The Biden administration just announced their newest spending bill. What are the results of this bill, exactly? What happens if all this money gets into the system? Could it affect your life? How much is actually for physical infrastructure versus “social” infrastructure? Won’t this kind of spending cause hyperinflation as we had in the late ‘70s? Does printing money cause the value of the dollar to decline? Whether you are a Democrat or Republican, these questions matter to you now and in the future.
First, is repairing infrastructure important and necessary? I believe everyone would agree that it is important. How much of the 2 trillion dollar package going to physical infrastructures, like bridges and roads and airports?
Only about 5% of that $2 trillion will go to roads and bridges. The rest I would characterize as social engineering. I don’t want to get into all the things it covers which I am sure has some happy and others miserable. What I want to talk about is how this affects your pocketbook and whether it is really necessary.
Like the “Stimulus Bill”, we don’t need stimulus. The economy is roaring back. Just yesterday it was reported that the unemployment rate dropped to 6%. Even my daughter, who has been unemployed for one year, had two offers for jobs last week after she has been applying every day since she was laid off. 6% is near full employment and that is after our unemployment hit 18% less than one year ago.
First, let’s talk about the taxes. Who will pay for this bill? You. I summarized the taxes in my last commentary. This tax bill is the biggest tax increase since 1968. It is a 3 trillion dollar increase in taxes. It’s a big deal.
The main increase in taxes is increasing the corporate tax to 28%. Was it corporate interests that put the current president into the White House? Well, believe it or not, they were involved in designing this package. Corporations shelter most of their money from taxes by passing the costs along to workers (in the form of lower wages) and customers (in the form of higher prices). None of this will hurt Amazon or Twitter, Facebook or Microsoft.
As the government injects trillions into the economy, what does that do to your costs? The cost of almost every durable good goes way up. The price of lumber has jumped more than 280%. Crude oil jumped 188% Sugar, 50%. Copper and tin went up more than 80% each and so on. That appears to be fine if you are a politician, but not for you and me! The cost to buy a home has jumped up 11% nationwide. According to the United Nations Food Price index, the cost of food has just reached its highest level in seven years.
My point is that by spending all of this money that politicians did not make, the people in charge are making it far harder for most Americans to live here. That’s the cost of inflation. It’s a tax, it’s insidious, and it’s impossible to control once it starts. Meanwhile, the most powerful people are happy and content in their huge homes and protected health care and many money-making ventures such as cryptocurrencies.
My opinion is that there are trillions of dollars that are changing hands. I would call this looting. Politicians have been looting us for years and they have not created a thing. They are not creators but takers and have gotten rich on it. Do you ever wonder how they become multi-millionaires on a government salary? Whether you are a Democrat or Republican, don’t be fooled. Welcome to hyperinflation.
One final point. The bill also makes possible the elimination of exclusionary zoning and needless barriers to producing affordable housing. We all want to help the poor and help with housing in some way. This bill brings that type of housing to your neighborhood. Does it matter to you? Is it equity? If you are against it are you a racist? You decide.
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