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Robert Wright’s review of my book captures the essence of my journey in America.
“There is a right way and a wrong way, always choose the right way.” Abraham Sabrin (1914-2001)
In a Wall Street Journal op-ed today, House Speaker Kevin McCarthy pats himself of the back for the debt ceiling bill he negotiated with President Biden. He begins his self congratulatorily piece by stating: “In Washington, wasteful government spending almost always goes up” (emphasis added.).
Earth to Speaker McCarthy, it is not “wasteful spending” that it is the problem. It is all the spending that is not authorized by the Constitution. When the Speaker administers the oath of office to members of the House every other January, they swear to defend the Constitution. Unless a member votes against all spending not authorized by Article I, Section 8, then all members would be in violation of their oath to their constituents, who elected them to faithfully serve in the Congress.
Speaker McCarthy makes the egregious assertion that “out of control inflationary spending is harming our country.” He is half right. Increases in government spending is not inflationary per se. If the spending is financed by the Federal Reserve buying some or all the newly issued Treasury securities to cover the budget deficit, then price inflation would accelerate. So the blame for inflation is the Federal Reserve’s “money printing,” not government spending.
If the Speaker believes out of controlled government spending is the villain in America, he should denounce former President Trump’s budgets and his fellow Republicans for their fiscal irresponsibility. During the four years of the Trump administration the federal budget rose from $3.98 trillion (Obama’s last budget) to $6.82 trillion, Trump’s last budget a massive 71.3% increase in four years.
To put these numbers in perspective, former Reagan budget director David Stockman points out (subscription required) Trump was the most reckless spender of all recent presidents and increased the debt by an obscene annual average in real dollars of $2.043 trillion. No Republican or Democrat comes close to Trump’s mind-blowing spending. Real spending increased by an average of $366 billion per year during Trump’s four years in the White House.
Republicans would argue all of Trump’s spending in 2020 was necessary because it was the Covid lockdowns and all the funds needed to “fight the virus” and putting money into the hands of individuals, families, and businesses to get them over the hump.
Critics of the lockdowns were right as early as soon as the pandemic began in 2020. Shutting down most of the economy was unnecessary and thus Trump gets a big fat F for his fiscal policies that ballooned the debt.
The real winner in the McCarthy-Biden debt ceiling bill is the Welfare-Warfare state (WWS). The welfare state is still intact and military spending keeps increasing (3%) and yet the Senate’s chief warmonger, Lindsay Graham, stated he would vote against the debt bill because military spending is being shortchanged!
The real loser is the American people who will have to pay the piper for the WWS in the form of higher prices as the Fed will keep on monetizing the federal debt, and the economy will not be as robust as it otherwise would be because resources will continue to be diverted from the private (productive) sector to the bottomless pit of DC spending.
My latest piece on the economy was published in Fortune, https://fortune.com/2023/03/27/recession-2023-layoffs-tech-finance-unemployment-outlook-fed-rates-murray-sabrin/ This is an update of my 2021 forecast, https://fortune.com/2021/12/09/next-recession-heres-everything-bubble-markets-2021-2022-covid-murray-sabrin/
Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. His new book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021), provides decision makers with tools needed to help manage their businesses during the business cycle. Sabrin's autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022.
Winner...the top 5%. Everyone else is a big time loser.