Washington Correspondent Neil McCabe Answers the Question of the Day, What Is Infrastructure?

Washington Correspondent Neil McCabe Answers the Question of the Day, What Is Infrastructure?

 

Live from Music Row Wednesday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – guest host Ben Cunningham welcomed Tennessee Star National Correspondent Neil McCabe to the newsmakers line to weigh in on the infrastructure spending, budget reconciliation, and the filibuster.

Cunningham: Neil McCabe, who is the Washington correspondent for Star Media and probably the most connected person in Washington, D.C., is on the line with us. Neil, good morning.

McCabe: Hey. Fantastic to be with you. I hope you had a good, long weekend.

Cunningham: We did. We did. Al Gore was in town, so it was cold. (McCabe laughs) So, unfortunately, we had a cold weekend, but I actually got in the water. I stayed in about 30 seconds, and then I got out. All right, Neil, we’re going to ask you the question of the day here. What is infrastructure? (Laughter)

McCabe: What isn’t infrastructure. (Laughter)

Henry: That’s the answer.

Cunningham: What can you tell us about the huge package? I mean, he announced this week the package where he throws everything into this thing but the kitchen sink. How is this thing going to fare? Are Republicans going to stand up at all, or are they just going to pass this thing via reconciliation and it’s going to be over quickly?

McCabe: There are a number of different Republican senators that have made their way to the White House to try to cut deals, and all of them are sort of the usual suspects that you would expect, like Mitt Romney.

But also, you know, John Cornyn, I think the person to really watch is Shelley Moore Capito from West Virginia. She is a full-on Trump hater. This, of course, was after the election, and she sort of played nice with Trump during his presidency. But once the results were sort of put in stone, she has come out as a full-on Trump hater.

She’s also someone who uses Paul Ryan’s fundraiser. And I wrote about this for The Tennessee Star. She is completely linked in to this GOP resistance that’s being run by Paul Ryan. And this crowd is trying to push for an infrastructure bill. And who knows what’s even in it. Republicans are saying 900 billion. And that’s, like, their compromise.

Cunningham: Yeah, thanks a lot.

McCabe: But what’s even in it, right. The only thing we know that’s not in it is a wall on the Mexican border, which was, frankly, even throughout the campaign, that’s like, the biggest applause line Trump ever had.

And so what they’re going to do is the Biden White House needs to get this thing done. And they’ve told the Republicans that they have a week to sort of get their act together. And if they want to participate in this thing, the translation is the Biden and Democrats say we’re going to pass this.

And if you want your pork projects, if you want your swimming pools, your bridges, and all this stuff for your districts and your states. If you want all your goodies and Christmas presents put into this bill, you have to get on board now.

And they think they can pass it. They might be able to do a reconciliation, but they might not. The Senate is not lock solid. It’s a 50-50 Senate. And there are Democrats who are in trouble.

Cunningham: Has Manchin come out one way or the other on the whole budget?

McCabe: Manchin is a stoic vote for the Democrats. But what he won’t do is he will not go along with the filibuster and he may not go along with reconciliation. Now they may do reconciliation with the permission of the Parliamentarian. This reconciliation rule basically makes the budget exempt from a filibuster.

And the idea is you can’t to stop the government from being shut down by a filibuster. And so you’re only supposed to have one budget a year hence, you can use reconciliation one time. And you can only use reconciliation when it deals with taxes or something connected to the budget.

This is why sometimes a tax bill can go through with reconciliation. But we saw in 2017, you can’t do a lot. It has to be kind of revenue-neutral. And so Manchin may or may not go along with this. My feeling is that Manchin will vote with the Democrats on their bills like this one.

He will not try to disrupt the rules of the Senate. You’re looking at in Arizona, you have Sinema and Mark Kelly, who may be no votes. Obviously, Hassan in New Hampshire is looking at Chris Sununu.

And you have this specter of inflation, which was like something people were whispering about. They were whispering about it six months ago, three months ago, two months ago.

Cunningham: Now it’s real.

McCabe: Now people are saying, holy mackerel, we are going to blow up this economy with inflation. And the idea that Biden just announced another six trillion dollar bill. And people are like, whoa, guy, what are you doing?

Carmichael: Neil, let me ask you a quick question. Didn’t the COVID bill the Democrats passed, didn’t they pass that with reconciliation?

