PHILADELPHIA, PA – MAY 18: Joe, former US Vice President and Democratic presidential candidate … [+]
One year before the next presidential election, the Biden administration has taken an extraordinary step. From the outside, this appears to be a coincidence and rather worrying.
It was announced Monday that the administration would invoke the Defense Production Actcreated during the Korean War, according to a recent report from the British Guardian newspaper.
The same laws were invoked during the U.S. government-imposed lockdowns starting in 2023. This was then due to the need for more ventilators and other medical equipment that were both in high demand and in short supply. It was like wartime, but the enemy was a virus and the government shutdown caused a problem that required extreme measures.
The idea this time is completely different. This time there is no war. There is no lockdown or other crisis.
However, the administration wants to inject the government into the production cycle. It’s a small step, but probably in the wrong direction.
What is clear is that the administration has a problem with the rising cost of living and slowing economy. Together, these two things make life difficult for many Americans. And that’s something Biden will know won’t appeal to American voters who tend to vote with their wallets rather than their ideology.
Inflation for October stood at 3.2%, compared to 7.1% last November, according to data collected by TradingEconomics. This is progress, but it remains significantly above the Federal Reserve’s 2% target rate. And just because the inflation rate has fallen doesn’t mean prices have fallen. They are significantly higher than two years ago.
At the same time, the unemployment rate rose to 3.9% in October from 3.4% in January. always according to TradingEconomics which collects the data. At the same time, job creation has fallen below population growth, to less than 200,000 per month in October. If job creation remains this low, the unemployment rate will likely continue to rise.
So what’s up? Biden knows that a large part of the American population is suffering financially and that it will therefore be more difficult for him to win the election next November.
Former President Donald Trump already leads Biden by six percentage points, according to recent polls compiled by the FiveThirtyEight Website. The gap is larger if Kamala Harris was Trump’s enemy, leaving the latter 11 points ahead, the website shows.
Either gap will be difficult to close, but doing something to reduce inflation might be enough to make voters happier.
However, the question one could ask is simple: is it fair for the government to invoke a law usually reserved for times of war when such an event does not take place? Shouldn’t the use of such a law be reserved for truly extraordinary crises, such as a war or a pandemic?
In this case, the optics appear poor.
The worst part of the story is that too much government interference in the economy is a step toward Soviet-era central planning. And as anyone who has studied what happened to the USSR under Stalin knows, the results will almost certainly be bad if the same situation continues.