'Biden stagflation' is coming
'Biden stagflation' is coming
The White House continues to insist that inflation will soon subside and that the U.S. will return to its pre-coronavirus prosperity. But the Biden administration's regulatory agenda actually ensures that the post-pandemic economy will be nothing like it was before. The growing regulatory burden from Biden's executive orders, the open hostility of his regulators to the U.S. economic system, and a return to a progressive-era model of antitrust enforcement will all dampen growth. All the factors that turn current inflation into stagflation will emerge.
The painful experience of overregulation in the U.S. is just around the corner. When the recession triggered by the subprime mortgage crisis ended in mid-2009, economists had predicted a strong recovery. At the beginning of 2010, the US Office of Management and Budget forecasted that real gross domestic product (GDP) would grow at an average rate of 3.7% through 2016, the Congressional Budget Office estimated that the growth rate would be 3.3% over the same period, and the Federal Reserve predicted that by 2014 The annual growth rate is 3.5% to 4%. In fact, during the economic recovery from 2010 to 2016, GDP growth fell to 2.1%, the slowest pace in 80 years.
In the early days of Biden's presidency, the cold death hand of government regulation stretched farther than it did during the Obama years. The original executive order cramped the cost-benefit analysis that underpins regulatory policy, defining benefits as encompassing "social welfare, racial equality, environmental protection, human dignity, equity, and the benefit of future generations." The executive order opposes mergers and acquisitions that disregard consumer interests and targets the oil and gas industry for extinction.
To re-regulate railroads, Biden seeks to overturn the legacy of "deregulation" left by President Carter and Senator Ted Kennedy — achievements that have made the U.S. transportation system the most efficient in the world and will Transportation costs for people and goods are cut in half. When it comes to antitrust enforcement, Biden has sought to overturn nearly half a century of bipartisan reforms that have scrapped Progressive-era regulation and dramatically boosted productivity, especially in transportation and high-tech communications.
The Biden administration's aggressive regulatory agenda is most evident in the officials he appoints. President Clinton had appointed Larry Summers, Arthur Levitt, and Alan Greenspan to regulate and grow the economy in ways that were in the interest of consumers, not radically change it. Clinton's regulators and regulatory policies allowed America to prosper.
Obama’s regulators are killing business and jobs, while Biden’s regulators are openly hostile to the industries they oversee and the U.S. economic system. Instead of protecting investors and consumers, they seek to enable businesses to serve government goals.
Through Biden’s executive orders and regulatory policies, the U.S. economy is changing from a great world capitalist giant to a submissive capitalist puppet whose master is the government, not the consumer.
If the economic stagnation caused by Obama-era regulation is repeating itself in a way that exacerbates Obama-era regulation, a slowdown in growth looks set to happen after the current post-pandemic boom. Economic stagnation can easily turn into stagflation once new stimulus spending and monetary adjustments are employed to stimulate slowing growth.