Congress’s Joint Economic Committee (JEC) warned that the Biden administration’s economic policies have caused an unsustainable debt crisis and historic inflation.
This assessment was announced formally earlier this week by JEC Vice Chairman and Congressman for Arizona’s first district, David Schweikert, through the 160-page Republican Response to the Council of Economic Advisers’ 2024 Economic Report of the President.
Schweikert stated in a press release that 2024 serves as a “critical juncture” for the nation’s fiscal health, one that transcends political parties.
“The challenge before us is neither Republican nor Democrat — it is our moral obligation to ensure American families aren’t left behind. Congress holds the keys to determine which path we choose,” said Schweikert. “We can either behave like adults and choose the path of fiscal responsibility or continue our partisan gamesmanship that will put the American dream further out of reach for future generations.”
Schweikert said that the problems and proposed solutions put forth by the JEC report were inherently bipartisan, focusing on common-ground economy boosters like a healthier population and secure social safety net programs.
“Those of us on the Republican side, we built a report that offered actual moral, great economic solutions instead of the election year rhetoric.”
— Joint Economic Committee Republicans (@JECRepublicans) June 21, 2024
The JEC assessed that the Biden administration’s demand-side policies financed by increased borrowing have placed unsustainable pressure on constrained supply. As a result, JEC predicted that debt-to-GDP would grow from 99 percent to 116 percent by 2034, with interest costs rising. JEC noted that the labor force participation rates haven’t recovered to prepandemic levels; historic mortgage payments for new homebuyers, the highest in 30 years; constraints on budding American industries due to new restrictions on trade; and the cost of clean energy subsidies amounting to $1.2 trillion over 10 years, despite emissions from electricity production declining.
Further exacerbation of the economy comes from an aging population, declining fertility rates, and decreased prime-age labor force participation among men, per the JEC. The aging population is anticipated to drive Social Security spending to 6 percent of GDP by 2035, an increase from the present 5.2 percent and the 1970s at 3.1 percent, though no major expansions have occurred in over 20 years. The JEC reported that one in nine prime-age men remain out of the labor force; if just 25 percent of those entered, the economy would grow by $215 billion.
JEC disputed the Biden administration’s belief that increased taxes of wealthier individuals would amount to their desired revenue, a dwarfed amount of around 1.1 to 2 percent of GDP compared to future deficits. JEC stressed that only reduction in spending would improve fiscal consolidation.
Another demographic with an outsized impact on the economy, according to the JEC, is the rapid increase in obesity. Excess medical expenditures are anticipated to amount to over $9 trillion, as well as federal government spending of over $4 trillion within the next decade. Labor productivity and supply reductions impacted by obesity are projected to cost nearly $3 trillion and $12 trillion, respectively.
As for a positive solution to the nation’s current and looming fiscal woes, JEC indicated that artificial intelligence could grow the economy and improve government efficiency.
JEC also issued a lengthy assessment of the Congressional Budget Office’s revised budget and economic projections for the next decade. This included a $400 billion increase in projected FY2024 deficit, with about 80 percent of the increase coming from President Joe Biden’s student loan forgiveness, the Federal Deposit Insurance Corporation failing to recover payments from 2023 bank failures quickly, new legislation, and higher than expected Medicaid outlays.
CBO recently released its updated budget and economic projections for 2024-2034 from the original forecast in February 2024. Below are some key takeaways from the revised estimates 🧵
— Joint Economic Committee Republicans (@JECRepublicans) June 19, 2024
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Americans consistently voice their disapproval on the state of the economy in recent polls, largely because of the stratosphericcost of living. But apologists for the Biden administration point to the low unemployment rate of 3.9% in April as proof of the economy’s strength.
Yet this is a hollow talking point since the real unemployment rate is likely between 6.5 and 7.7%.
The unemployment rate is the percentage of people in the labor force who don’t have a job. That means the unemployment rate can change if either the number of people unemployed or the total size of the labor force changes.
