Democratic voters should understand that Joe Biden’s pandemic spending and his proposed $3.5 trillion “Build Back Better” plan will have large negative unintended consequences for his supporters.
Large pandemic-related transfer payments (unemployment, rent relief and child support) have increased most taxpayers’ bank accounts and spending in the past year. Absent an equivalent increase in the supply of items available for consumption, the logical and unintended consequence of this is high inflation.
Already, we are seeing that real wage growth has turned negative. And as the president offers the prospect of “living-wage jobs,” his policies are leading to the prices of automobiles, gasoline, groceries, etc., increasing at a rate higher than his economic policies are (hopefully) creating jobs with higher wages. Meanwhile, the flood of cash into public hands is also driving up real estate and stock prices, greatly amplifying the inequality between those who own these assets and those who do not.
The proposed $3.5 trillion “Build Back Better” plan, which borrows heavily from future generations to put far more money into public hands today, will only make worse what we have seen of his economic policies since the election. Despite promises of massive confiscatory tax increases, these policies will always hurt those they are intended to help.
