Post by the Scribe on Nov 1, 2022 21:30:26 GMT
Republicans Claim They'll Fix Inflation. We Asked 8 GOP Senate Candidates How.
www.yahoo.com/lifestyle/republicans-claim-theyll-fix-inflation-110000093.html
Jack Holmes
Tue, November 1, 2022 at 4:00 AM
inflation republican senate candidates 2022 election
We Asked 8 GOP Candidates for Inflation PlansMike Kim
It’s perfectly reasonable for Republicans to batter Democrats on inflation. Gas prices have fallen way off their June highs, but the rising cost of living is still a problem for Americans from most walks of life, and Democrats are the party in power. That’s politics.
www.bloomberg.com/news/articles/2022-10-26/gas-prices-flat-or-lower-in-each-state-easing-pressure-on-biden#xj4y7vzkg
But now that Republicans have chosen inflation—and particularly gas prices—as their number-one issue for this political cycle, it follows that their candidates would have detailed plans to turn things around if they’re elected. That’s governing.
We asked the campaigns of eight Senate candidates in competitive races—J.D. Vance in Ohio; Mehmet Oz in Pennsylvania; Herschel Walker in Georgia; Blake Masters in Arizona; Ron Johnson in Wisconsin; Ted Budd in North Carolina; Adam Laxalt in Nevada; and Mike Lee in Utah—the following:
What is the candidate's plan to lower gas prices?
What is the candidate's plan to fight inflation?
Here’s what we heard back. The campaigns of Oz, Lee, Walker, and Masters did not respond, while the others all offered the eerily similar responses that you can find below. Usually, these solutions came in the form of pointing out horrible things the Biden administration has done. Not mentioned: global supply shocks tied to the pandemic shutdown, monopoly power and corporate concentration*, corporate profits, the war in Ukraine, OPEC, housing (the main driver of inflation through much of 2022), or the Federal Reserve.
www.chicagobooth.edu/review/how-covid-19-shocked-both-supply-demand
www.bloomberg.com/news/articles/2022-08-25/us-corporate-profits-soar-taking-margins-to-widest-since-1950
www.cato.org/blog/yes-russias-war-ukraine-did-raise-price-gasoline-0
www.politico.com/news/2022/03/18/housing-costs-inflation-00015808
MORE PIPELINES, MORE DRILLING PERMITS :
VANCE: “Global commodity prices are always going to shift here and there in ways that you can't control,” Vance told the Columbus Dispatch. His campaign forwarded those comments along to Esquire. “But if you look at things like the Keystone Pipeline, shutting down that on day one, if you look at the really low number of oil and gas permits the Biden administration has granted, I think that we've really shot ourselves in the foot when it comes to energy prices.”
In a debate, he added that Biden has “made it impossible to invest in Ohio’s oil and gas sector.”
BUDD: “We need to start increasing domestic energy exploration and production rather than reduce it,” said Budd spokeswoman Samantha Cotten. “High gas prices are also driving higher costs for everything else. Among Joe Biden’s first actions was canceling a major gas pipeline being built in the U.S. and he also slowed to the point of almost stopping new permits for domestic energy exploration. It’s not complicated.”
jd vance inflation keystone pipeline
Mike Kim
JOHNSON: “On President Biden’s first day in office he also fired the first shot in his war on fossil fuels by canceling the Keystone XL pipeline. That decision cost a Wisconsin construction company approximately 2,000 union jobs, and signaled the Biden administration’s policy of purposefully driving up the price of gasoline and other energy powered by fossil fuels. In other words, record high gasoline didn’t just happen, it is the direct and desired result of the radical left green energy policies that have been fully embraced by the Biden administration and its Democrat enablers in Congress…That’s why they and their allies are restricting the issuance of permits and throwing just about every roadblock imaginable in the way of increasing fossil fuel production.”
LAXALT: “The average price of gas in Nevada is well above $5 [Ed. Note: at the time of publication, it was $5.001], and this is due to Joe Biden and [Nevada Senator Catherine] Cortez Masto’s Green New Deal, anti-energy policies,” says Laxalt spokesman Brian Freimuth. “The Biden-Masto agenda has leased the fewest acres for drilling since WW2. When Adam is in the Senate, he’ll fight to restart oil and gas leases and revive American energy independence to bring prices back down.”
WILL IT WORK ?
The Keystone XL Pipeline is the holy grail of conservative politics, so it’s not a surprise it makes an appearance here. But even if Biden hadn’t canceled the project upon taking office in January 2021, it would not have been operational until 2023. If all had gone to plan, it would have carried Canadian tar sands oil—some of the dirtiest fossil fuel in the world, in case anyone cares—to refineries in Texas. In total, it would have transported up to 830,000 barrels a day, less than 1% of daily global consumption. Prices went from $70 a barrel in Fall 2021 to more than $100 for much of 2022, so it’s not clear how XL would have made the difference at the pump. (Saudi Arabia produced close to 11 million barrels a day last year.) As for Johnson’s jobs claim, the pipeline would have created 3,000-4,000 temporary construction jobs and 35 permanent gigs, though unemployment is not exactly our problem at the moment.
www.ucsusa.org/resources/what-are-tar-sands
www.cbsnews.com/news/could-the-keystone-pipeline-help-limit-rising-gas-prices-oil-cbs-news-explains/
www.politifact.com/factchecks/2022/jul/21/tim-michels/end-keystone-pipeline-did-cost-jobs-most-were-temp/
www.npr.org/2022/08/05/1116036160/the-unemployment-rate-fell-to-3-5-matching-its-lowest-level-in-the-last-50-years
As for the permits, that refers to leases to drill for oil and gas on federal lands. According to the American Petroleum Institute, about 24% of American oil and 11% of natural gas is drawn from federal lands and waters. Biden paused new permits on taking office, though he inherited thousands of already approved permits that oil and gas firms had yet to make use of. The API puts that number at around 9,000 right now, which they call “a small fraction” of the nearly 100,000 producing wells on federal lands. (The fraction is 9%.) Industry groups deny they are stockpiling unused permits, citing red tape and the lengthy process before wells bear fruit. The API says “it can take more than five years for some fields to go from discovery to production,” which does not suggest Biden’s permit pause less than two years ago is what has made the difference here. Also, a federal judge blocked his executive order and leases began again in 2021—at an approval rate that enraged environmental groups. That rate is down in 2022, but again, the oil doesn’t go to market the day after the lease is approved. Also, as we began, 76% of American oil isn’t produced on federal lands.
www.api.org/news-policy-and-issues/blog/2022/03/24/drilling-down-on-federal-leasing-facts#:~:text=In%20reality%2C%20federal%20natural%20gas,of%20total%20U.S.%20oil%20production.
www.americanprogress.org/article/oil-gas-companies-gain-stockpiling-americas-federal-land/
www.investopedia.com/ask/answers/061115/how-long-does-it-take-oil-and-gas-producer-go-drilling-production.asp
apnews.com/article/joe-biden-climate-change-environment-and-nature-business-9751c4909a8b1baba28f3bcff9d5fa6e
ron johnson inflation oil and gas permits
Mike Kim
In general, average oil production is up under Biden, though it was higher under Trump before the pandemic. Neither of them were turning some dial in the Oval Office to make it happen. If you’re looking for why oil production isn’t up more, though, one compelling explanation is that the money isn’t behind it. Oil is riding high at the moment, but for years the market has been less certain, and more to the point, the future is certainly not bright. You could, as Laxalt and Johnson do, blame Biden’s green energy agenda for this, though Johnson’s suggestion that Biden has a deliberate strategy of driving up gas prices is nuts. You could also give oil executives and Wall Street types credit for assessing that, while oil is still hugely important, the indications are that an investment now—or even a few years ago—in a well that will bear fruit a half-decade later is a risky capital outlay at a time when wind and solar are getting highly competitive and electric vehicles are gaining steam. (Instead of expanding operations, major oil and gas firms have often been returning money to investors through stock buybacks and dividends.) Maybe this is what Vance meant by making it impossible to invest, but is that really just Biden’s doing in less than two years?
www.wusa9.com/article/news/verify/presidents-dont-control-the-quantity-of-domestic-oil-being-produced-technically-highest-oil-production-during-president-bidensadministration/65-401bfdf8-e601-4d3f-8dee-f90f349c9cac
www.nytimes.com/2022/07/29/business/oil-company-buybacks.html
If Republicans were to pursue their plans—building pipelines and adding to the 26 million acres already leased for oil and gas drilling, 53% of which BLM says is currently fallow—it would not have much effect on supply for years. It would also add to the credibility of these proposals if candidates acknowledged that oil production was scaled back during the pandemic shutdown and has struggled to meet surging demand since the world reopened; that the war in Ukraine has disrupted global energy markets further; and that OPEC Plus routinely decides to cut production with seemingly little regard for the prices consumers are paying. Also, the aforementioned major firms have enjoyed near or record profits in 2022. If they’re raking in profits—not just revenues—was it justifiable to pass on all those costs to consumers during a global crisis?
www.doi.gov/sites/doi.gov/files/report-on-the-federal-oil-and-gas-leasing-program-doi-eo-14008.pdf
www.nytimes.com/2022/10/26/us/politics/us-saudi-arabia-oil.html
www.washingtonpost.com/world/2022/08/08/oil-companies-profits-inflation/
CUTTING SPENDING, CUTTING TAXES :
VANCE: “We have to live within our means as a country. The borrowing and spending added to an energy-constrained economy just drives inflation through the roof…if we stop the borrowing and spending, I think we go a long way to really solving the inflation crisis.”
BUDD: “Stop the reckless government spending such as the IRA and American Rescue Plan. Inflation is caused by too many dollars chasing too few goods. Even Democrat economic officials have said the IRA, which [North Carolina Senate candidate] Cheri Beasley has publicly supported, is likely to actually increase inflation rather than reduce inflation.”
ted budd inflation cut spending
Mike Kim
JOHNSON: “I’ve been warning about runaway inflation and possibly stagflation for a year now – ever since Democrats began discussing their 100% partisan $1.9 trillion ‘COVID relief’ bill. They passed this with no Republican votes at a time when we still had more than $1 trillion unspent from the previous $4 trillion COVID relief passed in 2020…When the federal government prints money to pay benefits to people helping them to sit on the sidelines and not re-enter the workforce, you’ve negatively impacted both parts of the inflation equation. You’ve created even more dollars and reduced the supply of goods available to buy.”
LAXALT: “To stop inflation, Adam will vote against the absurd levels of reckless government spending that Cortez Masto has rubber stamped. And Adam will fight to bolster American businesses by reducing taxes and burdensome regulations.”
WILL IT WORK ?
As far as spending, the American Rescue Plan that Democrats passed in March 2021 added to inflation. The estimates vary: Some left economists put it at 1-2%—out of an 8.3% total year-on-year increase—while some conservative economists have put it as high as 3%. The bill was too big and likely pumped too much money into the economy too soon after the trillions in stimulus passed under Trump.
In general, the Biden administration was willing to overshoot the fiscal stimulus to ensure a quicker recovery from the pandemic downturn. This was an effort to learn from the Obama administration’s failure coming out of the Great Recession, when insufficient stimulus led to a very slow recovery. The result is that by August 2022, employment exceeded pre-pandemic levels. “More than 8 million Americans who were jobless in March 2021 are now working,” the Washington Post reports, and “the economy last year posted its fastest growth since 1984 and ended the year more than 3 percent larger than before the pandemic.”
www.washingtonpost.com/us-policy/2022/10/09/inflation-economy-biden-covid/
However, despite a very strong labor market, wages still aren’t keeping up with inflation for many workers. That’s a big problem.
www.dallasfed.org/research/economics/2022/1004
The candidates here are right that the Inflation Reduction Act will likely have little effect on inflation, though its clean-energy and prescription drug provisions are major achievements. (It is not likely to increase inflation, as Budd suggested, and when asked, his campaign did not identify any examples of Democrats who have said it will.) The bipartisan Infrastructure Investment and Jobs Act, which plenty of Republicans voted for and which the Congressional Budget Office estimates will add $340 billion to the budget deficit, may have anti-inflationary effects if it can address supply chain issues* at our ports and elsewhere.
www.cbo.gov/system/files/2021-08/hr3684_infrastructure.pdf
The Federal Reserve has moved to raise interest rates five times this year, and the signs are that those moves have made a dent in the previously scorching housing market. (The Fed was also pumping money into the economy constantly over the last few years, including in the period when the American Rescue Plan was coming into effect.) But it’s not clear how much more the central bank can achieve here. What would the legislature do under Republican leadership?
www.washingtonpost.com/business/2022/10/27/mortgage-rates-7-percent/
www.politico.com/news/2022/01/10/fed-chief-powell-economy-challenge-526783
adam laxalt inflation tax cuts
Mike Kim
The solution the candidates unanimously offered was spending cuts, though they did not specify where. Johnson has suggested elsewhere that Medicare and Social Security should be eliminated as mandatory spending programs and turned into discretionary spending to be approved (and, if Republicans are in power, likely cut) on an annual basis. Never mind that we’re all paying into these programs out of each paycheck on the basis that they constitute social insurance. Prospective Speaker of the House Kevin McCarthy has said such cuts are not off the table, and he even floated that House Republicans will use debt-ceiling brinkmanship to force spending cuts in this and other areas. (What other areas?) Never mind that raising the debt ceiling does not authorize new spending—it’s about paying off existing commitments. Refusing to raise it would not impact American debt levels, though it could cause the U.S. to go into default and kick off a global recession.
www.washingtonpost.com/national-security/2022/08/03/ron-johnson-medicare-social-security/
www.washingtonpost.com/politics/2022/10/18/mccarthy-gop-medicare-social-security/
The other solution offered here is Laxalt’s “reducing taxes and burdensome regulations.” This likely references the wider Republican push to make key provisions of the 2017 Trump tax cuts permanent. Not only will they look to cut taxes on top earners and extend a 20% deduction for “pass-through entities,” but they’ll look to nix the modest corporate tax hikes in the original law that offset (a fraction of) its costs. Mind you, the CBO found the Trump tax cut would add $1.8 trillion to the national debt over a decade, part of a debt orgy under Trump that was well underway before the pandemic. This proposal to make the Trump cuts permanent would merely compound the original cost and do nothing good for inflation.
www.washingtonpost.com/us-policy/2022/10/17/republicans-tax-trump-biden/
www.washingtonpost.com/business/2021/01/14/trump-legacy-national-debt-increasee/
Also, if you’re interested, the federal budget deficit is now half what it was when Biden took office. Republicans could cut into this accomplishment by reversing the prescription drug pricing measures that Democrats passed in the Inflation Reduction Act. Those wouldn’t have much impact on the prices most consumers pay at the pharmacy—though seniors paying more than $2,000 a month out of pocket will see a difference—but the measures should significantly reduce the federal government’s expenditures on drugs.
www.nytimes.com/2022/10/21/us/politics/federal-budget-deficit.html
www.axios.com/2022/09/23/gop-drug-price-repeal-target
www.esquire.com/news-politics/a40783113/manchin-schumer-ira-drug-pricing/
You may be sensing by now that Republicans are not truly committed to reining in the debt—or, for that matter, truly taking on inflation. Larry Kudlow, formerly Trump’s chief economic adviser, once compared Kevin McCarthy’s Commitment to America plan to the economic agenda that just got Liz Truss run out of a job. Their rhetoric is, however, very good politics.
*Some of our problems with inflation are tied up in supply chain issues, which are in turn tied up in issues of corporate concentration. When beef prices were soaring in the first half of this year, part of the equation was people switching their consumption from restaurants to eating at home. But another part of it was a highly consolidated supply chain, where just four meatpackers dominate the market. “You have cattle ranchers going broke while consumers are paying all-time record prices for beef," Bill Bullard, head of the Ranchers-Cattlemen Action Legal Fund, told WBUR in February. The firms in between them were raking in record profits.
www.wbur.org/onpoint/2022/02/14/more-than-money-monopoly-and-meat-processing
www.statesman.com/story/news/politics/politifact/2022/07/05/fact-check-meat-packing-companies-making-record-profits/7793150001/
san francisco california july 05 gas prices are displayed at an exxon gas station on july 05, 2022 in san francisco, california analysts increased their estimates for exxon mobil's second quarter earnings after the oil company indicated that its refining earnings could surge over $5 billion compared to first quarter earnings photo by justin sullivangetty images
Oil and gas companies pulled down record profits while this was happening. Was it really just about demand?Justin Sullivan - Getty Images
It’s not always necessarily that firms are profiteering, though some certainly are using their market power to drive up prices knowing competition is limited. Maybe the bigger problem is that this consolidation makes our supply chains less resilient: the baby formula shortage was in large part a symptom of a heavily monopolized industry. When demand moves from services to goods or vice versa, highly specialized supply chains built around firms with a huge market share do not adapt well. There are consolidated markets in healthcare, car dealerships, and many other places where prices are high.
www.wbur.org/onpoint/2022/05/19/the-corporate-monopolies-behind-americas-baby-formula-crisis
Republican Sen. Chuck Grassley introduced a bill to try to address problems in the meatpacking industry, but few of his party compatriots are interested in monopoly issues. Certainly none of the candidates above are. It’s a difficult one to solve on a macroeconomic level, but one proposal is a one-time windfall profit tax on corporations making huge money this year while consumers struggle with the costs of their goods. In the short term, it would disincentivize, say, oil firms from passing so much cost on to consumers while in some cases doubling their third-quarter profits year over year. And one idea for the proceeds from the levy would be putting it towards addressing supply chain issues to make our markets more resilient.
www.grassley.senate.gov/news/news-releases/bipartisan-meat-packing-special-investigator-act-passes-senate-agriculture-committee
www.manchestereveningnews.co.uk/news/uk-news/shell-reports-more-double-profits-25365387
www.yahoo.com/lifestyle/republicans-claim-theyll-fix-inflation-110000093.html
Jack Holmes
Tue, November 1, 2022 at 4:00 AM
inflation republican senate candidates 2022 election
We Asked 8 GOP Candidates for Inflation PlansMike Kim
It’s perfectly reasonable for Republicans to batter Democrats on inflation. Gas prices have fallen way off their June highs, but the rising cost of living is still a problem for Americans from most walks of life, and Democrats are the party in power. That’s politics.
www.bloomberg.com/news/articles/2022-10-26/gas-prices-flat-or-lower-in-each-state-easing-pressure-on-biden#xj4y7vzkg
But now that Republicans have chosen inflation—and particularly gas prices—as their number-one issue for this political cycle, it follows that their candidates would have detailed plans to turn things around if they’re elected. That’s governing.
We asked the campaigns of eight Senate candidates in competitive races—J.D. Vance in Ohio; Mehmet Oz in Pennsylvania; Herschel Walker in Georgia; Blake Masters in Arizona; Ron Johnson in Wisconsin; Ted Budd in North Carolina; Adam Laxalt in Nevada; and Mike Lee in Utah—the following:
What is the candidate's plan to lower gas prices?
What is the candidate's plan to fight inflation?
Here’s what we heard back. The campaigns of Oz, Lee, Walker, and Masters did not respond, while the others all offered the eerily similar responses that you can find below. Usually, these solutions came in the form of pointing out horrible things the Biden administration has done. Not mentioned: global supply shocks tied to the pandemic shutdown, monopoly power and corporate concentration*, corporate profits, the war in Ukraine, OPEC, housing (the main driver of inflation through much of 2022), or the Federal Reserve.
www.chicagobooth.edu/review/how-covid-19-shocked-both-supply-demand
www.bloomberg.com/news/articles/2022-08-25/us-corporate-profits-soar-taking-margins-to-widest-since-1950
www.cato.org/blog/yes-russias-war-ukraine-did-raise-price-gasoline-0
www.politico.com/news/2022/03/18/housing-costs-inflation-00015808
MORE PIPELINES, MORE DRILLING PERMITS :
VANCE: “Global commodity prices are always going to shift here and there in ways that you can't control,” Vance told the Columbus Dispatch. His campaign forwarded those comments along to Esquire. “But if you look at things like the Keystone Pipeline, shutting down that on day one, if you look at the really low number of oil and gas permits the Biden administration has granted, I think that we've really shot ourselves in the foot when it comes to energy prices.”
In a debate, he added that Biden has “made it impossible to invest in Ohio’s oil and gas sector.”
BUDD: “We need to start increasing domestic energy exploration and production rather than reduce it,” said Budd spokeswoman Samantha Cotten. “High gas prices are also driving higher costs for everything else. Among Joe Biden’s first actions was canceling a major gas pipeline being built in the U.S. and he also slowed to the point of almost stopping new permits for domestic energy exploration. It’s not complicated.”
jd vance inflation keystone pipeline
Mike Kim
JOHNSON: “On President Biden’s first day in office he also fired the first shot in his war on fossil fuels by canceling the Keystone XL pipeline. That decision cost a Wisconsin construction company approximately 2,000 union jobs, and signaled the Biden administration’s policy of purposefully driving up the price of gasoline and other energy powered by fossil fuels. In other words, record high gasoline didn’t just happen, it is the direct and desired result of the radical left green energy policies that have been fully embraced by the Biden administration and its Democrat enablers in Congress…That’s why they and their allies are restricting the issuance of permits and throwing just about every roadblock imaginable in the way of increasing fossil fuel production.”
LAXALT: “The average price of gas in Nevada is well above $5 [Ed. Note: at the time of publication, it was $5.001], and this is due to Joe Biden and [Nevada Senator Catherine] Cortez Masto’s Green New Deal, anti-energy policies,” says Laxalt spokesman Brian Freimuth. “The Biden-Masto agenda has leased the fewest acres for drilling since WW2. When Adam is in the Senate, he’ll fight to restart oil and gas leases and revive American energy independence to bring prices back down.”
WILL IT WORK ?
The Keystone XL Pipeline is the holy grail of conservative politics, so it’s not a surprise it makes an appearance here. But even if Biden hadn’t canceled the project upon taking office in January 2021, it would not have been operational until 2023. If all had gone to plan, it would have carried Canadian tar sands oil—some of the dirtiest fossil fuel in the world, in case anyone cares—to refineries in Texas. In total, it would have transported up to 830,000 barrels a day, less than 1% of daily global consumption. Prices went from $70 a barrel in Fall 2021 to more than $100 for much of 2022, so it’s not clear how XL would have made the difference at the pump. (Saudi Arabia produced close to 11 million barrels a day last year.) As for Johnson’s jobs claim, the pipeline would have created 3,000-4,000 temporary construction jobs and 35 permanent gigs, though unemployment is not exactly our problem at the moment.
www.ucsusa.org/resources/what-are-tar-sands
www.cbsnews.com/news/could-the-keystone-pipeline-help-limit-rising-gas-prices-oil-cbs-news-explains/
www.politifact.com/factchecks/2022/jul/21/tim-michels/end-keystone-pipeline-did-cost-jobs-most-were-temp/
www.npr.org/2022/08/05/1116036160/the-unemployment-rate-fell-to-3-5-matching-its-lowest-level-in-the-last-50-years
As for the permits, that refers to leases to drill for oil and gas on federal lands. According to the American Petroleum Institute, about 24% of American oil and 11% of natural gas is drawn from federal lands and waters. Biden paused new permits on taking office, though he inherited thousands of already approved permits that oil and gas firms had yet to make use of. The API puts that number at around 9,000 right now, which they call “a small fraction” of the nearly 100,000 producing wells on federal lands. (The fraction is 9%.) Industry groups deny they are stockpiling unused permits, citing red tape and the lengthy process before wells bear fruit. The API says “it can take more than five years for some fields to go from discovery to production,” which does not suggest Biden’s permit pause less than two years ago is what has made the difference here. Also, a federal judge blocked his executive order and leases began again in 2021—at an approval rate that enraged environmental groups. That rate is down in 2022, but again, the oil doesn’t go to market the day after the lease is approved. Also, as we began, 76% of American oil isn’t produced on federal lands.
www.api.org/news-policy-and-issues/blog/2022/03/24/drilling-down-on-federal-leasing-facts#:~:text=In%20reality%2C%20federal%20natural%20gas,of%20total%20U.S.%20oil%20production.
www.americanprogress.org/article/oil-gas-companies-gain-stockpiling-americas-federal-land/
www.investopedia.com/ask/answers/061115/how-long-does-it-take-oil-and-gas-producer-go-drilling-production.asp
apnews.com/article/joe-biden-climate-change-environment-and-nature-business-9751c4909a8b1baba28f3bcff9d5fa6e
ron johnson inflation oil and gas permits
Mike Kim
In general, average oil production is up under Biden, though it was higher under Trump before the pandemic. Neither of them were turning some dial in the Oval Office to make it happen. If you’re looking for why oil production isn’t up more, though, one compelling explanation is that the money isn’t behind it. Oil is riding high at the moment, but for years the market has been less certain, and more to the point, the future is certainly not bright. You could, as Laxalt and Johnson do, blame Biden’s green energy agenda for this, though Johnson’s suggestion that Biden has a deliberate strategy of driving up gas prices is nuts. You could also give oil executives and Wall Street types credit for assessing that, while oil is still hugely important, the indications are that an investment now—or even a few years ago—in a well that will bear fruit a half-decade later is a risky capital outlay at a time when wind and solar are getting highly competitive and electric vehicles are gaining steam. (Instead of expanding operations, major oil and gas firms have often been returning money to investors through stock buybacks and dividends.) Maybe this is what Vance meant by making it impossible to invest, but is that really just Biden’s doing in less than two years?
www.wusa9.com/article/news/verify/presidents-dont-control-the-quantity-of-domestic-oil-being-produced-technically-highest-oil-production-during-president-bidensadministration/65-401bfdf8-e601-4d3f-8dee-f90f349c9cac
www.nytimes.com/2022/07/29/business/oil-company-buybacks.html
If Republicans were to pursue their plans—building pipelines and adding to the 26 million acres already leased for oil and gas drilling, 53% of which BLM says is currently fallow—it would not have much effect on supply for years. It would also add to the credibility of these proposals if candidates acknowledged that oil production was scaled back during the pandemic shutdown and has struggled to meet surging demand since the world reopened; that the war in Ukraine has disrupted global energy markets further; and that OPEC Plus routinely decides to cut production with seemingly little regard for the prices consumers are paying. Also, the aforementioned major firms have enjoyed near or record profits in 2022. If they’re raking in profits—not just revenues—was it justifiable to pass on all those costs to consumers during a global crisis?
www.doi.gov/sites/doi.gov/files/report-on-the-federal-oil-and-gas-leasing-program-doi-eo-14008.pdf
www.nytimes.com/2022/10/26/us/politics/us-saudi-arabia-oil.html
www.washingtonpost.com/world/2022/08/08/oil-companies-profits-inflation/
CUTTING SPENDING, CUTTING TAXES :
VANCE: “We have to live within our means as a country. The borrowing and spending added to an energy-constrained economy just drives inflation through the roof…if we stop the borrowing and spending, I think we go a long way to really solving the inflation crisis.”
BUDD: “Stop the reckless government spending such as the IRA and American Rescue Plan. Inflation is caused by too many dollars chasing too few goods. Even Democrat economic officials have said the IRA, which [North Carolina Senate candidate] Cheri Beasley has publicly supported, is likely to actually increase inflation rather than reduce inflation.”
ted budd inflation cut spending
Mike Kim
JOHNSON: “I’ve been warning about runaway inflation and possibly stagflation for a year now – ever since Democrats began discussing their 100% partisan $1.9 trillion ‘COVID relief’ bill. They passed this with no Republican votes at a time when we still had more than $1 trillion unspent from the previous $4 trillion COVID relief passed in 2020…When the federal government prints money to pay benefits to people helping them to sit on the sidelines and not re-enter the workforce, you’ve negatively impacted both parts of the inflation equation. You’ve created even more dollars and reduced the supply of goods available to buy.”
LAXALT: “To stop inflation, Adam will vote against the absurd levels of reckless government spending that Cortez Masto has rubber stamped. And Adam will fight to bolster American businesses by reducing taxes and burdensome regulations.”
WILL IT WORK ?
As far as spending, the American Rescue Plan that Democrats passed in March 2021 added to inflation. The estimates vary: Some left economists put it at 1-2%—out of an 8.3% total year-on-year increase—while some conservative economists have put it as high as 3%. The bill was too big and likely pumped too much money into the economy too soon after the trillions in stimulus passed under Trump.
In general, the Biden administration was willing to overshoot the fiscal stimulus to ensure a quicker recovery from the pandemic downturn. This was an effort to learn from the Obama administration’s failure coming out of the Great Recession, when insufficient stimulus led to a very slow recovery. The result is that by August 2022, employment exceeded pre-pandemic levels. “More than 8 million Americans who were jobless in March 2021 are now working,” the Washington Post reports, and “the economy last year posted its fastest growth since 1984 and ended the year more than 3 percent larger than before the pandemic.”
www.washingtonpost.com/us-policy/2022/10/09/inflation-economy-biden-covid/
However, despite a very strong labor market, wages still aren’t keeping up with inflation for many workers. That’s a big problem.
www.dallasfed.org/research/economics/2022/1004
The candidates here are right that the Inflation Reduction Act will likely have little effect on inflation, though its clean-energy and prescription drug provisions are major achievements. (It is not likely to increase inflation, as Budd suggested, and when asked, his campaign did not identify any examples of Democrats who have said it will.) The bipartisan Infrastructure Investment and Jobs Act, which plenty of Republicans voted for and which the Congressional Budget Office estimates will add $340 billion to the budget deficit, may have anti-inflationary effects if it can address supply chain issues* at our ports and elsewhere.
www.cbo.gov/system/files/2021-08/hr3684_infrastructure.pdf
The Federal Reserve has moved to raise interest rates five times this year, and the signs are that those moves have made a dent in the previously scorching housing market. (The Fed was also pumping money into the economy constantly over the last few years, including in the period when the American Rescue Plan was coming into effect.) But it’s not clear how much more the central bank can achieve here. What would the legislature do under Republican leadership?
www.washingtonpost.com/business/2022/10/27/mortgage-rates-7-percent/
www.politico.com/news/2022/01/10/fed-chief-powell-economy-challenge-526783
adam laxalt inflation tax cuts
Mike Kim
The solution the candidates unanimously offered was spending cuts, though they did not specify where. Johnson has suggested elsewhere that Medicare and Social Security should be eliminated as mandatory spending programs and turned into discretionary spending to be approved (and, if Republicans are in power, likely cut) on an annual basis. Never mind that we’re all paying into these programs out of each paycheck on the basis that they constitute social insurance. Prospective Speaker of the House Kevin McCarthy has said such cuts are not off the table, and he even floated that House Republicans will use debt-ceiling brinkmanship to force spending cuts in this and other areas. (What other areas?) Never mind that raising the debt ceiling does not authorize new spending—it’s about paying off existing commitments. Refusing to raise it would not impact American debt levels, though it could cause the U.S. to go into default and kick off a global recession.
www.washingtonpost.com/national-security/2022/08/03/ron-johnson-medicare-social-security/
www.washingtonpost.com/politics/2022/10/18/mccarthy-gop-medicare-social-security/
The other solution offered here is Laxalt’s “reducing taxes and burdensome regulations.” This likely references the wider Republican push to make key provisions of the 2017 Trump tax cuts permanent. Not only will they look to cut taxes on top earners and extend a 20% deduction for “pass-through entities,” but they’ll look to nix the modest corporate tax hikes in the original law that offset (a fraction of) its costs. Mind you, the CBO found the Trump tax cut would add $1.8 trillion to the national debt over a decade, part of a debt orgy under Trump that was well underway before the pandemic. This proposal to make the Trump cuts permanent would merely compound the original cost and do nothing good for inflation.
www.washingtonpost.com/us-policy/2022/10/17/republicans-tax-trump-biden/
www.washingtonpost.com/business/2021/01/14/trump-legacy-national-debt-increasee/
Also, if you’re interested, the federal budget deficit is now half what it was when Biden took office. Republicans could cut into this accomplishment by reversing the prescription drug pricing measures that Democrats passed in the Inflation Reduction Act. Those wouldn’t have much impact on the prices most consumers pay at the pharmacy—though seniors paying more than $2,000 a month out of pocket will see a difference—but the measures should significantly reduce the federal government’s expenditures on drugs.
www.nytimes.com/2022/10/21/us/politics/federal-budget-deficit.html
www.axios.com/2022/09/23/gop-drug-price-repeal-target
www.esquire.com/news-politics/a40783113/manchin-schumer-ira-drug-pricing/
You may be sensing by now that Republicans are not truly committed to reining in the debt—or, for that matter, truly taking on inflation. Larry Kudlow, formerly Trump’s chief economic adviser, once compared Kevin McCarthy’s Commitment to America plan to the economic agenda that just got Liz Truss run out of a job. Their rhetoric is, however, very good politics.
*Some of our problems with inflation are tied up in supply chain issues, which are in turn tied up in issues of corporate concentration. When beef prices were soaring in the first half of this year, part of the equation was people switching their consumption from restaurants to eating at home. But another part of it was a highly consolidated supply chain, where just four meatpackers dominate the market. “You have cattle ranchers going broke while consumers are paying all-time record prices for beef," Bill Bullard, head of the Ranchers-Cattlemen Action Legal Fund, told WBUR in February. The firms in between them were raking in record profits.
www.wbur.org/onpoint/2022/02/14/more-than-money-monopoly-and-meat-processing
www.statesman.com/story/news/politics/politifact/2022/07/05/fact-check-meat-packing-companies-making-record-profits/7793150001/
san francisco california july 05 gas prices are displayed at an exxon gas station on july 05, 2022 in san francisco, california analysts increased their estimates for exxon mobil's second quarter earnings after the oil company indicated that its refining earnings could surge over $5 billion compared to first quarter earnings photo by justin sullivangetty images
Oil and gas companies pulled down record profits while this was happening. Was it really just about demand?Justin Sullivan - Getty Images
It’s not always necessarily that firms are profiteering, though some certainly are using their market power to drive up prices knowing competition is limited. Maybe the bigger problem is that this consolidation makes our supply chains less resilient: the baby formula shortage was in large part a symptom of a heavily monopolized industry. When demand moves from services to goods or vice versa, highly specialized supply chains built around firms with a huge market share do not adapt well. There are consolidated markets in healthcare, car dealerships, and many other places where prices are high.
www.wbur.org/onpoint/2022/05/19/the-corporate-monopolies-behind-americas-baby-formula-crisis
Republican Sen. Chuck Grassley introduced a bill to try to address problems in the meatpacking industry, but few of his party compatriots are interested in monopoly issues. Certainly none of the candidates above are. It’s a difficult one to solve on a macroeconomic level, but one proposal is a one-time windfall profit tax on corporations making huge money this year while consumers struggle with the costs of their goods. In the short term, it would disincentivize, say, oil firms from passing so much cost on to consumers while in some cases doubling their third-quarter profits year over year. And one idea for the proceeds from the levy would be putting it towards addressing supply chain issues to make our markets more resilient.
www.grassley.senate.gov/news/news-releases/bipartisan-meat-packing-special-investigator-act-passes-senate-agriculture-committee
www.manchestereveningnews.co.uk/news/uk-news/shell-reports-more-double-profits-25365387