Medicare Part B premiums for 2022 jump by 14.5% from this year, far above the estimated rise in cost. At the same time, Social Security Cost of Living Adjustments (COLA) are set to rise by only 5.9% for 2022.
It seems that The Biden Administration and US Congress are declaring war on just about everybody, but retirees in particular.
Supply chain problems is what the Biden Administration likes to blame inflation on. Those supply chain problems persist, for sure. But when the main culprits driving inflation are energy (up 30 percent from last year), accelerating rents and ongoing worker shortages, sourcing difficulties are not the whole story.
Policy blunders perpetrated by the Biden White House have made a bad problem worse.
For instance, oil prices are higher for two reasons. First, U.S. production has declined by about two million barrels per day since 2019, even as demand has recovered from the COVID-19-induced downturn. Oil markets are global, so the fall-off in output would not necessarily jack prices up, but our declining output needs to be offset by an increase elsewhere.
Enter OPEC, which has not restored output to the level necessary to bring down prices, despite repeated pleas from Biden.
Meanwhile, Biden has done a lot to discourage a resurgence in U.S. drilling and production. He has cancelled pipelines, threatened oil and gas producers with higher taxes, taken promising acreage out of play, such as the Arctic Natural Wildlife Refuge, slow-walked leasing and new drilling permits and, most recently, imposed new methane-curbing rules that make drilling more expensive.
What sensible person would invest in the oilfield in the face of such unrelenting hostility? Drilling activity is up, but nowhere near where it should be at $82 per barrel oil.
Another boost to inflation came from housing. With “shelter” accounting for some 40 percent of the CPI, economists have warned that fast-rising home prices would eventually seep into higher inflation readings. In October, we saw this occur, with the increase in the cost of shelter accelerating to 0.5 percent from September, an annualized rise of 3.48 percent. The CPI owners equivalent rent of residence rose to 3.13% YoY. Too bad home prices are increasing at almost 20% YoY.
One reason home prices have been increasing at nearly 20 percent per year is that the Federal Reserve has continued to buy up $15 billion worth of mortgage-backed bonds each month, keeping mortgage rates artificially low. The result has been a booming market, driving home prices, and now rents, higher.
At long last, the Federal Reserve has announced it will begin to throttle back its bond-buying program, including the purchases of mortgage-backed bonds. Critics think the Fed is behind the curve, having seriously underestimated price pressures.
Biden does not control the Fed, but he has made no secret of his preference for the easy money policies that have helped prop up the economy, and the stock market. Fed Chair Jerome Powell’s term ends in February; Biden has recently interviewed not only Powell but also Fed Governor Lael Brainard, a known dove and Obama appointee, for the position.
That these are the only two candidates he seems to be considering sends a clear signal. He will choose growth over stability, even if it means that inflation continues to accelerate. Unhappily, Powell is listening.
Finally, Biden has not only encouraged monetary excess, but has also endorsed big-spending packages that have put money in consumers’ pockets but also kept workers on the sidelines. The biggest shortage we have in this country today is labor. The labor participation rate is mired at 61.6 percent, 1.7 percentage points below the level in February 2020.
Studies have shown that the slew of benefits contained in the Cares Act and subsequent relief bills, including incremental unemployment benefits, expanded child tax credits and rent moratoriums, have offered Americans up to $100,000 per year while not working. These payments may have been necessary early in our recovery from the pandemic, but no longer are needed.
And then people are surprised that grocery prices are getting so f&^*ing high???