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The recent rail workers’ deal reminds us that Joe Biden, far from fighting inflation, is actually enabling price increases, in three important ways.
First, he won’t stop spending. After touting the questionable deficit cuts contained in his Cut Inflation Act, the President decided to write off student debt to the tune of an additional trillion dollars.
According to the nonpartisan Committee for a Responsible Federal Budget, in less than two years, Biden has added $4.8 trillion to our long-term debt. This tsunami of government (taxpayer) spending is driving the highest inflation in 40 years, crushing the well-being of the average American.
Second, all the perks offered by an unpopular president in hopes of gaining higher approval ratings, such as a 21% increase in spending on food stamps and the cancellation of student debt, combine to prevent people to have to go back to work.
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The worst impact of the influx of federal spending has been the sidelining of workers, driving up the cost of labor. The Atlanta Fed reported 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 collective bargaining, has only made matters 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 also proposed making union dues tax-deductible and reversed pro-business measures passed by President Trump that, for example, defined the role of independent contractors.
The rail deal highlights the mounting cost of Joe’s promise to be “the most pro-union president you’ve ever seen.” We’re only just starting.
Faced with devastating inflation and an economy on the brink of recession, Joe Biden is undeterred. Indeed, he has done so many laps of honor lately that he must be dizzy.
Some ended badly, like the garden party celebrating its Inflation Reduction Act. This absurd event coincided with dismal news on real inflation and one of the worst stock market selloffs in recent times. The Dow Jones fell almost 1,300 points, but Biden was there, shouting about how his climate bill (which for the most part won’t bring prices down and is actually about to give life back more expensive), was GOOD FOR PEOPLE!!!
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(Biden only has one volume setting these days, and that’s LOUD. Screaming like crazy is how the president hopes to allay concerns about his vitality and fitness for duty.)
But it is the last celebration that interests us. Biden gave a victory jig at the White House over the settlement that averted a strike by railroad workers, saying the deal was “an important victory for our economy and the American people.”
The ever-helpful New York Times called the settlement “a victory for President Biden, whose administration helped broker the deal.”
CNN reported that “President Joe Biden personally called to speak to negotiators” and met with management and labor teams in person after a deal was reached.
The report showcased the president’s alleged negotiating skills, which during the 2020 campaign were touted 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, indeed anyone who disagrees with him.
So Biden must have been discouraged — and confused — to see stocks fall again. After all, he “saved” the nation from a shutdown that would have cost the economy some $2 billion a day in trade losses.
But investors weren’t thrilled with the rail settlement, and rightly so. The deal is costly and could well pave the way for more expensive employment deals to come. Workers will receive an immediate 14% raise, cash bonuses of $1,000 per year and an overall 24% wage increase over five years.
In addition, railway employees will not experience any increase in deductibles for health insurance and will also be entitled to more time off for medical problems.
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You can’t blame unions for demanding higher wages. After all, the cost of living is rising more than 8% a year today, and American workers are falling behind. But Biden’s infatuation with Big Labor will be an accelerator for the pay rises companies will have to hand out; these increases are priced in for inflation and will likely get worse as the unions regain their mojo, with help from the White House.
We see companies like Starbucks and Amazon facing successful organizing efforts for the first time; newly formed unions will have to prove their worth by offering generous contracts. Meanwhile, the continuing shortage of workers means employers will have to follow or lose scarce employees.
Unions, meanwhile, are celebrating their newfound power by increasing the number of strikes at companies like tractor builder Deere & Company and grain producer Kellogg. We have also recently seen nurses go on strike in Minneapolis and teachers go on strike in Seattle. With tailwinds from the White House, we’ll see more.
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As for the threat of a railway strike, I never believed it for a moment. Big Labor frying Joe Biden’s economic weeks from a midterm election – that wasn’t going to happen. Unions have been in decline for decades; this is their moment, thanks to Biden. Approval for organized work increased; it would have been political folly to turn things around.
The railroad strike may have prevented a temporary hiccup in the economy, but make no mistake – the rising costs of Biden’s program mean the country is suffering far worse.
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