Many of us hear numbers, and we have reactions from numbness to incomprehension. Our economy’s numbers are measured in the trillions of dollars. We at times trying to understand those numbers become irrational in our reasoning.
For example, the United States Gross Domestic Product (GDP) for 2020 was $20.94 trillion. This year, the GDP is projected to be $23.17 trillion. Those are large numbers that are beyond our ability to comprehend what they represent.
Two weeks ago, the U.S. House of Representatives passed its version of the “Build Back Better” Act which would allocate $2.3 trillion over the next decade for things like traditional infrastructure, childcare, and family-friendly policies. That amount would equate to $230 billion per year. More money than even the richest person in the world possesses.
A couple of other numbers to consider. Last year, the U.S. government had a budget of $6.6 trillion which is 31.2% of total GDP. The deficit was $3.1 trillion which is 14.9% of GDP. This year the budget is projected to be $6.82 trillion or 30.6% of GDP with a deficit of $3 trillion or 13.4% of GDP. Again, numbers that Americans just do not contemplate in their daily lives unless they are economists. The numbers are those produced by the Congressional Budget Office
Considering the trillions, the U.S. government and economy deal with, $230 billion doesn’t seem to be all that much to spend for the benefit of the American people. That is about 3% of the total 2021 federal budget.
The silliness of saying that if “Build Back Better” became law, it would create more of an inflationary economy just does not hold water. Our current inflation, unlike the 1970s, is not a wage-price spiral but rather difficulties brought on by Americans spending much more on goods which is a departure from our traditional spending patterns. In simple terms it is about supply and demand.
Covid shutdowns cannot only be measured in what happens in the United States but viewed in a global context. A factory or mine that closes in Asia or Africa will impact what is available here. The inability to load and unload ships is not just an American phenomenon. China and Europe also have delays.
During Covid we ordered goods instead of services causing our current inflationary problems. At some point within the next year, we will have sated our appetites for electronics, home improvements, and cars. Waiting months for a refrigerator has not been the norm for the past 75 years. Companies will adjust how their goods are made adding to an easing of prices as availability becomes more common place.
Consumers will go back to purchasing services as they did pre-Covid. The purchasing of services is paying someone to perform a specific task such as provide a meal in a restaurant or a haircut. It usually is a one-time transaction that relies on receiving labor instead of goods. It is knowledge and skill based as opposed to buying a product.
One of the best things we can do as a nation is invest in our people. For too long, our government has gotten its priorities backwards. We have been trying to help corporations instead of individuals hoping that by doing so businesses would be the ones providing ample jobs and benefits for their employees. That has not been a successful strategy.
West Virginia Senator Joe Manchin has never met a corporate give away that he didn’t like especially in the coal and oil field. Yet he had the audacity to say that including paid family leave and childcare would make working Americans less inclined to hold a job. What utter nonsense!
Most other OECD (Organization for Economic Co-operation and Development) nations have much higher job retention and recovery rates than we currently do. Manchin and others like him believe in corporate welfare and subsidies but not investment in citizens. That is what has led to our economic and political fragility.
All you have to do is look at the numbers.