A few weeks ago we learned that the U.S. GDP shrank by an annualized 0.9 percent during the second quarter, marking the second straight quarter of negative GDP growth. Of course, two consecutive quarters of negative growth has long been accepted as the technical definition of a recession—or so we thought. Politicians and media personalities in Washington D.C. spent a good portion of recent weeks in a peculiar rhetorical debate over the definition of the word “recession.”
This fight over semantics completely missed the point. It doesn’t really matter whether we are technically in a recession or not. What matters is that the American economy is in trouble and hard-working families are feeling the pain. We are in the midst of the worst inflationary spike in 40 years, and it shows no signs of easing. Prices for everyday goods and services are through the roof. The cost of gas has more than doubled since the day Joe Biden took office. Rents are surging and, thanks to high prices and rising interest rates, the housing market is even more lopsided against buyers. Supply chain issues continue to paralyze the economy, as seen in the struggle to get baby formula. Businesses are struggling to find workers as our economy grapples with a dismally low labor participation rate. The stock market saw its worst first half in 50 years.
There is simply no escape. Americans are left feeling like the economy is falling apart before their eyes.
This crisis demands leadership. The American people need the president and his administration to take bold action to break the back of inflation and get our country on a path toward economic stability and prosperity. Fortunately, there are a number of common-sense steps the administration can take right now to help accomplish that goal.
First, kill the new tax and spending bill. Shortly after taking office, the president and his allies in Congress forced through a massive $1.9 trillion spending bill which flooded the economy with excess capital and sent inflation soaring to 40-year highs. A year and a half later, Democrats appear poised to make the same mistake again.
At this very moment, Democrats are rushing to pass a reckless new $700 billion bill that threatens to gravely harm our economy and the pocketbooks of working families in every corner of the nation. According to a recent analysis by the University of Pennsylvania’s Wharton School of Business, the bill will increase inflation over the next two years. Worse yet, it imposes massive tax increases. These tax hikes will kill jobs, reduce wages, lead to higher prices, and undermine American economic growth for years to come.
If President Biden and his Democratic colleagues want to slow inflation and get America’s economy rolling again, the first thing they must do is kill this new tax and spending bill.
Second, promote domestic oil and gas production. The Biden administration has been hostile towards American energy producers since day one. It has banned offshore drilling, implemented a host of permitting regulations, canceled the crucial Keystone XL pipeline, and curtailed leasing in the Arctic National Wildlife Refuge. Now Americans are paying for it. Energy prices have skyrocketed over the past year and a half, and the cost of gas has more than doubled. This administration needs to reverse course and unleash American energy production. Not only will this help address inflation, but it will also put the United States back on a path toward energy independence.
Third, address logjams at American ports. Right now there are dozens of container ships outside of Los Angeles and Long Beach (which receive about 40 percent of containerized imports), as well as other other West Coast ports waiting to offload their goods. This bottleneck is costing Americans billions of dollars and driving prices higher.
While the supply chain crisis is complex and will likely take many months to resolve itself, there are a number of steps this administration can take right now to help alleviate the backlog and lower prices. The West Coast ports negotiations are ongoing. This administration, which prides itself on being the most labor-friendly presidential administration ever, should work with local unions and municipal governments to ensure ports are fully staffed and operating at full capacity around the clock. Fixing the backlog at our ports is one of the quickest ways we can start to bring down prices for American consumers and stimulate economic activity and growth.
While there is no silver bullet that will completely fix the problems plaguing our economy, these three common-sense proposals will go a long way towards addressing the inflation crisis and relieving the pain felt by hard-working families in every corner of the country. A recent survey found that nearly 90 percent of Americans say the country is headed in the wrong direction. It is time for the president and his allies in Congress to step up and take the action necessary to defeat inflation and get our economy back on track.
Elaine Chao is the first Asian Pacific American woman in American history to be appointed to the President’s cabinet. Ms. Chao served as the 24th U.S. Secretary of Labor and 18th U.S. Secretary of Transportation.