Some shows are better in reruns, so it was last week when Senator Joe Manchin stood alone against his own party once again, stopping the insanity of increasing taxes and regulations in a period of rampant inflation and slowing economic growth. Both are the precise opposite of what economics demands, but Democrats are increasingly unmoored from anything except their unpopular agenda.
“We’re all going to die,” declared House Budget Committee Chairman John Yarmuth after Senator Joe Manchin, a fellow Democrat from West Virginia, officially destroyed all hopes of a Build Back Better redux, this time under the guise of a climate package. “It doesn’t matter what I advise. The Senate’s the Senate. It doesn’t matter what any of us do. Apparently, it doesn’t matter what the administration does. We’ve got one person who’s trying to dictate policy for the entire country and that’s a shame,” Representative Yarmuth continued, telling NBC News the entire Democrat party is in a state of “incredible frustration.” “Unfortunately, we have one Democrat who thinks he knows better than every other Democrat,” he added, neglecting to mention that these same Democrats think they know better than that Democrat and every Republican. The truth is that Senator Manchin, the Republican Party as a whole, and quite possibly other middle of the road Democrats such as Senator Kyrsten Sinema, all opposed the latest incarnation of progressive spending dreams because they understand the insanity of adding another trillion to the government budget and increasing taxes when the economy is already experiencing out of control inflation and likely headed into a recession. Both are precisely the opposite of what basic economics dictates under these conditions. When costs are already rising for consumers and businesses, increasing them further with additional energy regulations, more spending, and taxes is the economic equivalent of trying to put out a fire by dousing it with jet fuel.
Incredibly, NBC News reported that “some” Democrats were “befuddled” by Senator Manchin’s “citing inflation as a reason to hold off on the package,” making one wonder where they’ve been for the past year, even as all of their claims inflation would be “transitory” have one up in the smoke from Americans burning a hole in their wallets. Senator Manchin has made this same argument before, barely six months ago the last time we saw this movie and things haven’t gotten any better since. Inflation remains the number one issue for voters by a substantial margin for obvious reasons: Despite slight increases in take home pay, consumers are earning less than they were last year because costs have gone up even further and show no signs of slowing down. In June, we broke another record of the special kind you don’t want to break, when inflation surged to a 9.1% year over year rate, the highest since November 1981. This was after the Federal Reserve increased interest rates at a clip not seen since the 1990’s and are expected to do the same again this month, all in a last ditch effort to combat inflation they completely failed to anticipate because they were too busy printing endless money. “Unless the wheels really come off of the economy over the next two weeks, the July decision will very likely be a three quarters of a percent hike—and if not that, a full percentage point increase is more likely than a half percentage point one,” Comerica Bank chief economist Bill Adams told The New York Post.
In the meantime, consumers can expect to pay more for everything starting with energy, up a whopping 41.6%. Food has increased some 10.4% leading to a never before seen $10 loaf of bread. These prices are “like a punch in the nose,” according to Mark Cohen, director of retail studies at Columbia University. Prices have reached levels that “nobody has seen before,” he added. “Across the economy, consumers, business leaders, investors and regulators are all asking the same question: When will inflation peak?” Bankrate senior economic analyst Mark Hamrick pondered. “Central bankers were caught flatfooted and are now trying to play catch-up and recover some of their bruised credibility,” he continued in a candidate for understatement of the year. The Biden Administration itself is keenly aware of this reality, alternatively lying about it and shifting the blame. The President issued a statement immediately after the report was released, claiming it was already “out-of-date.” “Energy alone comprised nearly half of the monthly increase in inflation. Today’s data does not reflect the full impact of nearly 30 days of decreases in gas prices that have reduced the price at the pump by about 40 cents since mid-June.” It sounded reasonable enough until you looked at the actual numbers. On May 31, gas prices averaged $4.727 per gallon, but by June 30, the end of the period in question, they’d risen further to $4.979, an increase of 5.3%. They were slightly higher in the middle of June, hitting another of those records you don’t want to break at $5.107 per gallon, but they still haven’t fallen to May levels, making the Administration’s statement completely false. The “full impact” has been captured. It just happens to be the opposite of what President Biden claimed.