The shocking reality is that somewhere between 4.7 million and 7 million people who aren’t working today are not included when calculating the unemployment rate. That artificially reduces the figure.
The reason these millions of Americans are uncounted began with the events of 2020.
When the government instituted draconian lockdowns across most of the economy in response to the COVID-19 outbreak, over 17 million people became unemployed, and another 8 million people immediately left the labor force.
As the economy slowly reopened across the country, millions of people began returning to work. That, of course, drove down the unemployment rate by reducing the number of unemployed people. Some of those who left the labor force also returned and eventually found jobs, further reducing the unemployment rate.
But there were also millions who left the labor market entirely and never returned. As such, they were no longer counted among the unemployed nor in the labor force. This pushed the unemployment rate down even more.
If those millions of people were to suddenly look for work again, it would greatly increase the labor force, but it would also increase the unemployment rate, at least until those job-seekers found work.
Official government data point to just how many workers are missing from the labor market today. Several metrics show a large gap between their current reading and their pre-pandemic trends. These include the employment level, the number of non-farm payrolls, the employment-to-population ratio and those not in the labor force.
The gap is between 4.7 million and 7 million people, all of whom are not working but are excluded from the unemployment rolls. If they were still counted as jobless members of the labor force, the unemployment rate would jump to between 6.5% and 7.7%.
The latter figure is almost twice the official unemployment rate. Even 6.5% would represent a significant spike.
Looking only at the unemployment rate can give a distorted view of the labor market. If unemployed people are looking for work and then get jobs, that causes the unemployment rate to fall. But, if those same people give up looking for work and leave the labor force, it has precisely the same effect on this metric.
Using additional data provides a better gauge of the labor market’s health and workers’ jobs satisfaction. Real, or inflation-adjusted, earnings are a good example—and they have plummeted.
While the average American worker’s weekly paycheck has increased $147 from January 2021 through April 2024, those earnings buy $47 less because prices have risen so much faster than incomes.
This has caused many Americans to work extra hours or pick up a second job. Among renters, more than one-fifth of them have taken on another job in order to pay their rent on time in the last few months.
That’s noteworthy because whenever someone is hired, whether it’s that person’s first or fourth job, it’s still counted as an additional payroll in the government’s monthly job statistics. With millions of Americans picking up additional work to try and make ends meet for their families, the number of jobs has risen much faster than the number of people employed.
Simply touting a low unemployment rate provides a view of the labor market that is at best incomplete and at worst deceptive. A comprehensive view of economic conditions for the working class shows why they are so unhappy: inflation has made it impossible for them to get ahead, no matter how many jobs they work.
E.J. Antoni is a contributor to the Daily Caller News Foundation, public finance economist and the Richard F. Aster Fellow at The Heritage Foundation, and a senior fellow at the Committee to Unleash Prosperity.
Home builders are warning that Gov. Katie Hobbs’ moratorium on home building will hurt the state’s economy severely.
The Home Builders Association of Central Arizona (HBACA) cited a recent study by Elliott Pollack, a Scottsdale-based real estate and economic consulting firm.
“From an economic perspective, the sudden and drastic measures announcing no new certifications of assured water supply from groundwater created uncertainty and risk, an effective deterrent to potential investors in our state’s economy,” read the study. “The prevailing sentiment that Arizona is out of water is now a significant hurdle that requires educating all future potential investment in our State.”
The study projected that the governor’s moratorium on new builds, imposed last June by ceasing certifications of assured water supply, could cost the Phoenix area over 26,000 jobs over the next decade. That, along with a projection that the moratorium would exacerbate the state’s affordable housing crisis.
Hobbs issued the moratorium in response to an Arizona Department of Water Resources (ADWR) report projecting a 100-year deficit of four percent in groundwater for the greater Phoenix area.
