Some Housekeeping

Sweeping up some crumbs from previous posts

May 01, 2021

Updating a potpourri of several of the subjects I originally presented for discussion.

Inflation

I made the point last week that, in the face of the massive expenditures proposed by the Biden Administration, the real danger to the economy is inflation. On April 14, the data aggregating site statista.com projected a modest rise in inflation over the next 6 years:

Inflation is a term used to describe a general rise in the price of goods and services in an economy over a given period of time. Inflation in the United States is calculated using the consumer price index (CPI). The consumer price index is a measure of change in the price level of a preselected market basket of consumer goods and services purchased by households.
This forecast of U.S. inflation was prepared by the International Monetary Fund. They project roughly a 2.25 percent annual rise in the general level of prices until 2026. This means that a product bought today for about 100 U.S. dollars will cost about 102.25 U.S. dollars next year, and so on. Considering the annual inflation rate in the United States in recent years, a 2.25 percent inflation rate is a very moderate projection.
Although the moderate inflation of prices between two and three percent is considered normal in a modern economy, countries’ central banks try to prevent severe inflation and deflation to keep the growth of prices to a minimum. Severe inflation is considered dangerous to a country’s economy because it can rapidly diminish the population’s purchasing power and thus damage the GDP .

The Federal Reserve’s Federal Open Market Committee (FOMC) drew similar conclusions at its March meeting. The consensus projection is that there is enough slack (room for growth) in the current economy to absorb the huge injection of government dollars resulting from the various pandemic relief bills and President Biden’s ambitious agenda. Current projections have GDP growing at an annual rate north of 6% this year.

The Filibuster

There is the real possibility that many of the Biden Administration’s ambitions will never survive what an article in The Atlantic this week calls “the zone of legislative death”, the Senate’s filibuster (unlimited debate). What is maddening to those who would like to eliminate or reform the filibuster is that it only takes a simple majority to change Senate rules. With the Senate divided 50-50 and the Democrats having the tie-breaker in Vice-President Harris, what is needed is a unified Democratic caucus. Still, even as more Democratic Senators signal support for reform, Senators Joe Manchin (WV) and Krysten Sinema (AZ) have been outspoken in their opposition to any changes. There is no way of knowing if, behind-the-scenes, either the White House or Senate leadership is offering the recalcitrant duo inducements to drop their objections to changing the filibuster.

As for the Republicans, The Atlantic article makes clear their incentives to maintain the status quo. Analyzing election results since 1980, the authors point out that though “Republicans have never once achieved 60 seats [the supermajority required to end debate] in the period since 1980… exceptions to the filibuster rule have been carved out that allow two major Republican policy priorities: cutting taxes and confirming federal judges.”

The Trump Hangover

Last month I pointed out that Donald Trump’s grip on the Republican Party leaves it “with a dilemma that will be resolved in November 2022: support radical Trumpist candidates and risk losing to the Democrats or back moderates with a better chance of winning. [Despite] the efforts by GOP state legislatures to suppress voting, it seems obvious that, in the long term, the Republican struggle will be internal.”

So far it appears the Trumpists are prevailing. According to the Brennan Center for Justice, legislators have introduced 361 bills with restrictive provisions in 47 states. These bills target absentee voting, early voting, and voter registration. Some enact stricter requirements for voter ID. Republican-controlled Georgia, which went narrowly for Biden and elected two Democratic Senators in January’s special election, led the way in March.

But with the announcement that Major League Baseball would move this summer’s All-Star Game from Atlanta to Denver and statements from major corporations- including Georgia-based Coca-Cola, Delta Airlines, and UPS- critical of the law, the potential of losing donor support from the business sector became a reality. Chiming in from Florida, former President Trump urged his supporters to boycott Major League Baseball and the other companies who took stands against voter suppression. Senate Minority Leader Mitch McConnell, the master of political irony who oversees an array of GOP fundraising groups, warned business to “stay out of politics… Corporations will invite serious consequences if they become a vehicle for far-left mobs to hijack our country from outside the constitutional order.” Whether or not businesses will sustain this break from their traditional Republicanism, it must be worrying to party leaders that the extremists have engendered such a response from a reliable component of their coalition even if the statements prove to be mostly symbolic.

There is also the matter of the House Republicans’ efforts to oust Rep. Liz Cheney (WY) from House leadership as punishment for her vote to impeach Trump following the January 6 insurrection. Cheney, a rock-ribbed conservative, is standing firm, but the internecine battle reals yet another crack in the Republican facade.

A coda to the Cheney issue involves Rep. Matt Gaetz (FL) who traveled to Wyoming in January to lead an anti-Cheney protest. Subsequently, in late March the media reported that Gaetz was being investigated by the Department of Justice for sex-trafficking in a case that involves an under-age girl. The investigation was opened during the Trump administration while Bill Barr was Attorney-General. That might make one wonder if Liz’s dad, former Vice-President Dick Cheney, had pulled some strings to get the reports leaked.

It is never a good idea to mess with the Dark Prince of the Deep State.

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