By E.J. Antoni, via The Daily Caller News Foundation | January 10, 2024
Few academics have fallen as far from grace as Treasury Secretary Janet Yellen. Instead of composing lectures from her Ivy League ivory tower, she’s been reduced to penning editorials defending the indefensible: Bidenomics.
Her latest screed plays a shell game with the facts, telling the American people to disbelieve their lying eyes and empty wallets. The truth is much simpler than Yellen portrays: the middle class has gotten shellacked by the very policies she has helped implement.
Even the truths which Yellen writes seem to be in service of lies. For example, while she correctly notes that inflation has come down markedly, that implicitly acknowledges inflation was previously very high — which she conspicuously omits, along with her share of the blame.
What caused that inflation? The policies for which Yellen strongly advocated: government overspending, overborrowing and overprinting money. That deadly combination spawned the return of 40-year-high inflation, which robbed the real value of the American middle class’s incomes and savings.
Inflation is still well above its pre-pandemic rate. And prices are so far above their pre-pandemic level that a typical family needs an extra $11,000 in annual income just to maintain the standard of living they had when President Joe Biden took office.
So, while it’s true that inflation is no longer at 40-year highs, it’s still higher than when Biden and Yellen started, and there’s no hope of the cost of living coming down appreciably.
Not wanting to dwell too long on such shaky ground, Yellen pivots to the unemployment rate, which has remained unexpectedly low. But this is due in part to millions of people leaving the workforce, which has removed them from the unemployment calculation.
Depending on how one wants to measure the pre-pandemic trends in the labor market, the economy is effectively missing between 4.8 million and 6.8 million workers. Accounting for their absence yields a more accurate unemployment rate of between 6.4 and 7.5%, a range commonly found in recessions.
This phenomenon is like what happened when America entered World War Two and millions of young men, many of whom were unemployed, were put into uniform and removed from the labor force. Almost overnight, the unemployment rate went from double-digits to near zero.
Perhaps more offensive to the truth is Yellen’s deception about real wage growth. As proof of Bidenomics’ success, she cites real wages today being higher than in 2019, before the pandemic. There’s just one problem: Biden wasn’t president in 2020 or in 2019.
Since Biden took office and began implementing his agenda, real weekly earnings have dropped about 4.5%, costing a typical middle-class family the equivalent of thousands of dollars in annual income. Given this sizeable loss, implicit in Yellen’s comparison is an admission that the only way to make her boss look better is to take credit for his predecessor’s success.
Similarly, Yellen claims that the administration drained 180 million barrels from the Strategic Petroleum Reserve (SPR) in the wake of the Ukraine war to stabilize oil markets. What she omits is that Biden had started draining the reserve just three months into office, long before the conflict in Europe, and continued the drains long after any global oil disruptions were resolved.
Lastly, Yellen took gaslighting to a new level when she cited trillions in government deficit spending as the reason for America’s rosy economic situation, even claiming the Biden administration’s prodigal ways have reduced prices. The opposite is true.
So-called infrastructure spending and the misleadingly named Inflation Reduction Act have imposed new taxes and fees on Americans while wasting taxpayer dollars on unprofitable projects, all while those trillions in deficit spending fueled inflation.
But did the middle class get a bailout from Yellen as their savings lost value from that inflation? No. Yellen instead bailed out wealthy Democrat donors who had their savings at the mismanaged Silicon Valley Bank.
As part of an administration with such a dismal record, it’s no wonder Yellen has resorted to deceiving Americans, but the people aren’t buying it.
E.J. Antoni is a public finance economist at the Heritage Foundation and a senior fellow at the Committee to Unleash Prosperity.
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