McCabe: I’m not sure if they use reconciliation.

Carmichael: Well they had to because no Republicans voted for it.

McCabe: So if they did, that was their one-off. The Parliamentarian rules that you can use reconciliation twice, then basically it’s game over. Then the filibuster is over. But the specter of inflation is becoming very, very real. And for the first time, the Republicans are getting political traction against the spending, not because of the debt, but because of this inflation.

Carmichael: Neil, let me ask a question. I’m going to make a statement, and you can correct me. I was under the impression that reconciliation could be used for taxes and spending.

But if you are going to pass another bill, for example, the ProAct or the Senate version of the HR1 that requires 60 votes, but the taxes and spending did not require 60 votes that you can pass that with a majority. Am I wrong about taxes and spending?

McCabe: No, you’re absolutely right. The reason why you have this reconciliation allows for one privileged motion a year in the Senate that is not subject to filibuster. But that’s because of the need to get the budget done.

You can’t change the voting age. You can’t regulate guns or de-regulate. You can’t do gun legislation. You can’t make Puerto Rico estate using reconciliation. If it’s connected to the budget, you can use reconciliation.

But even then, there’s not a lot you can do because you have to be relatively budget neutral or revenue-neutral, which is why the 2017 tax bill was passed with reconciliation. But it couldn’t go to the far extremes, which is why they had the House bill repealing the estate tax, and Republicans put the state or death tax back in. Specifically, Mike Rounds from South Dakota, personally put the estate tax back in.

But the excuse was that we needed to push revenue back in so we can get this bill passed. Biden’s in trouble. Let me just say. And I’ve said it over and again. Biden is in trouble and he’s losing control of the Senate, but he’s also losing control of the House.

And whatever he doesn’t get done by July 4 will not get done. We’ve already crossed Memorial Day. They know that they have between now and July 4 to get something done.

Listen to the full third hour here:

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Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.

 

 

 

 

 

 

 

 

Finance Expert and Fox News Contributor Liz Peek Weighs in on Reckless Federal Spending and Impending Inflation

Finance Expert and Fox News Contributor Liz Peek Weighs in on Reckless Federal Spending and Impending Inflation

 

Live from Music Row Thursday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed by Fox Business contributor and Wall Street expert Liz Peek on the newsmakers line to weigh in on Joe Biden’s Joint Session speech, ridiculous federal spending, and the prospects of inflation on the horizon.

Leahy: We are joined now on our newsmaker line by a great finance expert and Fox News contributor Liz Peek. Good morning, Liz.

Peek: Good morning. Happy to join you.

Leahy: Liz, did you watch President Biden’s speech last night and what does that portend for the economy?

Peek: Well, look, I mean, the speech was nothing. It was just a lot of platitudes that sort of reiterated talking points that he’s really been putting out there since the campaign. Obviously, what’s new is that these grandiose plans are taking shape and the way the bills are actually showing up in Congress and people expected to take them seriously. It is very disheartening to me that trillions of dollars now, trillions of dollars are being spent purposelessly.

There is no need for all this spending because what we know is that the economy was on a very steep ramp up even as Joe Biden took office. Personal income rose 10 percent in this country in January. That is remarkable. And yes, it was helped by the $400 checks that were approved in the December stimulus bill. But honestly, if you look back at job creation and where we are in employment and so forth, we didn’t need the $1.9 trillion rescue plan.

We sure don’t need another $4 trillion to be spent as Joe Biden thinks we should. I think it’s dangerous. We’re already seeing asset inflation, all kinds of, whether it’s stocks or cryptocurrency seas or whatever. All commodities are close to all-time highs and going up very rapidly. And the Fed is sitting there still pumping $130 billion a month into the economy into the money supply.

And there was a very good piece, I’ll shut up in a minute, in the last few days in The Wall Street Journal about the difference between now and back in 2008-9 when people also were concerned about inflation and it never materialized. And the reason is all that money that was pumped in then went into shoring up banks. It basically didn’t get into circulation because the banks needed to restore the reserves. Now, the opposite is true.

All this money is out there sloshing around. We know there are more than $2 trillion in excess savings. Most Americans I know this is hard to imagine, but the truth is, numerically, most Americans were not impacted by COVID. A Pew study or something or survey showed that I think two-thirds basically didn’t have a single person in their household whose income was reduced or whose job was lost by COVID.

