IN THIS ISSUE:
1. How Biden Would Handle Disagreements With VP Harris
2. What President Biden Should Do On Day One in Office
3. The Growing “Wage Gap” in America in One Worrisome Chart
4. Bad News For Liberals – America is Still a Conservative Country
Overview – Touch On Several Topics Today
I usually try to focus on one main topic in these pages each Tuesday, but there are some weeks where there is not one specific topic or theme to zero in on. This is one of those weeks. The media seems focused on President-elect Biden and his Cabinet and inner circle appointments, whether President Trump will leave the White House peaceably, coronavirus developments, the January 5 Senate runoff races in Georgia and which party will control the Senate.
Since there is no single topic to focus on today, I’ll touch on several bases as we go along. Sometimes these multi-issue letters are the most interesting, if you don’t mind jumping around a little. Let’s see what happens today.
I’ll start with some seemingly bizarre comments President-elect Biden made last week about what he might do if he and Vice President Harris run into any serious moral disagreements on policy. If you haven’t heard this, prepare to be shocked.
From there, I’ll move to what I think President-elect Biden should do as soon as he takes office. He has made many promises on what actions he will take on his first day in office, including reversing President Trump’s tax cuts and other liberal actions. But I have a different suggestion for what he ought to do first. Think trade policy.
Following that discussion, I’ll briefly revisit the income gap in America and the worsening wage inequality problem. I ran across the best chart I have seen which illustrates this issue, and I have reprinted it for you below.
And finally, I’ll close with some comments on why the November 3 election was such a huge disappointment for the Democrats. Not only was the recent election not a “Blue Wave” for the liberals, it was a “Red Wave” for down-ballot Republicans, even though President Trump lost at the top of the ticket.
That’s a lot to get to in one letter, so let’s jump right in.
Biden: How He Would Handle Disagreements With VP Harris
I am not making this up. Last Thursday in a CNN interview, reporter Jake Tapper asked President-elect Biden what he would do if he and Vice President-elect Kamala Harris have a serious moral disagreement over policy. Mr. Biden bizarrely responded (follow this closely):
“We [Biden & Harris] are simpatico on our philosophy of government and sympatico on how we want to approach these issues that we are facing, [But] "like I told Barack [Obama], if I reach something where there's a fundamental disagreement we have based on a moral principle, I'll develop some disease and say I have to resign."
Say what? You’ve got to be kidding me! If he and Kamala disagree on some major issue, Biden will pretend he has some major health issue and resign? Let me be clear: I have dismissed all the conspiracy theories that Biden will not make it through his first term. There is no compelling evidence of that.
I have even gone one step further to say that I genuinely hope Mr. Biden does serve-out his full term as president, assuming he is sworn in, because we do not want ultra-liberal Kamala Harris in the Oval Office. Yet Biden’s comment above uttered last Thursday on national TV (CNN) has me seriously scratching my head.
Some of Biden’s spokespersons said the comment was intended as a joke. And we all know Mr. Biden misspeaks on a fairly regular basis. But if this is just another Biden “gaffe,” it is more troubling than any he has made before it. Even if it was a joke, it’s not a joking matter.
Now of course, the mainstream media is giving Biden a pass on it, so maybe most Americans will forget about it in the weeks ahead. But politicians sometimes make statements which appear to be gaffes, but in reality that is what they truly believe. Let’s hope not in this case!
What President Biden Should Do On Day One in Office
Candidate and now President-elect Biden has made so many promises on actions he will take on his “first day in office,” I seriously wonder if he can even remember them all. In any event, I have a different suggestion for him to add to his first day list. He should immediately repeal most or all of President Trump’s trade tariffs.
Since taking office, President Trump has imposed numerous trade tariffs as part of his “America First” economic policy. The president believes tariffs are effective and help the economy. The fact is, they don’t. And often the countries affected by our trade sanctions respond with matching tariffs on American goods.
If you recall, President Trump announced 30-50% tariffs on imported washing machines and solar panels in January 2018. In March of 2018, he announced tariffs of 25% on steel and 10% on aluminum from most countries. Starting in 2018, Mr. Trump imposed tariffs on various imports from China and then escalated those and other tariffs on $50 billion worth of Chinese goods up to 25% in 2019. Those tariffs remain in place today.
Of course, China retaliated with similar tariffs on US goods which also remain in place today. And the Chinese halted or reduced purchases of US agricultural products, so much so the US government had to subsidize American farmers to keep them in business.
The bottom line on Trump’s trade war is it costs American households a lot of money each year. A 2019 study by the Federal Reserve Bank of New York estimates that the trade war costs the average American household almost $1,000 annually due to the increased cost of imported goods. The National Bureau of Economic Research estimates Trump’s trade war is reducing the economy (GDP) by a 1% drop in overall employment.
The benefits of repealing the trade tariffs would be good news for American consumers and US exporters in particular. It is my understanding that President Biden could repeal Trump’s trade tariffs on day one via Executive Order. We’ll see what he does in late January, assuming he becomes president on January 20.
The Growing “Wage Gap” in America in One Worrisome Chart
We continually hear journalists complain about the widening “wealth gap” in America. The dilemma is the top 1% of wage earners have seen their incomes skyrocket over the years as opposed to those in other wage quartiles.
Over the last 40 years, those in the top 1% have seen their incomes rise a whopping 160.3%, while those in the bottom 90% have seen their incomes rise only 26% over the same four decades, as you can see below. This is the best graphic I have seen on the wage gap – the disparity leaps off the page at you.
The Economic Policy Institute (EPI) reported the US wage income data last week, and it used wage statistics data compiled by the Social Security Administration. Including deferred compensation of nearly $344 billion, and distributions from deferred compensation plans totaling $3.1 billion, net compensation for all wage earners totaled nearly $8.8 trillion in 2019, up from about $8.4 trillion in 2018.
According to the EPI, the steep gain in the top 1% between 2007 and 2019 came at the expense of the bottom 90% of earners. In fact, the EPI says, “The one constant wage dynamic in every period since 1979 has been that the wages for the bottom 90% are continuously redistributed upwards.” Unfortunately, no one in Washington seems to have an answer for this problem.
Bad News For Liberals – America is Still a Conservative Country
Progressives were convinced the 2020 national elections were going to result in a “Blue Wave” for Democrats up and down the ticket. While Joe Biden appears to have received several million more votes than Trump in the race for the White House, Democrats were sadly disappointed with the results in most of the down-ballot races.
As it now stands, Republicans added at least 10 additional seats in the House, with a couple still undecided, while the Democrats lost at least 9 seats. The Republicans also did better than expected in other down-ballot elections across the country. In sum, besides Biden apparently winning the presidential election by a comfortable margin, it was a “Red Wave” down ballot.
The irony is Trump's coattails pulled hundreds of Republicans over the goal line – but they apparently didn't save him from a defeat at the hands of Joe Biden. Many conservatives were sorely disappointed that Trump didn’t win, and lots of GOP voters question the election results.
Yet the real carnage for Democrats was in the state houses. Hold on to your hats – here are the latest election results from the American Legislative Exchange Council. The GOP gained a total of 192 House and 40 Senate seats at the state level. No one predicted this.
As a result of these big and improbable wins, Republicans now have majority control in both House and Senate chambers in 31 of 50 states. Democrats have control in only 18 states. That's a map of the USA which looks awfully red throughout middle America, with only the Northeast and the West Coast colored blue.
The bottom line is: This election proved that America is still a conservative nation overall. Let’s hope we can keep it that way!
All the best,
Gary D. Halbert
© Halbert Wealth Management
© Halbert Wealth Management
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