Art Laffer: 'Catastrophic economy' belies Biden's rosy outlook

Joe Biden meets with the New Democrat Coalition in the Roosevelt Room, Wednesday, March 30, 2022, at the White House. (Official White House photo by Erin Scott)
Joe Biden meets with the New Democrat Coalition in the Roosevelt Room, Wednesday, March 30, 2022, at the White House. (Official White House photo by Erin Scott)

The White House assured the nation last year ago that the surge in inflation was temporary, and now, amid 40-year highs for basic goods, President Biden on Friday insisted Americans can handle the burden to their budgets “because of the enormous progress we’ve made in the economy.”

The Bureau of Labor Statistics announced Friday the consumer price index was a higher-than-expected 8.6% in May. And energy prices were much worse, spiking 35.6% compared to May 2021, while food prices surged 10.1%. Airline fares, meanwhile, jumped 37.8% and new vehicle prices jumped 12.6% and used vehicles 16.1%.

At the Port of Los Angeles on Friday, Biden vowed that his administration “is going to continue to do everything we can to lower the prices for the American people.”

Biden has touted his proposed “Build Back Better” spending plan as an effort to curb inflation, but it features the kind of government subsidies on health care, fuel, child care and housing, and other government spending that have served only to drive inflation.

Meanwhile, Biden’s press secretary, Karine Jean-Pierre, declared this week the economy is “better than it has been historically.”

But Americans actually are suffering the effects of “a catastrophic economy,” insisted Art Laffer, a member of President Reagan’s Economic Policy Advisory Board who is known for his Laffer Curve illustrating that cutting tax rates can result in increased total tax revenue because the cuts result in economic growth.

Biden, in fact, made a reference to the Reagan policy, dubbed “trickle-down economics,” at the Summit of the America’s in Los Angeles, saying it’s “time to put a nail in the coffin” of a policy “that doesn’t work.” But Reagan’s supply-side economics emphasizing tax-cuts, on the heels of the stagflation-plagued 1970s, was the centerpiece of the greatest economic expansion the world had ever seen.

Meanwhile, in the first quarter of this year, GDP declined by 1.5%, Laffer noted, and inflation is accelerating while total employment is 800,000 people lower than in it was in February 2020, at the beginning of the pandemic. A majority of Americans, according to a new Economist/YouGov survey, believe the U.S. economy is already in a recession, which is defined as two straight quarters of GDP decline.

“This is not a recovery; this is not even a catch-up back to where we were before,” Laffer told Maria Bartiromo on the Fox Business Network’s “Mornings with Maria” on Friday morning.

This week, the World Bank forecast in its latest report “an extended period of stagflation reminiscent of the 1970s,” warning global economic growth will decrease this year, and most countries should prepare for a recession and several years of above-average inflation. Meanwhile, the Dow is experiencing the worst annual decline in its history, down more than 4,700 points since the beginning of 2022.

Laffer said in the FBN interview that based on the trendline from February 2020, the U.S. is 5 million jobs short of where it should be.

“This is a catastrophic economy. I hate to say it, but whoever wrote that piece for Biden in the Wall Street Journal doesn’t know straight-up from siccum.”

The Wall Street Journal published an op-ed May 30 with Joe Biden as author headlined “Joe Biden: My Plan for Fighting Inflation.” Two days later the paper published a rebuttal by Karl Rove titled “Biden Has No Plan to Fight Inflation,” arguing Americans “aren’t buying the idea that we can spend our way out of this mess.”

Laffer said Biden and his financial team, including Treasury Secretary Jane Yellen, are “just spouting party lines.”

“They’re not acting as professional economists,” he said. “They are not changing their views with new information.

“They need to change their policies,” he continued. “I mean reversing them quickly.”

Laffer advised, among other measures, reducing the Federal Reserve’s balance sheet and increasing oil drilling, including opening up the Keystone pipeline, which Biden shut down on his first day in office.

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Biden said Friday that Americans are enjoying “better pay,” but wages are down 3% from last year and Americans on average have $9,000 less in savings.

“Every country in the world is getting a big bite and piece of this inflation worse than we are,” said Biden.

But The Hill’s Joe Concha – citing figures in other major nations, including Japan, China, Switzerland and Saudi Arabia – said in a Fox News segment Friday that Biden is “outright lying.”

“These are very easy things to fact check,” he said, “and the American people are not fooled.”

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