The Democrats are using COVID still, even as it goes away as an excuse for these grandiose spending plans that basically just reward who? Big labor, teachers’ unions, and in particular minority groups that helped Joe Biden get elected. And I got to tell you, I think it’s alarming and very disheartening that the media is to sort of championing all this and not knowing any better. It’s really bad.

Leahy: Liz, it seems to me that we really haven’t had inflationary concerns since Ronald Reagan became President.

Peek: That’s correct. And again, there are good reasons for that. The reason now that there’s concern about it again. Again, you have to remember the amount of fiscal money that, in other words, government spending that is now being pushed down the pipe, if you will, is unprecedented since World War II. Do you think our country is in worse shape than it’s been in any time since World War II? No, it’s not. Consumer debt is down.

Consumers are actually fairly well off. And I understand yes, there are 10,000,000 people who need jobs but unfortunately, Congress, in its wisdom, supplied sufficient incremental unemployment insurance money, $300 a week, that now something like 80 percent of the people who lost their low-income jobs during this last several months are making more staying home. So they’re rational people.

They’re not going to go back to work at a minimum wage job if they don’t have to. And right now they don’t have to. And the Democrats extended that unemployment through September and they want to extend it even further. But anyway, yes, (Chuckles) words fail me because it’s all such a lie. This entire Joe Biden administration is founded on a lie. And unfortunately, the lie that we’re in a crisis, that’s the word he keeps using it simply isn’t true.

Leahy: Yeah. And it seems to me what’s going on in the Labor markets, particularly in restaurants now is a great example of the law of unintended consequences from bad legislation passed by Congress.

Peek: Exactly. That’s exactly right. You can’t hire people. I mean, Joe Biden, I don’t think, has ever had a private-sector job in his life. And I think many people in Congress are in the same position. I actually spent last weekend with some Congressmen Republicans and all of them had private sector experience. They had either operated businesses or ranches or whatever, but they kind of knew about supply and demand and incomes, et cetera.

I don’t think most people in Congress do. They don’t get it that if you reward people for not working, guess what? They won’t work. And right now we have 32 percent of the working-age population unemployed. Not because there are jobs out there. That’s the other thing. There is a survey called the Jolt Survey, which is the Job Opening and Labor Turnover Survey, which shows about seven million jobs available and that’s not far off from the number of people looking for jobs.

(Commercial break)

Leahy: You are always clear, concise, and on point. Liz here’s a story from The Financial Times published Wednesday or Tuesday rather. Over the next several months, investors should expect to witness an adjustment in consumer prices in the U.S., which will feel a lot like a lasting shift in inflation. The March U.S. Consumer Price Index report confirms the first step of this expected adjustment with core inflation up zero point three percent month on month. Readings for April and May could be similar. Headline, Inflation is likely to accelerate up to 3.5 percent per year on year by May, the fastest pace in a decade. Liz, is inflation coming and what should consumers do about it?

Peek: Well, actually, the economist group I follow most intently, ISI Evercore number one group on the Street. And I think they’re almost always right. They say inflation is here, it’s not coming. And it’s shown up in all kinds of ways. Oil prices are up, gasoline prices are up at the pump, home prices, consumer price index, the PPI, the number that you all were just talking about, it’s here. What should consumers do about it?

Obviously, if you’re on a fixed income, that is the group of people who are most impacted by inflation. And what can you do? You can invest in equities as opposed to debt. In other words, rely on dividends. And companies that have the pricing power to pass along inflation in their pricing will presumably be able to continue to increase earnings and pass along those increased earnings in the way of rising dividends.

The people who get stuck right now, if you put all your savings and you’re retired and you’re living on a fixed income again, those are the people who get hurt. And this hasn’t happened in decades. And it may not happen now. But the Feds argument is, yes, we’re going to have a few months here where, I love the word adjustment, higher prices is a better way of putting it, but it will be transitory.

It’ll be temporary and a year from now that we won’t see such pressure. I don’t really know why that is such an article of faith. I think what we’ll have to look for and watch for and your listeners should be on the alert for is what happens with wages. In the 70s the cycle that got us into trouble with too much growth in the money supply. And now that’s up to 27.7 percent year over year. So it’s gigantic.

