There will be no Biden reset

By John Ruberry

After a summer of failures, including the resurgence of COVID-19, horrid job numbers, the crisis at the southern border, rampant urban crime, and our humiliating exit from Afghanistan, there was hope within the Biden White House, cheered on by the compliant media, that a reset was due with the new season.

But over this weekend, which isn’t over yet as of this writing, things got worse. In a flashback to the Obama years, the Pentagon chose Friday afternoon–a Friday news dump–to reveal not only that the August drone strike in Afghanistan didn’t slay any ISIS-K terrorists, but the bombing killed an aid worker and nine members of his family, including seven children. Also that afternoon France recalled its ambassador to the USA after the Biden administration, behind France’s back, announced a deal with Great Britain to sell nuclear submarines to Australia. But France already had a deal, now cancelled, with the Aussies. If you ever worked as a salesperson and saw a sleazy co-worker swipe a lucrative sale from you, then you know that feeling of betrayal.

Also on Friday, in a story that is largely being ignored by the national media except for Fox News, a Third World-style shanty town, with thousands of illegal immigrant inhabitants, was discovered on the Rio Grande in Del Rio, Texas.

There will be no reset for Joe Biden and his administration. That’s because, as I’ve written at DTG over these last few weeks, it is very likely that the president is suffering from cognitive decline. There are people in their seventies and eighties who still have nimble minds. Biden, who turns 79 later this year, is not one of them. Age-related cognitive decline is not reversible. And with crisis after crisis emerging, it’s becoming clear that no one is in charge at the White House, even though, as John Kass remarked, Biden’s chief of staff, Ron Klain, is openly referred to as “President Klain.”

I get it. Sometimes calamity after calamity happens. Lyndon B. Johnson suffered an entire year, 1968, like that. And LBJ of course decided not to run for a second full-term as president that year.

But some of Biden’s debacles were preventable, such as his abandoning Donald J. Trump’s remain-in-Mexico policy regarding migrants, which led to the crisis at the southern border. No one, outside of military contractors, wanted our military involvement in Afghanistan to indefinitely continue. But Biden promised our withdrawal from Afghanistan wouldn’t look like our departure from South Vietnam. Well, Biden was right on that vow–our exit from Afghanistan was worse than that.

The administration’s response to COVID-19, once seen as a strong point for Biden, is also a problem for him. Last week a poll revealed that for the first time a majority of Americans don’t approve of the way Biden is handling fighting the virus. 

So far Biden has gotten a pass for gasoline prices being 40-percent more than they were one year ago when that mean Tweeter with the orange hair was president. Escaping blame for Americans paying more at the pump can’t last forever. for Biden. As temperatures cool urban crime will decline but it will bounce back, as it always does, in the spring. That will give Biden and the Democrats another headache in 2022. Look for Republicans running for House and Senate seats to use crime fears as a central theme in their television commercials, as they did with great success last year. Despite denials the Democrats are the party of “Defund the Police.” Biden has gotten a pass for inflation for now. But his reckless policy of printing money will likely create even more inflation.

What else?

I’ve mentioned this quote before but it needs to be repeated.

Barack Obama reportedly once said of his vice president, “Don’t underestimate Joe’s ability to f**k things up.” And that was before Biden’s cognitive decline set in.

I don’t like quoting myself, but I really think my Tweet of mine from last month hit the nail on Biden’s head.

“If I just awakened from a 10-year long coma and I saw what a mess America finds itself in now I would come to one quick conclusion. Somehow Joe Biden became president.”

John Ruberry regularly blogs at Marathon Pundit.

No inflation? Not buying it

I affectionately call her The Kraken!

During the early part of 2020, when COVID restrictions were in full swing and everything fun had to arrive in an UberEats or Amazon delivery vehicle, I built a pirate ship. A big, frickin’ pirate ship. Like, adult sized, complete with cup holders for your adult beverages. Home Depot had a massive truck drop off all the lumber, and every weekend until the beginning of summer, there I was, building away on the ship. Luckily, as the summer and COVID dragged on, my kids had something to play on while the city shut down all the other playgrounds.

The lumber I purchased was fairly hefty: 4×4 posts, 5/4 decking board, 2×6 framing, and all of it is pressure treated. Recently I went to add a simple enclosure for my garden, and looked at the price for some 4x4s. And man, did they look expensive. Curious, I pulled up my receipts from the pirate ship project. And sure enough….4x4s had nearly doubled in price.

