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The recent railroad workers settlement reminds us that, far from fighting inflation, Joe Biden is actually enabling price increases, in three main ways.
First, he won’t stop spending. After crowing about the questionable deficit cuts in his Inflation Reduction Act, the president decided to cut student debt for an additional $1 trillion.
Biden has added $4.8 in less than two years, according to the impartial committee on a responsible federal budget trillion for our long-term debt. That tsunami of government spending (taxpayers) is driving the highest inflation in 40 years and crushing the well-being of the average American.
Second, all the benefits offered by an unpopular president hoping to buy higher approval ratings, such as a 21% increase in food stamp spending and the cancellation of student debt, will keep people from going back to work.
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The single worst impact of the federal spending wave has been the sideline of workers, which has driven up labor costs. The Atlanta Fed reported that wages rose 6.7% in August, a multi-decade record. The wage-price spiral is now a fact; the railway agreement, which sets a new bar for labor negotiations, only made matters worse.
Third, as we have just seen, Biden’s enthusiastic embrace of Big Labor means higher wages. Many of the president’s generous plans to rebuild America contain provisions requiring the use of union workers; that means less competition and higher costs. He has also proposed making union dues tax-deductible and overturning President Trump’s pro-business measures that defined, for example, the role of independent contractors.
The railroad agreement highlights the mounting costs of Joe’s pledge to be “the most pro-union president you’ve ever seen.” We are just at the beginning.
In the face of devastating inflation and an economy on the brink of recession, Joe Biden is undaunted. Indeed, he has done so many victory laps lately that he must be getting dizzy.
Some have ended badly, like the garden party celebrating its Inflation Reduction Act. That ridiculous event coincided with dismal news about actual inflation and one of the worst stock market sell-offs in recent times. The Dow dropped nearly 1,300 points, but there was Biden, raving about how his climate bill (which most agree won’t cut prices and is indeed poised to make life more expensive) was GOOD FOR PEOPLE! !!
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(Biden only has one volume setting these days, and it’s LOUD. Yelling like crazy is how the president hopes to allay concerns about his vitality and fitness for work.)
But it was the last party that was our focus. Biden cast a victory mold at the White House over the settlement that averted a railroad workers’ strike, saying the deal was “a major 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 seal the deal.”
CNN reported that “President Joe Biden personally called to talk to negotiators” and met the teams representing management and workers in person after an agreement was reached.
The report showed the president’s presumed negotiating skills, which were touted during the 2020 campaign as evidence that Biden could “work down the aisle” with his political opponents. That talent seems to have disappeared; Biden now specializes in demonizing Republicans, or basically anyone who disagrees with him.
Biden must therefore have been discouraged – and confused – to see the stock plunge again. After all, he “saved” the nation from a shutdown that reportedly cost the economy some $2 billion a day in lost trade.
But investors weren’t thrilled with the railroad settlement, and rightly so. The deal is expensive and could pave the way for more expensive labor contracts. Employees receive an immediate 14% pay increase, cash bonuses of $1,000 per year and a 24% general pay increase over a five-year period.
In addition, railway employees do not receive an increase in the deductible for health insurance and they are given more free time for medical reasons.
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You can’t blame unions for demanding higher wages. After all, the cost of living is rising at over 8% a year these days, and American workers are lagging behind. But Biden’s enthusiasm for Big Labor will fuel the wage increases companies will have to allow; those increases are embedded in inflation and are likely to get worse as unions get their mojo back, with help from the White House.
We see companies like Starbucks and Amazon facing successful union activity for the first time; newly formed unions will have to prove their worth by delivering generous contracts. Meanwhile, the ongoing labor shortage is forcing employers to go along or lose scarce workers.
Unions, meanwhile, are celebrating their newfound power with more and more strikes at companies such as tractor manufacturer Deere & Company and grain producer Kellogg. We’ve also recently seen nurses on strike in Minneapolis and teachers on strike in Seattle. With the wind at the back of the White House, we’ll see more.
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As for the impending railroad strike, I didn’t buy it for a moment. For Big Labor to fry Joe Biden’s economy weeks of a by-election – that wasn’t going to happen. Unions have been in decline for decades; this is their moment, thanks to Biden. Approval for organized labor is on the rise; it would have been political madness to turn that around.
The railroad strike may have prevented a temporary slump in the economy, but make no mistake — the rising costs of Biden’s agenda mean the country is suffering much worse.
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