The State of the Union in June 2024 - Part I

I had an opportunity recently to spend a few hours with Chuck, a friend I hadn't seen in over a year. Chuck is independent-minded and tries to evaluate candidates based on their character, merits and proposals. He claims to be non-partisan but he also states because the Republican party has moved further to the right over the last eight years or so, from a federal election perspective, he's currently aligned with the more centrist/progressive party. I consider him open-minded, which means, he can honestly and objectively critique how well our current President has done over the last 3.5 years. I appreciate his trustworthiness and impartiality – something I strive towards, too. Part II will be published next week.

Me: Should President Biden run again in 2024?

Chuck: It's late in the game, but "No," when he ran in 2020, he declared that he only wanted to be a one-term president. It's disappointing that he's gone against his word in 2020. Is he receiving lousy advice from his inner circle? Is he too insulated by all the chatter about individuals from both parties saying he's too old to serve another four years? Why didn't the Democratic National Committee groom someone for the upcoming campaign three years ago?

Me: Is high inflation these last few years strictly on Biden?

Chuck: This is such a hot topic that over the last year or so, I've done some research on this topic. Two words to describe this issue are "it's complicated." Biden did have a program after COVID-19 where he gave people a lot of money to spur the economy, contributing to inflation. It was the largest amount of emergency spending in U.S. history. Within two years and six laws, more than $5 trillion was spent to break our country out of the coronavirus funk. It strengthened the economy and put vaccines into the arms of millions, but it also created a situation of extraordinary levels of fraud and abuse. According to the U.S. Inflation Calculator, the inflation rate was 7% in '21, 6.5% in '22, and 3.4% in '23 and '24.

It appears that only part of the inflation situation can be blamed on Biden, but it appears he's getting all the blame. About 15 years ago, President Biden said that after the Great Recession in 2008, he and President Obama made a mistake by not addressing the crisis strongly enough. In his estimation, the stimulus package in 2009 had to be more significant to make a significant impact, and he vowed never to make that mistake if he were President. That experience may have led him to overspend after COVID-19 ($2 trillion American Rescue Plan (March 11, 2021)) – to ensure enough stimulus to build a more robust economy. Perhaps his heart overwhelmed his mind to commit to significant government spending.

There were also supply chain issues that created a demand versus supply issue, raising prices domestically and internationally. It's been reported that when the supply chain issues were resolved, some companies kept their prices high to help their stock prices -- a term I've seen described as "Greedflation," companies taking advantage of inflationary trends to raise prices for the profit motive, is much more of a problem. Unfortunately, this was out of Biden's hands. People complained about inflation in the U.S. from a myopic perspective, many thinking we were the only country that suffered from inflation for the last few years. As we know, inflation hit many Western industrialized countries.

Me: I've read that credit card debt is at an all-time high. Is that bad for the economy?

Chuck: The reporting on credit card debt needs to be more accurate. Many people today prefer charging items such as gas, food, and utilities and paying the amount before the deadline, all while earning points for additional items. Many middle-class and younger affluent individuals have turned away from cash and used these credit cards solely. Those in these demographics generally pay on time, avoid interest on their debt, and are usually in a more robust financial situation. However, these charges are included in the overall credit card debt along with those who carry debt from month to month. When politicians rail against all this debt, they fail to mention this fundamental fact.

Digging deeper, according to the CFPB (Consumer Financial Protection Bureau), the Annual Percentage Rate (APR) was 12.9% in late 2013 and in 2023, at 22.8%, the highest amount since the Federal Reserve started gathering data. This means that for those who carry debt from month to month, the interest on this debt has dramatically increased in the last ten years. Those who carry debt from month to month must realize the debt they have accrued will be charged at a much higher rate than even then years ago. Indeed, part of the record debt could be attributed to the APR increase.

Sometimes, demographics get in the way of telling a good story but doesn't always tell the complete story. How has the increase in the U.S. population contributed to record levels? From 2013 until 2023 (ten years), the population increased by 6.45%. More people mean more credit card debt, although not a significant amount but noteworthy, especially to those who think today that the credit card debt is way too high.

Me: Did Biden make a mistake about Afghanistan?

Chuck: Interestingly, many media outlets complained about how poorly the rollout was planned to leave Afghanistan in 2021. Biden appeared to rush the withdrawal while trying to uphold one of his campaign promises. He'd love a mulligan on this one.

However, when this was publicized a few years ago, it was disingenuous to focus on the withdrawal without considering how we initially got involved. Weeks after 9/11, President Bush declared war on Afghanistan to destroy Al Qaeda (who took refuge there). Several other NATO countries provided financial and military support to root out Al Qaeda and Osama Bin Laden. At the time we declared war, who would have imagined us remaining there for 20 years until 2021 (even though we had assassinated the leader of Al Qaeda, Osama Bin Laden, in 2011)? Over those years, it didn't appear that neither Bush or Obama developed an effective exit plan even after Al Qaeda seemed to be defeated years before.

History will repeat itself if you're not careful (Why didn't we learn the lesson from the Russian invasion in the late 70s?). Did we think we could control the country and install democracy in a country with a history of fractured governments in some of the most incredibly rugged terrains in the world? I know the Bush administration was aggressively finding those responsible for 9/11. Still, regardless, before you invade, you need to have an exit plan in place: what will have to happen before you can say it's been a successful campaign and time to withdraw? It's easy to destroy nations and extremely hard to build them back up and install democratic governments. Both Democrats and Republicans are both to blame regarding Afghanistan. Also, the former one promised to get us out of Afghanistan (along with building a "great wall" on our southern border) but those promises were not kept.  

Me: If Biden loses, what would be his Achilles heel?

Chuck: Immigration, Inflation, and the Middle East. He should have focused earlier in his administration on the border. He should have realized that seeing hundreds cross the border on a daily basis on Fox News would not be a good look for the President. The immigration policy was being discussed in Congress earlier this year to prevent undocumented immigrants from entering our country, but it didn't go anywhere. The former one instructed Mike Johnson, the Speaker of the House, not to pass any immigration bills so that the former one would come to the rescue once he was elected in '24 so he could take credit for improved border security. It's nice to know that the former one ignores what's best for the country and puts his needs ahead of the security of the U.S.

Regarding the Middle East, it appears that President Biden can't win. If he solidly supports what Israel and Netanyahu are doing in Gaza, many young people and university students will protest his policies in the Middle East. Some of the casualties in the Gaza war involved Israel using weapons from the United States. So, of course, there are many angry Americans with how we're supporting a country that has killed a disproportionate number of civilians. If he's tough on Israel, many Republicans and Christians will rail against the lack of support for our most reliable ally in the Middle East. Besides, many Christians look upon Israel as the Holy Land. If he tries to find a middle ground, both opposing sides will not be happy with his policy. He's in a lose-lose situation for peace or a temporary cease-fire in that region. If there's ever permanent peace in the Middle East, it may be years from now, and Joe will not get the credit.

In terms of inflation, Biden owns this. However, I have outlined several factors above to provide a more comprehensive description of the inflation picture. Is it not the responsibility of the electorate to look honestly and objectively at all the factors that led to higher inflation? Some folks may pick Inflation and others may choose Undocumented Immigration as the key factors that may hurt President Biden this November 5.  

The State of the Union in June 2024 (Part II will continue next week)