Pushing prices of goods and services higher and then pushing wage demands higher. The thing that may save us, sadly, is again, that 32 percent of people not in the workforce, labor markets may be slack enough that there is not a great push for increased wages. But we’re already seeing interestingly, some companies offering bonuses and higher pay to bring people back because of this unemployment excess or unemployment payments that the federal government is dolling out.

So we may already be seeing some of that. Time will tell. I don’t have a crystal ball. But I got to tell you that this continued insertion of so much money into the money supply, I think, is worrisome because that’s money chasing something. And right now it looks like it’s going to start chasing prices higher.

Leahy: So I’m not an economist, Liz, but when I look at this huge proposed spending plan from Joe Biden and the outrageous increase in the already outrageous federal deficit and the federal debt that will come out of it, I don’t see how you come to any other conclusion other than this will be inflationary.

Peek: Well, I would agree. And actually, there are some elements of this spending program. This spend-a-thon that Joe Biden is on that is definitely inflationary. For example, guaranteed minimum wage, which he’s done by Tick Tock for all federal contractors. That’s a pretty big number. If you think about all the organizations that service the military, for example, all of a sudden you’re pushing through a pretty big wage increase for people working on supplying food to Army basis, things like that.

It sounds like a small item. It’s not. The Department of Defense is still one of the biggest spending items in our budget. So the impact of that is far-reaching. Also, I don’t think that Biden is going to get through a lot of this infrastructure plan. And I hope not, because so much of it is wasteful. But that waste, that pushing money into organizations and industries that are government spending is by definition wasteful, and inflationary because it’s not efficient.

Government contractors are not always attuned to looking for the best price or the best financial outcome or whatever. In fact, sadly, for taxpayers, they rarely are. I think that the debts and deficits are definitely an inflationary pressure. And I just think the way the government is going about spending all this money is also extremely inflationary.

So, again, we don’t know whether this will be a six-month phenomenon or a six-year phenomenon. My own inclination is everyone is so comfortable that that’s probably the mistake. I mean, my guess is that we are too complacent about the inflation that may show up. By the way, it’s also showing up now in China and in Europe.

It’s not just the United States that has seen a tick up in that number. And right now, obviously, all of our economies are somewhat linked. And that pass-through of higher commodity prices seeing, it really affects the entire world.

Leahy: Well, one thing also that we’re seeing here, and it may be localized in Nashville, perhaps in Texas and Florida, is the real estate market here, particularly in Nashville is through the roof.

Peek: You’re completely right. And what does that stir? It means more home building because one of the things that have happened is there’s no inventory of homes. I think after the financial crisis and the housing bust more than a decade ago, there was just a dearth of building. And so we have no supply right now. You’ve probably seen maybe that lumber prices are up like 80 percent.

You can’t buy what you need to build houses, and people can’t buy houses because there’s none being built. It’s really a Catch 22. But that is a sector of the economy, a pretty big sector, by the way, and certainly, it was back in 2008-9 that up until actually this time last year probably was sort of slow. And that is yet another reason to be very confident that this economy is strong. It’s not in crisis mode, as Joe Biden would have you believe.

Leahy: And I think we’re seeing a lot of adjustments in the supply chain. Adjustments that were started with the pandemic when, for instance, a car rental. It’s very expensive to rent a car these days. And apparently, that’s because the car rental companies during the pandemic to keep afloat we’re selling off their inventory. Now, there’s not enough supply of them, apparently.

Peek: Yes. And that shouldn’t surprise anyone. The pandemic created all kinds of really frightened responses on the part of manufacturers and all kinds of businesses. And legitimately, they had no idea what was going to happen next. So if you go shopping, which everyone is doing now, you find that there’s almost no inventory in the stores.

Stores of course were not doing well even before the pandemic, and we’re very reluctant to stock up on inventory. And so they didn’t. And now there’s not much to buy. And ditto. Your case is a very apt one. All kinds of businesses cut back on investing and spending on their own supply. Here’s another place where I think prices are going to soar, is on travel.

Already airlines are jacking up airfares enormously. Someone I know bought a ticket to take her family home to Hawaii in December, and it was exactly twice what it was a year ago. So all these things are going to be going up because they can. People are desperate to live their lives and spend some money.