I unveiled the latest study of groundwater conditions across the Phoenix metropolitan area. Families and businesses from around the world come to Arizona in part because we are serious about water management, and that we are the leader in safeguarding groundwater supplies. ⬇️1/4
— Governor Katie Hobbs (@GovernorHobbs) June 1, 2023
Assured water supply requires demonstration that developers have a plan to use groundwater in compliance with water management rules set by the ADWR and facilitated by the Central Arizona Groundwater Replenishment District (CAGRD).
After ADWR allowed CAGRD membership to meet the renewable water management obligations in 1995, an estimated 460,000 homes were built, bringing in over 1.2 million residents. CAGRD’s existence ensured that water providers and landowners wouldn’t be on the hook for assuring the 100-year renewable water supply up front.
After the ADWR rule change concerning CAGRD, Elliott Pollack reported that the state brought in $50.4 billion in wages and $135.7 billion in economic impact. CAGRD region residents also spent over $180 billion in the local economy, and contributed over $35 billion in tax revenues.
According to a long-term forecast by the Maricopa Association of Governments (MAG), one out of seven newly built homes would be in Buckeye by 2030, with an estimated 14 percent of new builds cropping up in the city through 2060. That’s up to 3,700 new builds annually on average. However, Elliott Pollack said that this long-term forecast wouldn’t come to fruition under Hobbs’ moratorium — meaning, the expectation of the economy-boosting annual influx of around 10,000 new residents wouldn’t occur.
The study further projected the moratorium could cause mass out-of-state migration by escalating home prices in formerly affordable housing regions, with the supply of homes under $400,000 dwindling or ceasing to exist altogether. The median home price in Arizona sits at around $434,000.
Mortgage rates would demand a minimal income of about $100,000 to afford a $400,000 home. Census data estimated that around 40 percent of the greater Phoenix area’s population made $100,000 or more as of 2022, and further estimated median household income to be about $72,000.
That means about 60 percent of the area wouldn’t be able to afford a home in the area.
The study also found that most out-of-state migration from Arizona was to cities with more affordable homes. Out of nearly 30 cities analyzed, 25 had median home prices more affordable than Arizona’s.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
Friday’s jobs report is not the home run that Democrats and the mainstream media claim. In their rush to champion topline job creation, they overlook how the jobs report is actually made up of two surveys. And the other doesn’t look so good, though it’s far more reflective of the economic reality facing ordinary Americans and small businesses.
The Bureau of Labor Statistics surveys business establishments and households each month to generate its report on labor market conditions. The establishment survey of payrolls produces the monthly job creation number the media is quick to champion. Yet even the BLS admits the household survey is “more expansive” because it also measures self-employed workers and those employed privately in households. This survey produces the unemployment rate.
For years, these surveys have tracked each other in terms of employment growth, as you’d expect. However, beginning in mid-2022, they began to diverge, with the payroll survey showing far more job creation than the household survey. Over the last year, the payroll survey finds 2.9 million jobs have been created, while the household survey reveals only 1.1 million new jobs.
In stark contrast to the 353,000 jobs created in the payroll survey, the household survey shows employment actually declined by 31,000 last month. Full-time jobs declined by 63,000. That’s a far cry from today’s headlines about a booming economy.
These household survey numbers are in line with other anecdotal and empirical data. On Thursday, the job placement firm Challenger, Gray and Christmas reported a historic 82,300 layoffs in January. This week, UPS announced 12,000 layoffs. Major companies such as Zerox, Spotify, and Hasbro have recently laid off at least 15% of their workforce. There’s also a jobs bloodbath currently occurring in the media sector.
On Wednesday, ADP reported that only 107,000 private-sector jobs were created in January.
There are other technical problems with the jobs report. Seasonal adjustments and annual revisions to population estimates have made January jobs reports notoriously untrustworthy. I can’t understand why we need opaque “seasonal adjustments” to the job numbers at all. Americans are smart enough to understand that job creation will be higher in some months and lower in others for seasonal reasons. We don’t need green eyeshades smoothing them for us.
Bipartisan tax cut legislation passed this week in the House of Representatives can turbocharge job creation in both surveys in the months ahead. The legislation, brokered by House Ways and Means Chairman Jason Smith (R-MO), extends key tax cuts passed as part of the Tax Cuts and Jobs Act in 2017, making it easier for small businesses to invest, expand, and hire.
