Biden SOTU Post-Mortem: Inflation, Inflation, Inflation, & Tax Hikes

Authored by Mike Shedlock via MishTalk.com,

President Biden delivered his State of the Union speech far better than I expected. The problem was content, not delivery.

Please consider the Full transcript of Biden’s 2023 State of the Union Address.

25 Paragraph Synopsis: Inflation, Inflation, Inflation and Tax Hikes 

1. Now we’re coming back because we came together to pass the Bipartisan Infrastructure Law, the largest investment in infrastructure since President Eisenhower’s Interstate Highway System. Already, we’ve funded over 20,000 projects, including at major airports from Boston to Atlanta to Portland. And we’re just getting started. I sincerely thank my Republican friends who voted for the law.

2. I promised to be the president for all Americans. We’ll fund your projects.

3. We’re making sure that every community has access to affordable, high-speed internet. 

4. Tonight, I’m also announcing new standards to require all construction materials used in federal infrastructure projects to be made in America. American-made lumber, glass, drywall, fiber optic cables.

5. For example, too many of you lay in bed at night staring at the ceiling, wondering what will happen if your spouse gets cancer, your child gets sick, or if something happens to you. Will you have the money to pay your medical bills? Will you have to sell the house? I get it. 

6. A record 16 million people are enrolled under the Affordable Care Act. Thanks to the law I signed last year, millions are saving $800 a year on their premiums. But the way that law was written, that benefit expires after 2025. Let’s finish the job, make those savings permanent, and expand coverage to those left off Medicaid.

7. We’re building 500,000 electric vehicle charging stations installed across the country by tens of thousands of IBEW workers.

8. And helping families save more than $1,000 a year with tax credits for the purchase of electric vehicles and energy-efficient appliances.

9. The climate crisis doesn’t care if your state is red or blue. It is an existential threat. We have an obligation to our children and grandchildren to confront it. I’m proud of how America is at last stepping up to the challenge.

10. I’m a capitalist. But just pay your fair share. And I think a lot of you at home agree with me that our present tax system is simply unfair.

11. You may have noticed that Big Oil just reported record profits. Last year, they made $200 billion in the midst of a global energy crisis. It’s outrageous. They invested too little of that profit to increase domestic production and keep gas prices down.

12. Some of my Republican friends want to take the economy hostage unless I agree to their economic plans. All of you at home should know what their plans are.

13. I’m so sick and tired of companies breaking the law by preventing workers from organizing. Pass the PRO Act because workers have a right to form a union. And let’s guarantee all workers a living wage.

14. Let’s also make sure working parents can afford to raise a family with sick days, paid family and medical leave, and affordable child care that will enable millions more people to go to work.

15. Let’s also restore the full Child Tax Credit, which gave tens of millions of parents some breathing room and cut child poverty in half, to the lowest level in history.

16. If you want America to have the best-educated workforce, let’s finish the job by providing access to pre-school for 3- and 4-year-olds.

17. Let’s give public school teachers a raise.

18. And we’re making progress by reducing student debt and increasing Pell Grants for working- and middle-class families.

19. Let’s finish the job, connect students to career opportunities starting in high school and provide two years of community college, some of the best career training in America, in addition to being a pathway to a four-year degree.

20. More than 1 million Americans have lost their lives to COVID. We still need to monitor dozens of variants and support new vaccines and treatments. So Congress needs to fund these efforts and keep America safe.

21. Give law enforcement the training they need, hold them to higher standards, and help them succeed in keeping everyone safe.

22. We also need more first responders and other professionals to address growing mental health and substance abuse challenges.

23. Let’s do more on mental health, especially for our children. When millions of young people are struggling with bullying, violence, trauma, we owe them greater access to mental health care at school.

24. No one should be homeless in this country, especially not those who served it.

25. Let’s end cancer as we know it and cure some cancers once and for all.

[ZH: Additionally, Goldman Sachs’ Jan Hatzius notes that there were no significant policy announcements that weren’t already previewed in Monday’s White House fact sheet, and no major changes to our policy outlook for the Administration this year.]

The main points in their opinion were as follows: 

1. Debt ceiling: Biden urged Congress to “commit here tonight that the full faith and credit of the US will never, ever be questioned.” House Speaker McCarthy delivered a speech on the debt limit Monday night in anticipation, stating that “cuts to Medicare and Social Security, they are off the table.” President Biden’s speech, and the Republican reaction to it in the chamber, took cuts to those programs even further out of consideration. That said, the President welcomed budget negotiations not directly linked to raising the debt limit. We continue to expect the final debt limit increase will include some type of policy concessions, but that any spending cuts would be a fraction of the size of cuts in the 2011 debt limit deal. 

2. Manufacturing and “Buy American” policies: As previewed by the White House’s fact sheet released Monday, Biden announced domestic content rules that already apply to some materials in the IRA will now go further, noting “new standards to require all construction materials used in federal infrastructure projects to be made in America…lumber, glass, drywall, fiber optic cables” and that American roads, bridges, and highways “will be made with American products.” He also emphasized the importance of rebuilding domestic supply chains by highlighting recent semiconductor investments related to the CHIPS Act, as well as the healthcare and energy provisions from the Inflation Reduction Act, while reiterating his promise to veto any attempts to repeal the IRA. We continue to expect that for the next two years, it is extremely unlikely that Congress will make substantive changes to the IRA or expand the availability of IRA subsidies to foreign-produced equipment or vehicles.

3. Healthcare, consumer reforms, taxes: Also as previewed, Biden called on Congress to make the IRA’s ACA subsidies permanent, highlighted the administration’s planned regulation and proposed legislation regarding “junk fees”, and reiterated his support for legislation to quadruple the 1% tax on corporate stock buybacks. He also called on Congress to “strengthen antitrust enforcement” to prevent big tech platforms from self-preferencing their products, but we view the odds of substantial antitrust legislation passing as low.

4. China: Biden’s China rhetoric appeared consistent with both past remarks and the competition strategy advanced by his Administration in recent months. He addressed the balloon incident but dedicated little time to the US-China relationship in the speech compared to many other issues. 

5. Energy: Biden briefly addressed energy, though with less emphasis than we might have expected given the political salience of gasoline prices over the past year. He reiterated, “Big Oil just reported record profits” and “invested too little of that profit to increase domestic production and keep gas prices down” before highlighting his proposal to quadruple the buybacks tax. 

6. Immigration: Biden urged Congress to pass comprehensive immigration reform. However, we continue to expect that while there is a small chance of narrow legislation raising visa caps for some specific skills, we think the odds lean against this materializing – and we view broad immigration reform as very unlikely anytime soon.

Biden Proposes More Inflation

If you are looking for more inflation, then look no further than President Biden’s wish list of ideas in his state of the union address.

Regarding point 11 and record oil profits: Record profits happened because the President is doing everything in his power to drive them out of business. Refining capacity is down. Why should they invest with a president so hostile? Oil prices are high because of Biden’s policies. 

Everything else is self explanatory:

Free education, more tax credits, living wages, teacher raises, mandatory sick days, affordable child care, climate change nonsense, charging stations built by unions, and Medicaid expansion

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