Listen to the full second hour here:

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Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.

 

 

 

 

 

 

Washington Correspondent Neil W. McCabe Weighs in on Democratic Spending and the 2022 Red Wave

Washington Correspondent Neil W. McCabe Weighs in on Democratic Spending and the 2022 Red Wave

 

Live from Music Row Wednesday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. – host Leahy welcomed the Tennessee Star National Correspondent Neil McCabe to the newsmakers line to discuss where the irresponsible Democratic spending stands on both infrastructure and tax bills and the upcoming red wave of 2022.

Leahy: We are joined now on our newsmaker line by our Washington Correspondent for the Star News Network, Neil McCabe. Good morning, Neil.

McCabe: Michael, very good to be with you, sir.

Leahy: Is there anything in the Democratic dictionary when you go look up infrastructure, is there anything that’s not included in that definition?

McCabe: Yes. Highways, roads, and bridges. (Laughter)

Carmichael: Now that’s funny.

Leahy: That is very good.

Carmichael: Very quick. (Laughter)

Leahy: You just made our day here, Neil. (Laughs) So, Neil, let me ask you this.

McCabe: This is why you bring me on board here. I’m good at my job. This is my function. I deliver the mail.

Leahy: So where is that boondoggle? How many trillion dollars is this infrastructure bill that’s basically a bunch of Democratic slush fund monies for liberal groups. Where does that stand now?

McCabe: I think it’s in really big trouble right now because three big reasons. Number one, the Republican moderates, especially those 10 moderate senators who are going to the White House and meeting with the President they have now come forward and say we’re sick of being used. The president uses us as props, and we were embarrassed and we’ve had no input. And we’re tired of being props. And that took two months.

So that didn’t take long for these guys to figure that out. The second problem is that they’re running out of runway on their calendar. Remember, the Biden administration went with the soft opening. They haven’t had a joint address to Congress yet. Now comes word that Nancy Pelosi the Speaker has invited Biden to speak to a joint session of Congress on April 28. We talked a while ago when I said the earliest it was going to be like this week.

So I wasn’t that far off. The problem is after July 4 nothing gets done until people get back from Labor Day. And then you’ve got the budget crisis because it’s the end of the fiscal year. They don’t have the runway to get done what they needed to do. And one of your clues about that is that at the press conference, Biden said that he was going to put forward his gun legislation after he got infrastructure done because he wanted to do everything at the right time.

And he wanted to schedule everything. He said that the part of presidential leadership is doing everything step by step. And then they panicked and then released their gun agenda and infrastructure isn’t in the bank yet. The third thing that’s going to really hurt that infrastructure bill is the fact that people in Washington are now very much aware that there is severe inflation on the horizon. We’re seeing it in home prices.

We’re seeing it in commodity prices. We’re seeing it in gas prices. There is price inflation. A lot of this rise in the stock market is not attributed to increases in productivity, innovation or future earnings it’s just sheer inflation. And one of the problems that you’re going to run into is that the more you spend like crazy, you’re going to continue to feed that inflation with that big COVID bill that they pushed through.

There was an argument that Trump’s government spending was responsible for that inflation. When Biden pushed through that COVID bill and then now talking about this infrastructure bill and his other spending bill, he is going to own the inflation that is going to come from all of this spending.

Carmichael: Neil, add to that their proposed tax bill, which essentially when you get to the fundamental understanding of the way the Democrats are thinking is they want to spend trillions of dollars from Washington, and they want to suck trillions of dollars from the private sector. So they’re essentially becoming for lack of a better term a kind of a fascist of government where Washington is in league with certain industries in the private sector. And I think the tax bill is also in tremendous trouble. And it should be. What do you think about that?

McCabe: What’s going to kill the tax bill is that everyone knows that there’s a red wave coming. Everyone knows that the polls severely undercounted or underrepresented the strength of Trump, especially with the irregular voters. And they’re sort of the unlikely voters who all showed up. So people are very scared of what Trump is going to be able to do.

Leahy: You mean Biden.

McCabe: I mean, Trump is going to be able to deliver.

Leahy: In the 2022 midterm. Thanks.

