The socialist recipe for economic failure: Price controls, higher taxes, government intervention and subsidies paid for by printing an ever-depreciating currency.
These are the main pillars of “21st century socialism” and the radical leftist Peronism that destroyed Argentina. These are also the key elements of the economic plan presented by Kamala Harris and the Democratic Party. Undoubtedly, this is the most radical socialist economic plan ever announced by the Democrats.
According to the Committee for a Responsible Federal Budget (CRFB), Harris’ proposals would cost $1.95 trillion over 10 years. But he points out that if certain measures are made permanent, that number could easily rise to $2.25 trillion.
Her staff has said these costs will be offset by classic socialist-style sloganeering in any election: “higher corporate taxes and higher incomes.”
This is, obviously, ridiculous because there is no revenue raising measure that will cover the already bloated $2 trillion annual deficit and the additional $2 trillion!
The mantra “higher taxes for the rich” always means higher taxes and more inflation, a hidden tax, on everyone – especially the poor.
The Congressional Budget Office (CBO) has already warned of fiscal disaster for the United States, with an annual deficit at levels of 6% of GDP. Despite not factoring in a recession and projecting record tax revenues from 2024 to 2034, CBO projects the budget deficit to explode from $1.9 trillion to $2.8 trillion by 2034, even before accounting for the new of Kamala Harris’ fiscal spending plan.
This means that the cyclically adjusted deficit will rise above 6.9% of GDP by 2034, almost double the average of 3.7% over the previous 50 years. The US budget deficit as a % of nominal GDP.
The launch of the public debt
Under Democratic policy, the United States’ public debt will likely increase by $24 trillion over a decade.
There is no set of tax measures that can generate $2 trillion a year in additional tax revenue, and tax increases will hurt both investment and growth. An economy running an annual deficit of 6% of GDP to achieve annual growth of just 2% is already on a dangerous path, and Kamala Harris’s policy would make it even worse.
Kamala Harris promises to reduce inflation by spending and printing more money, cracking down on competition and attacking business.
It has never worked and it will never work because it is not based on any economic principle…. Imagine all those United States citizens who have escaped the interventionist-impoverished economies of Latin America or Europe to find a better opportunity in the United States and find that the same policies will be implemented by Harris.
The “fairy tale” without… a dragon with price increases
The price hike and inflation narrative that the Democrats are playing about the corporate “advantage” of raising prices is simply false.
- In 2023, profit margins in the grocery sector were at their lowest level since 2019, at 1.6%, according to the IMF.
- Companies, even if they were stupid and reckless, cannot push all prices up all the time.
- Competition would naturally reduce their market share.
- New entrants would eliminate it and overall prices would fall.
- What’s more, shops and businesses can’t send overall prices skyrocketing, sustaining the rise and spreading it across the board – as shown in the inflation index (CPI) we track each month.
- The only thing that can make all prices go up and continue to go up at a slower rate is money printing and the erosion of the purchasing power of the currency – the monetization of debt.
- The only thing that can keep overall prices rising is the destruction of the currency’s purchasing power, which comes from massive government spending and printing money to cover up fiscal imbalances.
Kamala Harris and her team know that their fiscal spending plan will skyrocket the national debt and that price controls aren’t going to cut it.
In fact, these should not be called ‘price controls’ but ‘limits to competition’.
If corporations were the cause of inflation and price controls were the solution,… “Peronist Argentina” would enjoy the lowest inflation in the world in decades.
Harris’ proposals to “forgive” debt such as student loans are profoundly anti-social. They don’t…forgive any debt, they just add it to the national debt for all the taxpayers to pay for.
This massive increase in the national debt will be a burden on every American, especially the poorest, with persistent inflation and lower real wages.
US citizens have already experienced negative real wage growth (i.e. decrease…) since January 2021, when Joe Biden took office, according to Federal Reserve data.
The worst is next…
Why is Kamala Harris promoting the same policies that have failed everywhere?
Promising free stuff and blaming others for the negative consequences is the defining strategy of socialist politicians.
Are we surprised to see how Germany, France and other historically rich nations are dealing with economic stagnation, high debt, persistent inflation, huge taxes and the destruction of the middle class?
These policies are what Harris promises. Who benefits?
The huge government and its surrounding corporations are reaping the benefits. Many people believe that a nation cannot be considered socialist if it contains private corporations. It doesn’t make sense…
State control is not limited to the ownership of capital but also to the enforcement of increasingly restrictive laws, government regulations and confiscatory taxes.
In fact, the government likes to absorb most of the wealth created by the private sector without the hassle of managing businesses.
Economist Huerta de Soto defines socialism as “any system of institutional, methodical aggression against the free exercise of entrepreneurship,” and that’s exactly what Kamala Harris promises.
Higher taxes and more debt – The bill will come
- The government will print money to subsidize a currency that is constantly losing value.
- He will blame business for inflation.
- Interventionist policies will continue to erode the private sector.
- The framers of these policies know that they will negatively affect the economy, yet they will also create a significant number of subservient (in them…) citizens who rely on the government and must comply with its decisions.
- Voters see a supposed “tsunami” of free money, but ignore the fact that they will pay for it through higher inflation, lower real wages, and reduced opportunities for small businesses and families.
Kamala Harris’s staff believes that deficits don’t matter and that the Federal Reserve can always cover up any budget imbalance. However, cracks have already appeared.
Persistent inflation is a consequence of years of excessive spending and debt monetization. The next step is the reality of losing the US dollar as the world’s reserve currency when it becomes completely unreliable due to ever-increasing debt.