If 4×4 was a stock, it would have beat an awful lot of the market. I also looked at our Walmart receipts, and sure enough, food prices bumped up a bit too. Gas is more expensive as well.

So I’m super skeptical when I get told we have little to no inflation. In real prices, I don’t see it. Everything is more expensive, and a lot more than the 2% you would normally expect. Maybe that makes me dumber than an economist, but I’ll take my actual experience of buying things over some book knowledge that seems to have no place in reality. Given how high these prices really are, I’m worried that inflation is going to skyrocket once people start buying things again in large numbers. If ever there was a time to worry about inflation, now would be that time.

This post represents the views of the author and not those of the Department of Defense, Department of the Navy, or any other government agency.

High inflation will make Illinois’ pension crisis less severe

By John Ruberry

Will high inflation offer benefits? In Illinois and other states burdened by woefully underfunded pension plans, it just might.

Boss Michael Madigan, the man behind Illinois’ financial debacle, is finally gone. Hard work by the Illinois Policy Institute, some Republicans, local radio hosts, and yes, bloggers, made the Madigan name toxic. The tipping point against the longtime chairman of the Illinois Democratic Party and the speaker of the state House for all but two years since 1983, was a disappointing 2020 general election. He’s now enjoying a comfortable retirement.

How comfortable? Madigan, 78, contributed just $350,000 to his retirement, an amount he’ll collect as a state pensioner in just three years, according to the Illinois Policy Institute. Over the next 17 years, of course if he lives that long, the Chicagoan will collect $2.9 million from his pension. Not that Madigan is poor. Presumably he’s made a lot of money from his law firm, Madigan & Getzendanner, which specializes in property tax appeals. How much money? We’ll never know because Madigan has never released his income tax returns. 

In 1989, Governor James Thompson, a Republican, signed into law a bill that gave Illinois retirees a three-percent annual cost-of-living increase raise in their pensions. Which means after twenty years their pensions double. Madigan was the House speaker when the pension COLA bill passed through the General Assembly. 

Over thirty years later Illinois’ pension plans are among the worst-funded among the 50 states.

Short of default–pension benefits are protected by the state constitution–or a federal bailout, there is no way out for Illinois in regards to these obligations. It’s that bad.

But then there is inflation. Joe Biden’s stimulus package, most of which is not related to COVID-19, has many economists, including Lawrence Summers, Treasury secretary under Bill Clinton, worrying about higher inflation. A basic explanation of how high inflation occurs is too much cash chasing too few goods. And Biden’s stimulus is more than double that of Barack Obama’s stimulus of 2009.

Here’s what Forbes’ Elizabeth Bauer said two years ago about inflation and pensions:

If the United States were to hit a period of high inflation rates, sustained over a long period of time, these liabilities would shrink considerably — and I’m not even speaking, snarky photo aside [the article contains a photograph of a Zimbabwean $100 trillion bill], of hyperinflation. Based on my calculations (and yes, these are real calculations, using real data for this plan collected for another project, not merely back-of-the-envelope estimates, however unlikely the very even numbers make it appear), an inflation rate of 10%, and assumptions for interest rate/asset return rate and salary increases over time which reflect the same net-of-inflation rates as at present, would halve the pension liabilities of the Illinois Teachers’ Retirement System.

Crisis solved? Kinda sorta. Public pension debt in Illinois will be less of a financial burden if 1970s-type inflation returns. And of course it’s easy to chuckle about the over 100,000 retirees who last year were collecting over $100,000 annually in their pensions, unless you are a member of this fortunate caste.

But what about the retirees collecting half of that–after years of seeing large chunks of every paycheck deducted for retirement? They’ll lose too.

When I was in college an economics professor explained to me and my classmates that inflation is a zero-sum game; he used the example of a five-person poker game. When the first cards are dealt there is, let’s say, $500 placed in chips, $100 per-player. When the final hands are played there is still $500. Some leave the table richer, others poorer. 

High inflation–and hyper inflation–will reward some, which is why, for my largely self-funded 401(k) plan, I recently moved some of my funds into real estate. Let’s hope I made the right decision.

Among hypothetical inflationary losers will be Illinois pensioners, and presumably other public-penioners, unless their plans are tied to the annual rate of inflation. 

Of course don’t expect the public-sector union bosses to quietly accept their fate if inflation deals them, excuse me for not letting go of the poker example, a bad hand. Among the lessons learned from the COVID-19 lockown is that teachers unions are very powerful and they have the ears of Democratic politicians, despite what the science says about the virus and how it spreads among younger people.

John Ruberry regularly blogs at Marathon Pundit.