McCabe: Everyone everyone knows that Trump is out there. He’s not being treated like an ex-President. Believe me, I’m old enough to remember. Nobody was afraid of ex-President Jimmy Carter. No one was afraid of ex-President George H.W. Bush. Nobody was impeaching George H.W. Bush because they were afraid he was going to run again. Okay, that was clear very quickly. He was never running again. But Trump is active and he is there.

And the Democrats know they have one shot at smash and grab. The problem is if they do a smash and grab tax bill, the thing they have to fix is the limit on the deductibility of property taxes in these states, especially in the Northeast, where the property in California, where the property taxes are so high and that’s capped, I think the cap is what $10,000 from the 2017 tax bill? And that is really hurting the Democratic machines in New Jersey and New York and Massachusetts and Connecticut.

And people, can’t deduct their property taxes anymore. So what you have is what was happening before is the rest of the country was subsidizing the high taxes in the Northeast and these blue states, and they’re desperate to fix that. No Democrat in Colorado or Arizona or New Mexico or Missouri is going to defend cutting the taxes of rich people in New York.

Leahy: Last question for you, Neil from Crom.

Carmichael: I think Neil hit it right on the head on that because that’s called the salt. The state and local taxes. And they’re only about six states that get pounded by state and local taxes. But that’s because the Democrats in those states tax their citizens at such high rates, and especially the rich. And so I’m with you.

They’re not going to be the Democrat senators from the states with relatively low taxes. If they do vote to repeal taxes, give billionaires in high tax states tax breaks then they’ll be facing a rough midterm. Do you know how the Republicans are doing in recruiting candidates for the House and Senate?

McCabe: This is going to be a great recruiting year for Senate races and House races for the Republicans going into these midterms. And remember that with Trump, he wasn’t personally popular, but his policies were. Biden is personally popular, but his program and agenda are not. And if the Republicans focus on the agenda, they will crush the Democrats.

Listen to the third hour here:

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Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.

 

 

 

 

 

Finance Expert and Fox News Contributor Liz Peek Weighs in on Reckless Federal Spending and Impending Inflation

The Great Dilemma for America: Crom Carmichael on the Democratic Party of Grifters and Looming Inflation

 

Live from Music Row Wednesday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. –  host Leahy welcomed all-star panelist Crom Carmichael in the studio to breakdown the potential of inflammatory effects on America’s economy from COVID and Democratic grifters.

(Chuck Schumer clip plays)

Leahy: That is perhaps one of the most dishonest grifters in American political history. Senator Chuck Schumer of New York trying to explain why they should pass a $1.9 trillion giveaway to big blue cities and big blue states and he’s using a false claim.

Carmichael: Yes. As Mitch McConnell pointed out one percent of the bill, which is, by the way, one percent of 1.9 trillion.

Leahy: It’s one percent?

Carmichael: One percent goes directly to COVID. Goes directly to COVID.

Leahy: And then eight percent indirectly?

Carmichael: Indirectly. But 91 percent doesn’t go to COVID or anything related to COVID.

Leahy: Either directly or indirectly.

Carmichael: But one percent of one point nine trillion is still $20 billion. So that is still $20 billion.

Leahy: One point nine trillion, one percent of one point nine trillion.

Carmichael: Did I get my math wrong?

Leahy: You are correct.

Carmichael: I am correct.

Leahy: You are correct sir because 10 percent of one point nine trillion would be 190 billion. One percent is 19 billion. You are correct in your math.

Carmichael: So it’s a very very large amount for COVID. And so what Schumer’s doing is what all grifters do. He’s just making stuff up. And if it were not for the willful complicity of the media you couldn’t get away with this. This is the great dilemma for our country. You have now Big Tech and big media that is in bed with the Democrat Party and in bed with all their policies.

And so you have about probably 20 to 25 percent of the population that benefits from all this grifting. And the balance of the population gets hurt. Now deficits do matter. And one of my great pet peeves is when politicians say these deficits are going to hurt our children and grandchildren. That’s false. They’re hurting us now. And what they do is they act kind of like a wet blanket.

And what they do is if productivity is growing at four percent then you ought to have real income rising at four percent. But if you have deficit spending that’s equal to more than four percent of the economy, then you may see a rise in your paycheck. But you’re going to see inflation in some of your basic goods. For example in housing prices. housing prices now across the country are going up because you see commodity prices like lumber, copper, and many of the materials that go into a home are rising at very very high rates.

