The contrast between how this President began his term and today could not be more stark. You may recall that the newly elected President, Joe Biden, sat at the Resolute Desk signing Executive Order after Executive Order for the first few days in office. He set a record of creating new policies and initiatives for the country.
Today, the country sits adrift with policies far beyond their shelf-life. There are at least three significant areas in which circumstances have so changed that the original policies, initiated just a year and a half or two years ago, no longer make sense. Those three areas of concern include monetary policy. Although technically set by the Federal Reserve, it is increasingly apparent that the Treasury and the Fed are on entirely different tracks. Biden continues to pump up federal spending, which increases inflation, while the Fed seeks to rein in inflation.
Second was the War in Ukraine, which produced a horrendous loss of life. Up to half a million soldiers from both sides have likely been maimed, injured, or killed. It’s time to begin the peace process, yet Biden refuses to pick up the phone and speak with Vladimir Putin. Biden’s policy of “for as long as it takes…” has continued without modification or review for a year and a half.
Finally, a new set of problems has appeared: strikes. The United Auto Workers and the Writers Guild have left their jobs. Strikes can devastate an economy, both to those actively involved and to that small circle of support companies. But when asked for some support in negotiating an end to the strikes, this Administration is as mute as Mitch McConnell. We get nothing.
It all began when the United Auto Workers took to the picket line last weekend. For weeks, the union had sought improvement in pay and benefits, yet Washington had done nothing. Past Presidents had brought all the parties to the Capital to work out any grievance between them. These leaders understood that any strike affecting 13,000 workers, like this one, can be devastating to the economy.
Strikes affect not just the Big Three Auto Makers, Ford, GM, and Chrysler, but also all the smaller contractors that supply parts and components. Indications are that these subcontractors have already begun to furlough staff as orders have ground to a halt.
Of course, the UAW is not the only union on strike currently. Out in Hollywood, the Writers Guild of America went on Strike on May 2; we’re now in the fifth month of that strike with no end. This strike has idled more than 20,000 workers altogether. And just like the autoworkers, this will devastate all the surrounding support services, the stagehands, grips, electricians, and others who cannot work as long as the strike continues.
Again, the Biden Administration has yet to do anything. Sitting on the sidelines, the Administration hasn’t even offered to negotiate. While Karen Bass, Mayor of Los Angeles, and Gavin Newsom, Governor of California, have volunteered to lead negotiations, there’s been nothing from Biden’s crew.
Strikes are the action of last resort from a union and generally indicate that negotiations have broken down. Unfortunately, with this Administration, sitting down and negotiating with the two sides of a dispute is foreign. While there have been no substantive negotiations with the Writers Guild, there has only been a tepid response to the Auto Workers, with the President sending representatives to the three Automakers at the very last minute. It’s an Administration that doesn’t like to talk.
It’s been over 18 months since the Federal Reserve began raising interest rates. The Fed hiked rates each time from ¼% to 3/4% for eleven times during that year and a half. Talk about Johnny One Note. From less and 1/4% to now 5 1/2%, it’s been one of the most dramatic moves in rates in the history of the Fed. And it worked. After hitting a high water mark in June 2022, the latest Consumer Price Index report fell by half, even though the price of gasoline has risen dramatically.
Most economists would see that as a victory: cutting inflation in half in 18 months. Many on Wall Street are concerned that this continued monetary tightening will send the economy into Recession. But not Jerome Powell and this Federal Reserve. Their strategy seems firmly cast in stone. The Fed will remain right where it is, with no change in policy. Powell promised more of the same at his Wednesday Press Conference: additional rate hikes before year-end.
In both the Federal Reserve and the Presidency, there is an inability to deal with changing conditions and new challenges. It’s a desire to stand pat and maintain the Status Quo, even if current conditions are deteriorating.
The Ukraine War
Finally, this was the week that Volodymyr Zelensky, President of Ukraine, visited the United Nations and the US Congress. Accompanying Zelensky was President Biden, who admonished both Congress and the UN to continue supporting Ukraine, again echoing his line, “for as much as it takes, as long as it takes.”
Rhetorically, Biden has inevitably couched the conflict in Ukraine in the starkest of terms. In his address to the UN, his key point was this:
“If you allow Ukraine to be carved up, is the independence of any nation secure?” Biden said during his remarks Tuesday. “I’d respectfully suggest the answer is no. We have to stand up to this naked aggression today and deter other would-be aggressors tomorrow.”
Unfortunately, Biden’s premise is off the mark. Neither NATO, the UN, nor the United States are “allowing” Russia to do anything. The reality is that Russia is defeating the best men and equipment we can put on the battlefield. For nearly 600 days, America has supplied Ukraine with its finest weapons and spent billions in support, to little avail. Russia currently occupies about a quarter of the country. The vaunted “Summer Offensive” by the Ukrainian Army produced little re-captured land.
The days of America “allowing” the rest of the world to act are gone. The lesson of Ukraine is that America is no longer the sole global superpower. Other countries, principally Russia and China, now have the military might to oppose the us.
There lies before us an opportunity to begin negotiating for peace in Ukraine. The people of Europe and America are more than ready to see negotiations begin. Increasingly, public opinion polls suggest that the populations on both sides of the Atlantic want to see an end to this conflict.
It’s an end that will only come when this President takes off his high hat and recognizes that this is now a multi-polar world.
It’s too early to play the slow-down game, and hope you can get reelected come November of 2024.