State of the Union: Taxpayer Protection Alliance Response

Americans are feeling the pain of high prices and struggling wages. President Biden had an opportunity to speak to those anxieties last night and offer real solutions in his State of the Union Address. Instead, the President doubled down on his agenda, proposed new tax and spending programs, and even went so far as to blame American businesses for the current economic stress.

The President led off by touting the supposed success of his economic record. He pointed to the fact that he spearheaded unprecedented job growth. He neglects to mention that this job growth came on the other side of the COVID-19 pandemic. According to the Bureau of Labor Statistics, the most recent unemployment rate in the US was 3.9 percent. This is still higher than the 3.5 percent unemployment rate in February of 2020, right before the onset of the pandemic. And, President Biden didn’t mention that many of the jobs added are government jobs.

President Biden followed by claiming he has built the strongest middle class ever. While this is a laudable goal, it is far from reality. Weekly wages, when adjusted for inflation, have fallen by 4.4 percent under the Biden administration. This is because of inflationary pressures and decreased hours from employers. Meanwhile interest rates are also pricing many middle-class families out of home buying. Household debt in America is the highest it’s ever been at $17.3 trillion. Further, Biden pushed an ill-advised cap on credit card fees, which would ultimately make it more difficult for middle-class families to gain access to lines of credit.

In an effort to downplay the effect of inflation on this supposed economic success, President Biden sought to place the blame on American companies. He bemoaned so-called “shrinkflation” as evidence. He claims companies are trying to cheat consumers by selling lower quantities of their goods, while charging the same price. However, this is just one of two natural responses to regular inflation. Companies can raise prices or cut back on quantity. Just because a company chooses the latter does not mean they are not facing the same inflationary pressure.

Biden also advanced the claim that no one making under $400,000 per year would pay a single additional cent in taxes under his administration. This is flatly untrue. The Biden administration has pushed for a number of under-the-radar taxes that would fall most heavily on lower-income consumers. His proposal on tobacco, nicotine, and vapor products being the foremost among them.

Among the new proposals the President touted in his speech was a push to expand “Buy American” provisions. This would mandate the purchase of American raw goods and materials in the supply chain – or otherwise disincentivize the purchasing of foreign-made goods. This is another example of the government picking winners and losers in the marketplace. American companies that rely on more affordable foreign-made goods are no less American that those that use more domestic products. Buy American also increase the costs of projects. 

Biden also laid out a slew of new taxes and spending programs. He floated a wealth tax, which has been presumed unconstitutional and fundamentally misunderstands the nature of net worth. He pushed for a national housing subsidy, which would supercharge demand (as all similar subsidies do) and lead to skyrocketing prices, exacerbating the already-sky-high housing market. He also called for passage of the Protecting the Right to Organize (PRO) Act. The PRO Act is a major giveaway to labor unions at the expense of independent contractors and franchisees.

While the President may paint a rosy picture of his economic agenda, there is far more under the surface. Much like the price controls on prescription drugs he proposed during his speech, simply slapping a different label on something does nothing to assuage the underlying condition. President Biden had an opportunity to pave a new way forward, but chose to double down on more of the same.