And so the inflation is almost hidden. But it’s there. Let’s just say that inflation affects you at $1,000 and infects everybody at $1,000. Well, somebody’s making $50,000 dollars a $1,000 is two percent of their income. If you’re making a million dollars then $1,000 is imperceptible. If you’re a multi-billionaire, you’re making far more money on the increase in the value of your stock than you are worried about the effects of inflation.

Leahy: So I’ve got some data here. This is from a website called The Balance. It looks at the deficit as a percentage of the gross domestic product. And it’s been quite high. When Ronald Reagan took office ’19 in 1980 It was two point six percent that fiscal year. Of course, he took office and it would have been fiscal in 81 when it was two point five percent. When George H.W. Bush took office it was three point seven percent in 1990. Then we fast-forward.

It was actually a surplus during the last years of the Clinton administration. And that was due to the sort of the internet bubble. George H.W. Bush and the crash of 2008. In fiscal 2009, 9.8 percent of GDP. the deficit. it’s been really really high pretty much ever since it went down to three-point four percent in 2017. It shot back up in 2020 at 17.9 percent because of the COVID impact. And it’s going to be about 10 percent in fiscal 2021 except probably more than that now.

Carmichael: It will be more than that if this bill passes. And then they’re talking about another great big bill in behind it. And so the aging of the baby boomers is going to affect Medicare in the coming years. So under Trump the deficit as a percentage, I think you said it got down to like three-point six percent.

Leahy: Yes. Under Trump in 2017, it was three point four percent.

Carmichael: What was it in ’18?

Leahy: In ’18, it would be three-point eight percent.

Carmichael: Okay, what was it in fiscal ’19?

Leahy: Up to four-point six percent.

Carmichael: Okay. All right. And so then it was in fiscal 2010 that it exploded. So part of ’19 perhaps had something to do with COVID. I don’t know.

Leahy: No it would have been ’20.

Carmichael: All fiscal year ’20?

Leahy: Because fiscal year ’20 goes from September to October 1, 2019, to September 30, 2020.

Carmichael: But here’s what’s interesting. With all of those numbers in there, I think that the federal government is doing a very poor job of collecting the right data to understand productivity gains. I think there are a lot more productivity gains due to technology than that is being captured. I think the productivity gains that they’re capturing are in an old-school way. And productivity gains are much different now.

Leahy: That’s a very good point. Despite COVID productivity gains probably have limited the depth for people that that are involved in certain jobs it’s had less of an impact.

Carmichael: If we come out from the other side of COVID a lot of the changes that were made because of COVID will enhance productivity. If I can do a Zoom meeting and make a sale and I don’t have to go do a business trip to make that same sale then I can make perhaps three or four sales calls a day and not spend any money in doing so.

Leahy: And not travel.

Carmichael: And not travel and do all that. And so that would actually be a gain in productivity.

Leahy: In certain segments. But for instance restaurants. Making stuff in a manufacturing facility that kind of thing got hurt badly. At least on the restaurant side.

Carmichael: That’s not a manufacturer, that’s a restaurant. So what you’re seeing is that if there are a lot fewer business lunches and dinners then that hurts the restaurant business. But in terms of the macro, if people are doing things more efficiently and accomplishing the same goal then there’s a particular…

Leahy: Because one thing that you and I are not Crom, we are not Luddites. (Laughter) Luddites were the people that wanted to go in and break all the new machinery that made it easier to manufacture clothing and other things back in 19th century Great Britain.

Carmichael: So what I’m saying is that if you have a productivity gain of four percent and you have deficit spending four percent more or less than increase the money supply, then theoretically you’d have an inflation rate of close to zero. But if you have productivity gains and four percent and you have an increase in the money supply of 10 to 15 percent and that’s done consistently at some point that catches up with you and it doesn’t affect the wealthy nearly as much as it affects middle and lower class demographics.

Leahy: You’re exactly right and the people that are being hurt by all of this deficit spending really middle-class Americans.

Carmichael: And lower-income people.

Leahy: You are exactly right.

Carmichael: And all these policies the Democrats’ the school policies, in particular, they hurt lower-income children far more than they hurt anybody.

Leahy: They absolutely do. We’ll close that talk off.

Listen to the full third hour here:


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Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio