romance: It’s Manchin and Yellen, Arm in Arm, All the Way to the 2022 Mid-Term Election
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On various news shows over the weekend we saw various Biden communicators defend inflation and the economy, and the $4 trillion social welfare entitlement spending and tax hiking and fossil fuel destroying bill that they argue will actually reduce skyrocketing inflation.
It’s a tough job arguing that more spending will hold down inflation or that much higher taxes will stimulate the economy, or there’s nothing they can do about high gasoline prices — they’ argue anything, except allowing American producers to produce.
The fun thing about the Biden defense — that this big government socialist bill will actually lower inflation — is that outside the White House and the executive branch of the Biden administration, there is no living human being that agrees with this view. No one.
Just check out the polls. Just check out the liberal polls. Like even the Washington Post poll right after the infrastructure bill was passed last week. President Biden’s job approval sunk to 41% with a roaring 39% approval on the economy.
Republicans even have a 10-point lead in the generic ballot for Congress. If the Washington Post is posting those kinds of numbers, I would say that’s a bit of a warning to the Bidens, though it appears that they’re not listening — or hearing.
We’ve had a lot of spending — about $4 trillion emergency spending last year, which I thought was in the main necessary. We’ve had so far $3 trillion in spending this year with another $4 trillion on the way.
With a relatively strong economy, this kind of excessive spending is associated with inflation by virtually the entire economics profession. Again, outside of the executive branch of the Biden administration. So I’d say they’re in something of a political pickle.
The only kind of, sort of, maybe, truth teller yesterday was Treasury Secretary Janet Yellen. Now, she blamed the inflation on the covid pandemic. I think there is some truth to that assertion. Now, though, she’s taking a decent idea way too far.
Mrs. Yellen’s new argument is that we won’t see an end to inflation until we see an end to the pandemic. Yet the pandemic is ending. The virus will never end, but the point is not to argue the science here. The point is the economy has reopened. It will remain reopened, and, yes, in the shorter term, economic demand is outstripping economic supplies.
There’s no excuse for union rules and government regulations that stopped the ports from operating 24/7. After 10 months, though, demand and supply should be in a lot better balance and prices should already be stabilized. Not skyrocketing.
There are two missing links here, which Mrs. Yellen is not ’fessing up to. One is all this government spending stimulating excess demand. Democrat Larry Summers has had that right. So have a number of Republican economists.
Mrs. Yellen knows better than to deny this. The emergency has been over for 10 months. Hence the emergency spending should be over. But it’s not.
Two is, the emergency Federal Reserve pump priming money creation should have ended 10 months ago. Quantitative easing and free money should have stopped last winter. Putting the two points together, one can say that it’s the excessive Fed that is financing the excessive federal government spending.
That is a lethal situation for higher inflation.
Mrs. Yellen, though, said that she thought the inflation would stop in the second half of next year. That’s a new forecast. I have no idea if it’ll be true, but I give her credit for being realistic instead of her other colleagues who are selling boloney.
Now, enter Joe Manchin. This guy is near heroic. He ought to run for president. That’s because he keeps saying that we should pause any new spending until the inflation is brought under control. Mrs. Yellen is saying second half of next year — top of the homestretch for the mid-term election.
So I’m waiting for Senator Manchin to say that he’d be happy to consider another spending bill — but not until the second half of next year in accordance with the apocryphal forecasting impressions of our nation’s treasury secretary.
Right? She’s the thought leader, and he’s applying her thought. Let the Republicans jump aboard this bandwagon. We have a semi-quantitative inflation forecast from the leading economic policy maker, and — who knows? — she might be right.
More importantly, we should fall into line with her view. Her boss — the President — should fall into line with her view. No new spending until at least the second half of next year. I’m calling this the Manchin-Yellen hypothesis. I’m bringing them together. They will make a lovely couple.
From Mr. Kudlow’s broadcast on Fox News.