On Wednesday night, Jason Furman, a Harvard Economics professor, sent out some bizarre tweets on the current economic meltdown. Furman also served as chairman of President Obama’s Council of Economic Advisors, which may be why current White House Chief of Staff Ron Klain saw the tweet and endorsed it.
This 👇👇 https://t.co/ymh53nEHAg
— Ronald Klain (@WHCOS) October 14, 2021
The most charitable interpretation of Klain’s endorsement is that he is pointing out that it could be worse. That is some pretty cold comfort. However, the idea that inflation and shortages are “high-class problems” is absurd and galling. Inflation in consumer prices is at its highest rate since Obama Inc. was in charge, and no forecast shows it slowing down. Adding to the problem, the U.S. Energy Information Administration announced it expects fuel prices to rise significantly this winter.
A family relying on propane and heating oil to warm their homes can expect the most significant increases at 54% and 43%. This will impact residents in exurban and rural areas that use these fuels. These are not areas where the vast majority of those considered members of the upper class live. If these urban creatures are wealthy enough to have second homes in Star Valley, Wyoming, or Aspen, Colorado, a rise in fuel prices would just be a blip in their expenses.
According to a study in The Lancet, the severe cold killed 20 times more people between 1985 and 2012 than extreme heat. In the U.K., high energy prices are blamed for thousands of deaths due to cold. National Energy Action and E3G estimate an average of 9,700 deaths each year due to living in a cold house. “Some 10% of the total deaths, significantly more than 3,000, are directly linked to fuel poverty itself. These are older people – perhaps those who survived war, and who helped build the country – dying of cold because they don’t have the money to pay their energy bills.”
Energy price inflation is not a high-class problem, as Klain seems to believe. Nor is general price inflation. The estimated increase in household expenditures on those making $70,000 is $175 a month. Small potatoes for Klain, but a burden on a working family of four.
There are also some technical problems with the original tweet. The high unemployment rates in 2020 were not due to any economic factors. They were a function of government-imposed shutdowns in the economy. President Biden inherited an unemployment rate of 6.3%. This rate is better than 7.7% that he and Barack Obama won reelection with. To get to Furman’s 10% requires a recession that would fall squarely on the shoulders of Klain’s boss.
The recovery from a record rate of 14.8% in April 2020 reflected Republican-led states reopening their economies beginning in summer 2020. Despite Biden crowing about the jobs his administration has created, improvements are primarily the result of employees returning to their previous positions. In January of 2020, the U.S. recorded a labor force participation rate of 63.4%. Now it sits at 61.4%.
To ease the impact of the economic disaster we are experiencing, the Biden administration needed to give Americans on Social Security a bump. The cost of living increase is 5.9% in 2022, the largest since 1982. The boost just about matches the rise in consumer prices at 5.4%. If inflationary trends continue, seniors on fixed incomes will have less buying power by the end of 2022. The Social Security Trust Fund depletion may also happen sooner than the current CBO prediction of 2031. Again, it is not high-class Americans like Klain who live on their Social Security income in old age.
Finally, the supply chain concerns go back to February 2021. President Biden ordered a strategic risk assessment due to concerns about shortages in pharmaceuticals, strategic materials, and energy industry components. By March, the National Fireworks Association was warning that Fourth of July celebrations could be missing fireworks when shipping times from China doubled and the time to unload a container vessel increased to 21 days at the Long Beach, Calif., port. Judging by the pictures of ships languishing off the California coast, the problem has gotten worse.
America was poised for a V-shaped recovery with a few bumps as production increased or was reshored to the United States. The current problems result from President Biden killing our energy independence, increasing reliance on China for critical inputs, and horrible public health messaging that makes many Americans think reemerging from the pandemic shutdowns is a deadly proposition.
The so-called “high-class problem” has middle- and working-class Americans scrambling to afford the increase in ground beef and a gallon of milk. At some point, it may become more difficult to find your elderly parents’ life-saving medications as they sit on a boat or in a rail yard. Somehow, I doubt Klain will miss a steak dinner or needed medications.