This legislation is overwhelmingly supported by Main Street, with small businesses calling the immediate expensing provision “a game-changer.” The Senate should quickly pass this legislation and send it to President Biden’s desk to be signed into law.
In the meantime, let’s see if the payroll and household surveys continue to diverge in the jobs reports ahead. If they do, it will be more confirmation that the economy is not out of the woods yet.
Alfredo Ortiz is a contributor to The Daily Caller News Foundation, president and CEO of Job Creators Network, author of “The Real Race Revolutionaries,” and co-host of the Main Street Matters podcast.
For the past thirty years or so the left has invented a narrative that there are two Americas. A group of very super-rich people (the one percenters) who have prospered over the past several decades, and everyone else who has gotten poorer. It’s a fairy tale narrative because almost all Americans have seen financial progress. The median household income adjusted for inflation rose by more than 40% since 1984.
Prosperity isn’t an “us versus them” zero-sum game. A rising tide really does lift all boats.
But there really are Two Americas today. First, there are the cultural and over-educated snobs – the kind of people who religiously read the New York Times, drive EVs, wear Harvard or Yale sweaters, and have never even heard of NASCAR or eaten at Popeyes or ridden a John Deere tractor.
And then there is normal main street America. The snobs thumb their collective noses at the unrefined working-class Americans. The elites believe they are intellectually, culturally, and morally superior to the working class and rural America. You won’t see too many elites at a Trump rally with 30,000 people.
A group I helped found, the Committee to Unleash Prosperity, just published a study entitled “Them Vs. U.S.” examining how America’s cultural elites (defined as at least one postgraduate degree, $150,000+ annual income, high-density urban residence, and attended an Ivy League school) are hopelessly out of touch with ordinary Americans. Pollster Scott Rasmussen did the research.
Here are some of the key jaw-dropping revelations from the survey:
Financial Well-being: Nearly three-quarters of the elites surveyed, believe they are better off now financially than they were when Joe Biden entered the White House. Less than 20% of ordinary Americans feel the same way.
Individual Freedom: Elites are three times more likely than all Americans to say there is too much individual freedom in the country. Astonishingly, almost half of the elites and almost six-of-ten ivy leaguers say there is too much freedom.
Climate Change: An astonishing 72% of the Elites – including 81% of the Elites who graduated from the top universities – favor banning gas cars. And majorities of elites would ban gas stoves, non-essential air travel, SUVs, and private air conditioning. That means no air travel with the kids to Disney World.
Education: Most elites think that teachers unions and school administrators should control the agenda of schools. Most mainstream Americans think that parents should make these decisions.
Oh, and about three-quarters of these cultural elites are Biden supporters. Surprised?
The Grand Canyon-sized divide between the elites in America and ordinary Americans is so profound that it is as if they live in two different countries. Silicon Valley, Manhattan, and Washington, D.C. have become bubbles that have lost contact with everyday Americans. This explains why the political class – which is a big part of the elite group – is confused by poll numbers showing that voters are feeling financially stressed out. The elites are doing fine, so they believe that everyone is prospering. I suspect that most don’t want radical change in the public schools because their kids attend blue-chip private schools. They are fine with abolishing SUVs because in big cities Americans generally don’t drive those cars – if they drive cars at all.
Crime, illegal immigration, inflation, fentanyl, and factory closings aren’t keeping the elite up at night because in their cocoons they don’t encounter these problems on a daily basis the way so many Americans do today. Not too many main street Americans are losing sleep about climate change or LGBTQ issues.
The elites in America tend to work in the “talking professions” – university professors, journalists, lawyers, actors, and lobbyists. They keep talking and normal Americans are more than ever not listening to them.
Stephen Moore is a contributor to The Daily Caller News Foundation, co-founder of the Committee to Unleash Prosperity, and chief economist with FreedomWorks.