Of course, gas prices might continue to fall this month and provide some respite for consumers, but no one honestly believes the impact is going to be large enough to account for the reality that price increases are outpacing income by a rate of around two to one, leading to a 3.6% decline in take home pay. This is undoubtedly another factor driving the President’s second front in his war on the truth, wherein he simultaneously blames gas station owners and operators for price gouging. Around the same time he claimed the topline inflation number was, well, inflated, he shared a post on Facebook suggesting that the price of crude oil has declined by “around 20%” while the price of gas at the bump has “only dropped by 8%.” The post was accompanied by a chart that showed a steep decline in crude against a smaller, flatter drop in actual prices. Taken at face value, it seemed to dramatically encapsulate the President’s point, but nothing the Administration claims at this point should pass without scrutiny. Therefore, it was no surprise to learn that the chart was intentionally manipulated to make the fall in crude prices larger in comparison to pump prices. The left hand side displayed crude oil over a variable range of 38% but the right hand side showed gas prices over a larger range of 54%, making the differential between prices 42% bigger than it is using the pure numbers. The President also failed to mention that prices at the pump tend to lag behind the price of crude by about a month because of the time required to refine the finished product that ultimately makes its way into our gas tanks. If you display a larger range with the proper axes, gas prices almost perfectly track crude going back to the beginning of the year.
It was yet another intentional deceit, designed exclusively to cover up his own failure and cast blame on others. Political spin and cover ups are nothing new, of course. Every Administration showcases the numbers that put them in the best possible light. Few, however, take direct aim at small business owners across the country and do so while actively pursuing an agenda that will make matters worse, not better. The climate provisions rejected by Senator Manchin included another flood of government money sure to increase inflation, as well as shift investment from increasing oil extraction to meet demand to unspecified “renewable” sources that are working so well Germany recently turned its coal-fired plants back on. As Senator Manchin explained in a statement, it “is time for us to work together to get unnecessary spending under control, produce more energy at home and take more active and serious steps to address this record inflation that now poses a clear and present danger to our economy. No matter what spending aspirations some in Congress may have, it is clear to anyone who visits a grocery store or a gas station that we cannot add any more fuel to this inflation fire.” This shouldn’t be a controversial position, especially after President Biden was warned by members of President Obama’s economic team that previous rounds of government spending including a massively unnecessary coronavirus relief bill that somehow solved the poverty problem could lead to an inflationary spiral. He failed to heed that advice, at times denying it was ever provided. For example, in July of last year former Treasury Secretary Larry Summers said, “I think most factors point to more cause for concern now than in 1966 when inflation accelerated.” He described the coronavirus legislation as the “least responsible” economic policy in four decades and warned there would be “consequences for the dollar and financial stability.” President Biden responded by saying “I don’t know anybody, including Larry Summers who’s a friend of mine, who’s worried about inflation” on a CNN Town Hall shortly after.
Sadly, President Biden is still not deterred. “I will not back down: the opportunity to create jobs and build a clean energy future is too important to relent,” he said in a statement. Other Democrats, such as progressive Senator Bernie Sanders, had harsh words for their colleague, calling Senator Manchin a saboteur. “He has sabotaged the president’s agenda. No, look, if you check the record, six months ago, I made it clear that you have people like Manchin, Sinema to a lesser degree, who are intentionally sabotaging the president’s agenda,” he said. Other prominent Democrats, like former Labor Secretary Robert Reich are arguing the Senator should be thrown out of the party. Secretary Reich took to Substack to vent his concerns, claiming “If the Democratic Party had any capacity to discipline its lawmakers or hold them accountable (if pigs could fly), it would at least revoke Manchin’s chairmanship of the Senate Committee on Energy and Natural Resources. To continue to allow this key position to be occupied by the man who has single-handedly blocked one of the last opportunities to save the Earth is an insult to the universe. I’m told the Democrats don’t dare take this step for fear Manchin would leave the Democratic Party and switch his allegiance to the Republicans.” Some like myself might argue that Senator Manchin has prevented Democrats from further sabotaging the future of the country, but either way it’s impossible not to conclude that progressives feel their agenda is more important than your personal finances and they will stop at nothing to keep pushing forward. Right now, Senator Manchin stands in their way, a lone voice of reason in a party that is increasingly at odds with the public on issues of paramount personal importance. He is likely to be joined by a new phalanx of Republicans if the current polling on the midterm election later this year is accurate. We can only hope it won’t be too little, too late.