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The recent railroad workers’ agreement reminds us that Joe Biden, far from fighting inflation, is actually allowing price increases, in three important ways.
First, he won’t stop spending. After crowing about the dubious deficit cuts contained in his Inflation Reduction Act, the president decided to write off up to another trillion dollars in student debt.
According to the nonpartisan Committee for a Responsible Federal Budget, in less than two years, Biden has added $4.8. billion to our long-term debt. This tsunami of government (taxpayer) spending is causing the highest inflation in 40 years, crushing the well-being of average Americans.
Second, all the benefits offered by an unpopular president hoping to buy higher approval ratings, such as a 21 percent increase in food stamp spending and student debt cancellation, are being combining to prevent people from having to go back to work.
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The single worst impact of federal spending has been to sideline workers, driving up the cost of labor. The Atlanta Fed reported that wages rose 6.7% in August, a multi-decade high. The wage-price spiral is now a reality; the rail deal, which sets a new bar for labor negotiations, just made it worse.
Third, Biden’s enthusiastic embrace of Big Labor means higher wages, as we just saw. Many of the president’s generous plans to rebuild America include provisions requiring the use of unionized workers; this means less competition and higher costs. He has also proposed making union dues tax-deductible and undoing President Trump’s pro-business measures that, for example, defined the role of independent contractors.
The railroad deal highlights the rising cost of Joe’s promise to be “the most pro-union president you’ve ever seen.” We are only at the beginning.
Faced with devastating inflation and an economy on the brink of recession, Joe Biden is not discouraged. In fact, he’s been taking so many victory laps lately that he must be dizzy.
Some have ended badly, like the garden party celebrating his Inflation Reduction Act. That absurd event coincided with lousy news about real inflation and one of the worst stock market selloffs in recent memory. The Dow fell nearly 1,300 points, but there was Biden, shouting about how his climate bill (which most agree won’t lower prices and is actually poised to make life more expensive) was GOOD FOR THE PEOPLE!!!
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(Biden only has one volume setting these days, and it’s LUCKY. Shouting like a madman is how the president hopes to quell concerns about his vitality and fitness for the job.)
But it was the last celebration that focuses on us. Biden touted the White House victory over the deal that averted a rail strike, saying the deal was “an important victory for our economy and the American people.”
The ever-helpful New York Times called the deal a “victory for President Biden, whose administration helped broker the deal.”
CNN reported that “President Joe Biden personally called to speak with negotiators” and met with teams representing management and labor in person after a deal was reached.
The report showed the president’s alleged negotiating skills, which were touted during the 2020 campaign as proof that Biden could “work across the aisle” with his political opponents. This talent seems to have disappeared; Biden now specializes in demonizing Republicans, or indeed anyone who disagrees with him.
So Biden must have been disheartened – and confused – to see the stock plummet again. After all, it “saved” the nation from a shutdown that would have cost the economy about $2 billion a day in lost trade.
But investors weren’t thrilled with the rail deal, and rightly so. The deal is expensive and could set the stage for more expensive labor contracts. Workers will get an immediate 14 percent raise, $1,000 a year in cash bonuses and an overall 24 percent increase in wages over five years.
Also, railway employees will not face any increase in health insurance deductibles and will also get more time off for medical issues.
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Unions cannot be blamed for demanding higher wages. After all, the cost of living is rising more than 8% annually, and American workers are being left behind. But Biden’s enthusiasm for Big Labor will be an accelerator of wage increases that companies will have to grant; these increases are being fed into inflation and will likely get worse as the unions regain their composure, with the help of the White House.
We are seeing companies like Starbucks and Amazon face successful union organizing efforts for the first time; newly created unions will have to prove their worth by handing out generous contracts. Meanwhile, the lingering labor shortage means employers will have to keep up or lose scarce workers.
Meanwhile, unions are celebrating their new power by increasing the number of strikes at companies such as tractor maker Deere & Company and cereal producer Kellogg. We’ve also seen nurses strike recently in Minneapolis and teachers in Seattle. With the headwinds at the White House, we’ll see more.
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As for the rail strike threat, I didn’t buy it for a second. For Big Labor to fry Joe Biden’s economy weeks after a midterm election, that wasn’t going to happen. Unions have been in decline for decades; this is their time, thanks to Biden. Approval of organized labor has been on the rise; it would have been political folly to turn it around.
The rail strike may have averted a temporary hiccup in the economy, but make no mistake: the rising costs of Biden’s agenda means the country is suffering much worse.
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