Biden’s Inflation and Spending Spree Hurts Low Income Folks the Most Bottom Out and Middle Down Revisited – More Socialist Economic Stupidity
n an earlier paper that exposed the absurd economic nonsense of the Biden Administration’s “Bottom up Middle Out” deception, the negative impact of virtually all of Biden’s major agenda driven fiscally irresponsible actions on lower and middle income individuals was discussed on an action by action basis. Inflation and taxation were approached from an aggregate viewpoint and, therefore, that paper did not point out the disparate impact of inflation on lower and middle income individuals in contrast to upper income individuals. Sadly, the Biden Administration appears to have no intention of backing off of its socialist agenda that is driving the present inflationary environment and promises to hike taxes in a manner that will severely damage the economy. It is even more egregious because these policies, referenced above, impact lower and middle income individuals significantly more than high income individuals – exactly opposite to the deceptive messaging spewed out by the Biden Administration and blindly parroted by the left leaning network media wing of the Democrat party. I find it comforting yet disconcerting that a notable Keynesian economist such as Lawrence Summers is ringing the same inflation related alarm bell as the supply side Milton Friedman camp monetarists. Biden’s proposed “Build Back Better” spending spree will only serve to aggravate the existing demand/supply imbalance which is already too substantial to cover up with rhetoric.
When looking at the breakdown of the inflation data, it should be noted that lower and middle income families household expenditures including food, household staples, heating (from all energy sources), gasoline, used vehicles, etc. make up a substantially greater percentage of their disposable income than for higher income families. In this paper, it is my intention to discuss the general magnitude of the discrepancy between the messaging of the Democrat party and the reality faced by middle and lower income families. Unfortunately, lower and middle income families due to their purchasing patterns are impacted most by the inflation associated with the goods with the highest rates. This is in contrast to the overall CPI (consumer price index) for the relevant time period which is more representative of the inflationary pressure impacting higher income families.
The following annual price change figures for October 2021 broken down by categories of goods (reported in the NY Times article “Fastest Inflation in 31 Years Puts More Heat on Washington” published on November 10 2021) clearly depicts the inflationary pressures facing the lower and middle income families:
Annual price changes in October
Fuel oil 59%, Motor fuel 50%, Car and truck rentals 39%, Piped utility gas service 28%, Used cars and trucks 26%, Hotels and motels 26%, Beef and veal 20%, Bacon and breakfast sausage 15%, Living room, kitchen and dining furniture 13%, Bedroom furniture 12%, Eggs 12%, Televisions 10%, New cars and trucks 10%, Men’s suits, sport coats and outerwear 9%, Women’s dresses 9%, Computers and peripherals 8%, Boys’ and girls’ footwear 8%, Postage and delivery services 7%.
These figures are scary. Even though these inflation figures impact all income classes, their impact on middle and lower income families is brutal, because, as mentioned above, a majority of their purchases fall into the categories with the highest figures. The overall annual October 2021 CPI figure (for the previous 12 months) is 6.2%. This figure is more representative of the impact of inflation on high income family’s purchases than low and middle income families. All income categories can expect to be battered by the scary figures listed above. In other words “Bottom Out, Middle Down” is the reality, and “Bottom Up, Middle Out” is a charade.
The most descriptive terms for the present inflationary situation is “unnecessary”, because a major portion of the overall inflation rates we are now observing is directly attributable to misguided Biden Administration socialist policies. The worst of these agenda driven policies, the constraint of crude oil production and transportation, to date, has added more to the rate of inflation than any of his other policies. If the upcoming massive socialist “Build Back Better” spending legislation passes Congress the damage to the economy will be even more devastating.
Looking at the spike in overall energy prices caused by the massive price increase in crude oil, after demonstrating his naivety by requesting OPEC to increase production to make for the US production he blocked (in conjunction with the myopic anti fossil fuel ESG – environment social and governance lenders, Biden acted surprised when they summarily dismissed his request. Now he has turned to the United States and other countries’ Strategic Oil Reserves to relieve the supply shortfall. This is a short run band-aid applied to a longer term problem. This will only set a short run cap on crude prices, with little or no long run benefits. The fear of wide spread new Covid-19 related lock downs, which will artificially diminish the demand for crude oil, will do more to establish a balance between the demand and supply of fossil fuels for the wrong reason. All of these maneuvers are, in essence, exogenous restrictions on free market outcomes and are horribly inefficient. If radically left Biden and his compatriot anti fossil fuel ESG lenders were not so agenda driven and if he had not artificially restricted North American production and availability of crude oil, the US would still be the price leader for crude oil and not OPEC, and the price of crude oil today would be significantly lower.
The price of oil over time is established in the futures market and oil traders know that US production can no longer respond in a timely manner to supply and demand imbalances. The pungent odor of Biden and the woke left’s socialist agenda and massive incompetence is now filling the nostrils of a majority of Americans as inflation is pummeling their standard of living. Socialism/communism is a social function without a real economic structure and a functioning free market engine.
So if the American public votes for socialism they better be prepared to live with the economic morass of socialism.