OPINION:
Has any president ever assembled a more incompetent and less impressive Cabinet and group of senior advisors than President Joe Biden?
This past week, Treasury Secretary Janet Yellen endorsed the idea of taxing “unrealized capital gains” – a terrible idea that is unworkable, economically destructive, and immoral. A capital gain is an increase in the price of an asset, whether it be a home, farm, business, corporate stock, art object, etc. The IRS taxes these price increases as income (even when the price increase is solely due to inflation) when the asset is sold, and the alleged gain realized. It is a terrible tax. So, the proposal by members of the Biden Administration and certain members of Congress is to take a very bad tax and make it worse.
To tax “unrealized” capital gains, the government would have to estimate the “gain” in the value of your home, farm, small business, savings, and investment accounts each year, and then levy a tax on the bureaucrat’s guess of the supposed gain. Some propose that the “unrealized capital gains tax” will only be placed on billionaires. And it is true that Jeff Bezos and others who might have 100 billion-plus on paper can never spend all of that money on themselves. So, what exactly do they do with all that money? Build spaceships to eventually go to Mars? Buy media properties like the Washington Post to bash conservatives and capitalism? And/or invest in new or existing businesses to make most things better, cheaper, and more convenient?
Many of the billionaires spend their money on ways and causes that I disagree with. But even if it was possible for the government to find ways to tax them more, we are likely to be worse off rather than better off. (Taxpayer-funded NPR tends to be even more irresponsible and biased than the Washington Post – and Amazon is clearly much better run than almost any government agency.)
It is not just Secretary Yellen, but almost the entire Biden economic team is incompetent. Noted economists Dan Mitchell, and Robert P. O’Quinn, have published a new study for the Club for Growth Foundation, based on scholarly academic research and new findings of the nonpartisan Congressional Budget Office. They concluded that the provisions in President Biden’s reconciliation bill will “accelerate America’s fiscal decline and undermine economic performance.” Specifically, the Biden economic agenda will cause: “A loss of $3 trillion of economic output over the next ten years; A loss of $1.6 trillion of worker compensation over the next ten years; A loss of more than $10,000, on average, in compensation for workers over the next ten years; A lifetime drop in living standards of almost 4 percent for young workers.”
The Biden team has now managed to create an economy with rising inflation, a shortage of goods and services, a labor shortage, and a high level of unemployment. It is not hard for most Americans to understand why this has come about if they have some basic economic literacy and pay attention to the course of events. Secretary Yellen (who is former Fed Chairman) and current Fed Chairman Powell have expressed surprise at the persistence of inflation, even though many of us in the private sector have been saying for more than a year that rapid money growth coupled with government-mandated labor and supply restrictions would cause precisely what has happened.
President Reagan took office when the country suffered from record inflation, economic stagnation, rising unemployment, and very unstable and dangerous world order. Unlike President Biden, Reagan assembled a world-class economic, foreign and domestic policy team to help him deal with the problems. He brought in mature, very smart, highly experienced, and knowledgeable steady hands like George Shultz, James Baker, Judge William Clark, Jeane Kirkpatrick, Edwin Meese, Casper Weinberger, Don Regan, Martin Anderson, James Miller, William French Smith, and many other exceptional people to help him. He also selected a Vice President, George H.W. Bush, who had the necessary gravitas, experience, and expertise to step in as President if needed.
By contrast, President Biden has selected a Secretary of Defense who, during the Congressional hearings last week, showed his lack of understanding of what his real job is – protecting the nation — rather than trying to suck up to the President’s political agenda. The Chairman of the Joint Chiefs came across as even worse – as a man consumed by his own image with the press and power while paying insufficient attention to what was happening in Afghanistan and elsewhere.
The Secretary of the Interior and Secretary of Energy are women who seem to be more concerned with shutting down U.S. energy production rather than reducing energy costs to consumers and protecting U.S. energy supplies. The Secretary of Health and Human Services is more interested in a woke agenda than following the science to deal with the pandemic, as Senator Paul showed during a hearing last week. Again, the economic team has been misreading the economy and proposing solutions that will make things worse – higher taxes and more spending and regulations.
Finally, the Vice President appears to be a know-nothing who is ill-equipped by temperament and experience to take over as President if needed. Pray for America.
• Richard W. Rahn is chairman of the Institute for Global Economic Growth and MCon LLC.
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