Maximizing the Incumbency

Back in the darkest days of Richard Nixon, Republican operatives used to chill the blood of New York Times readers by speaking ominously of “maximizing the incumbency.” The basic idea was that an authoritarian incumbent, if he were willing to ignore both constitutional restraint and long-standing precedent, might mobilize the enormous resources of the federal government for his own partisan advantage.

Nixon looked the part. With his hunched shoulders, furtive eyes, and more or less permanent five-o’clock shadow, he was a cartoonist’s dream. And yes, his people peeked at a few tax returns, rummaged through Daniel Ellsberg’s files, and permitted, if not commissioned, a break-in at the Democratic National Committee headquarters. But Nixon had a decent respect for the opinion of those New York Times readers and, in my personal observation, was too patriotic to go full, manly man authoritarian.

Not Joe Biden. He may look the part of the daffy uncle when he greets imaginary friends, wanders from the podium for parts unknown, or answers a question not even distantly related to the one just asked, but he is focused like a death ray on his own election. He has mobilized the enormous resources of the federal government in support of his reelection campaign.

You know the major themes.

It is by now beyond dispute that Biden’s border policies are designed to effect change that not even Barack Obama would have attempted. To open the door to millions of illegals, most of them young men of military age, many of them from countries openly hostile to America, is transformational.

And to use America’s precious megaphone, the bully pulpit, to alter or reverse our basic values is equally transformational. Law-enforcement officials who are operationally pro-criminal; educators fixated on social change at the expense of student achievement; affirmative-action hires in the military; the fairness lobby insisting that women athletes compete against loser men; campus leaders embracing antisemitism; political consultants making campaign centerpieces of abortion availabilities; undercutting allies doing the fighting and dying for the alliance — none of these enemies of the settled culture is called out by the president. All of them are excused, most of them applauded, many of them subsidized.

Those stories have been covered by at least the sectarian media. The more innovative part of Biden’s incumbency-maximizing strategy — his fiscal and monetary policy — has gone underreported.

• Last Wednesday, the Federal Reserve announced that it will be holding the federal funds rate steady at 5.25–5.5 percent. No news is big news. That is the highest rate in 23 years and has grave consequences for the economy. It means, among other things, that fewer people can buy or build new homes, start or sustain a business, and expand or refinance commercial real estate, industrial plants, and other capital-intensive investments. You know, grow the economy.
• The Fed couldn’t cut rates because inflation, running at 4 percent annualized, is stuck at twice its target rate. So the Fed did the next best thing for Biden and “slowed” the shrinkage of the bloated federal balance sheet from $60 billion per month to $25 billion per month. That reduction is another way of saying that, from now to Election Day, there will be $35 billion of excess liquidity sloshing through the economy each month.
• Among the principal drivers of the current inflation are Biden’s twin legislative trophies, the American Rescue Plan and the Inflation Reduction Act. Those two bills, taken together, represent the largest boondoggle in the history of public finance. Years after their passage on an emergency basis, years after scores of progressive special interests have been enriched by the billions, both programs still have unexpended funds in search of even superficially plausible projects.
• It was only last December when the Fed signaled to the financial world that, with the economy showing surprising strength, at least three interest-rate cuts would soon be forthcoming. The financial world then did what it’s supposed to do: It repriced financial assets to reflect the news. Stock prices boomed — and to immediate political effect. Every 401(k), every IRA, every retirement and investment account in the country was pumped up for year-end financial statements. Thanks to the concomitant increases in required minimum distributions, every senior citizen got a raise. By mid winter, Biden surrogates were out on the trail talking up “Bidenomics” and enjoying the president’s short-lived uptick in the polls.
• Here we are in May, and there have been no rate cuts. Why? I like a plainspoken guest on the CNBC shows, a fund manager named Freddie Lait. His answer to that question is, “There is no economic rationale for cutting.” Okay, then. There might still be no economic rationale when the Federal Open Market Committee next meets in June, but raw politics could prevail. The Fed is politically independent, but not monkishly so.
• Here’s another pearl from the truth-blurting Mr. Lait: “The reason they [the Fed] might cut is because the U.S. government can’t afford it.” Just so. During the fiscal year that ended last October, the U.S. government spent $659 billion on interest to service our national debt. In the current year, it is on track to spend $870 billion. You think inflation is bad at the grocery store and the gas pump? The cost of borrowed money has just gone up by 32 percent.
• To put that $870 billion number in perspective, consider that this year, for the first time in our history, we will spend more on interest payments than on national defense. There may be an economic historian somewhere who could identify a more likely tipping point for a great nation, but I’ve yet to run across one.
• All of the above is macro. Biden also does micro. Up against surprisingly weak polls among young voters, Biden has, to date, “forgiven” $153 billion in student-loan debt. He recently announced his intention to forgive another four million debtors and reduce payments for 25 million more. Again, for a bit of perspective: It was big news in 2016 when the Clinton campaign was rumored to have broken through the $1 billion barrier in total spending.
• One of the brighter spots in the 2024 economic picture is employment. More people are working, and fewer people are not working. That’s all to the good. But the lockstep legacy media don’t encourage a close look at the numbers. The fast-growing component of the national workforce is government and government-dependent jobs. At the margin, that is, there are now more people regulating economic growth and fewer people creating it.

Joe Biden is trying to buy his reelection with tax dollars, half of them extracted from voters who oppose him. In this one instance, he might feel that taxpayers are paying their fair share.