I watch the news at lunch time. This is usually the same time as the daily Whitehouse press briefing. Today, the speaker was Jared Bernstein, the Chair of the Council of Economic Advisers. What I saw was pure SPIN. To be fair, both Democratic and Republican department heads are propagandists. This spin is not only a Democratic Party problem.
Jared Bernstein’s Spin
The speech started benign enough, He started by stating the fact that the Consumer Price Index (CPI) had risen by 0.6% in August. This was the second monthly increase in a row that reflected annual inflation rate had increased to 3.7%. Knowing that this was not good news for the Biden administration, Bernstein started spinning.
He stated that the core inflation that excludes gas and food in August had only risen by 0.3%. He then added that if you consider only core inflation for the past three months, the annual rate of inflation is only 2.4% which is lower than it had been since March 2021 and close to pre-pandemic values.
He then added that wage growth was beating inflation which meant that workers are experiencing more buying power. He said with pride, “This is what Bidenomics… rising wages for low and middle income workers is at the heart of our middle-out, bottom-up growth agenda.”
He went on, “70% of the economy is consumer spending. When the middle class is doing well, the overall economy prospers.”
He boasts, “gas prices are down from last summer’s high by $1.20 per gallon which translates to an added $120 per month for a family of four.”
Bernstein went on, “Democrats are cutting energy costs by investing in clean energy and reducing our dependence on foreign countries who don’t share our values.”
When asked why the Biden administration declined an oil and gas lease in Alaska that could have reduced gasoline prices, Bernstein responded, “American oil production is at an all-time high at 13-million barrels per day. There are thousands of leases available to oil companies. Oil companies are making record profits. I don’t think that [oil denial in Alaska] is the problem.”
Unspinning the Spin
Inflation
When you extrapolate the 0.6% monthly rise in August into an annual rate it is 7.2%. 7.2% is not a good inflation rate, and this will likely force the Federal Reserve to raise interest rates once again.
Overall, average prices of all goods have increased 16.61% during Joe Biden’s presidency. This isn’t his fault, but that’s the real economic picture. Wages have increased a total of 13.6% during Joe Biden’s presidency, which means that buying power has declined by 3%. Another way to say this is that real wages have declined by 3%.
Oil & Gas Prices
Gasoline prices have increased by 60.8% in the Biden administration. Again, this isn’t all Biden administration driven. The average price of gas is $1.06 from its high last summer, and it has been climbing in the past three months. While oil exploration is picking up, regulations are adding to oil, and gas costs; and states are joining the anti-fossil fuel agenda adding more restrictions to oil exploration.
As far as domestic oil production being at an all-time-high at 13 million barrels per day, this is almost true. The daily high in oil production had been 12.4 million barrels per day until August when oil production increased to 12.9 million barrels per day. The pre-pandemic oil production was 13.1 million barrels per day. Since it takes about a month to get crude oil refined and to the pumps, this increase in production will not affect gasoline prices in the near term.
Clean Energy Prices
Bernstein stated that clean energy will reduce prices and reduce our dependence on foreign oil. This isn’t happening on both counts. If we are not dependent on foreign oil, prices would not be increasing as Russia is being boycotted; and OPEC countries continue to reduce production.
The best indicator of the price of clean energy is California. The cost of electricity in California was $0.106 per kWh in 1998. The price of electricity in California after growing their renewable energy generation to 35% of their electric grid in 2022 was $0.260 per kWh. Prices of renewable energy will increase exponentially as states increase these mandates. The reason is that electricity must be generated as it is needed. Wind and solar can only generate power when nature cooperates meaning the electricity infrastructure will become expensive and inefficient.
As far as reducing our reliance on foreign oil, this dream is several decades away when electric cars, airplanes, and other transportation can be electric. Economically speaking, forcing this electrification early is a problem.
What is Actually Happening in Our Economy?
I get it. A Democratic department head will spin economic news positively in a Democratic presidential administration. However, it is important that Americans get the straight story without the spin.
Our economy is not in great shape. Our government is on a spending spree driving national debt ever higher. This is happening at the same time the Federal Reserve is raising interest rates. This is a recipe for large deficits in our federal budget.
Our private economy is mostly a false creation from this massive borrowing. Prices have exceeded wages by so much that personal credit card debt is also climbing (up 34% in the Biden administration). At this same time, student loans payment relief is ending in the next month. These debt bubbles will have to burst into default; or their payments will suck spending power out of the economy.
So What?
This post is not an attempt to embarrass the Biden administration. It is also not an attempt to brag about the Trump administration. Both presidents have acted irresponsibly when it comes to our economy. Both presidents have stood at podiums and spun the status of our economy to benefit themselves and their political parties and deceive the American people.
I think that it is time that we stop watching Whitehouse press briefings; and start getting information directly from federal government departments who are separated from the political propaganda machines.
This spin is not limited to our economy. It happens in every facet of government operations and it is not helpful to those of us who want accurate information.
About the Author
Jeff Schuster is an accomplished businessman, engineer, and writer. Three of Jeff's books are attempts at helping people understand and solve political problems that are being made worse by political partisanship. His first book, Trial & Error, is a collection of 14 short stories. ReEngineering Education is a story of innovative education reform in the midst of political corruption. Engineering Unity is Jeff's most recent book published in August 2023 addressing political polarization on wedge issues that politicians use to divide us. You are welcome to join our private Facebook group called Reengineering Politics where we discuss politically polarizing topics in a civil manner.
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