Larry Kudlow: Did someone say economic security — or did someone say stupid?

Yesterday, President Joe Biden gave a speech talking about his success in providing “economic security” for Americans. Let’s have a look at this. 

For one, Mr. Biden’s bragging about job creation including today’s 263,000 increase in non-farm payrolls. Trouble is, these are not new jobs. They are people returning to work after the pandemic. If the pre-pandemic Trump trend had been in place, we’d be plus 6 million or more newly created jobs. Not just breaking even post-COVID.

For another thing, the jobs aren’t paying. Today for example, production worker wages increased 5.8% over the past year, which is normally a very strong gain. Problem is, the inflation rate is over 8%, so real wages fell for the 18th straight month. That’s the soft underbelly of the Biden economy. That’s a key reason for the kitchen table revolt that will be such a big factor in the November elections.

High inflation from excess federal spending and money printing and the war against fossil fuels is killing the economy. Mr. Biden inherited an economic boom from his predecessor Donald Trump and in a little over a year, Biden’s big government socialism turned that boom into a stagflationary bust. The economy actually shrank in the first half of the year with over 8% inflation. That is not economic security.

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Meanwhile, stock markets are falling, interest rates are rising, housing is in a deep recession and then, there’s the energy fiasco. Mr. Biden has essentially stopped permitting, stopped new fracking and stopped pipelining, so oil prices are hovering around $100 a barrel and after a brief respite, gas at the pump is moving up again.

The Biden Green New Deal policies basically say, “It’s OK to drill and produce oil and gas anywhere around the world except the United States.” If you think that’s an odd policy, you’d be right. If you think that’s a stupid policy, you’d also be right.

First, he went hat-in-hand to Saudi Arabia, but that didn’t work out so well as OPEC+ cut back production. He’s still trying to get a nuclear deal with Iran, which would include unlocking their oil. Now he’s also back to begging with Venezuela — another stellar democracy-loving American ally. Not.

Just to make sure there’s no onshoring of American energy production, the Bidens are now seeking a complete block on federal offshore fossil fuel drilling and perhaps new leases as well, but wait a minute! They’re also contemplating a ban on natural gas, diesel and refined product exports. This is of course would increase prices, cause a loss in U.S. GDP, force refinery closures and choke off energy supplies to U.S. allies overseas at their time of greatest need. Did someone say stupid?

On top of all this, the Bidens have decimated the strategic petroleum reserve as their desperate election-year oil selling in order to implement political price-fixing at the pump has taken out about half of the petroleum reserves. Remember, SPR was set up years ago in response to an Arab oil embargo that devastated the American economy. Could it happen again?

Well, given the OPEC + decision to cut production, side with Russia and poke a sharp stick in Biden’s America’s eye, you can’t rule out a new embargo, you just can’t. Did someone say energy security? Did someone say economic security? Did someone say national security?

Oh, by the way, we just hit $31 trillion in federal debt, which comes to about 125% of GDP. The new inflation expansion act, which featured $400 billion worth of green new deal tax credits, has recently been upgraded by an analyst to a potential $800 billion worth. The student loan cancelation cost estimate began around $200 billion by the White House, but has since been raised to as much as $1 trillion by outside experts. 

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You know, as a supply-sider, I never really worried so much about debt because I knew lower tax rates would produce more than enough growth and revenues, but then again, I’m starting to rethink, because I’ve never seen 125% debt-to-GDP ratio before. 

Hard to quantify this economic impact, but I’ll just generalize: It can’t be good. Did someone say economic security? Energy security? National security? Did someone say stupid? I can’t wait for the cavalry to come.

This article is adapted from Larry Kudlow’s opening commentary on the October 7, 2022, edition of “Kudlow.”