In our Tuesday editorial, ‘Why There Is No Hope In Sight To Tame Inflation,’ we underscored the role of President Biden’s loose fiscal policy and ballooning national debt in neutralizing the Federal Reserve’s rate hikes, leading to persistent inflation. This insight is a stark reminder that monetary policy alone is insufficient to curb inflation without fiscal austerity. With Biden’s continued adherence to a slack fiscal policy, the threat of prolonged inflation looms large, potentially impacting our economy for years.
Within 24 hours of our editorial, the Biden-Harris administration announced canceling an additional $7.7 billion in student loans. We should not take this decision lightly, as it brings the total canceled amount to a staggering $167 billion for nearly 5 million Americans. Its implications for the economy and the November election are profound.
In his desperation to win a second term, President Biden is taking actions ranging from releasing oil from the nation’s strategic petroleum reserve to canceling student debt by fiat and using lawfare against his opponent.
Election Interference Concerns
What is the underlying motivation behind Biden’s generous actions with public money? Biden is not losing sleep over student loan borrowers. The President strategically aims to attract specific voter segments, which could significantly influence the upcoming election’s outcome. This is not just a matter of policy but a potential case of election interference that demands attention and scrutiny.
As CNN puts it, it is now a monthly feature:
As the November election looms, the administration has been eager to highlight progress in its debt cancellation programs, making announcements such as this one nearly once a month.
The strategy aims to draw in young voters, a group the President can no longer rely on for reelection in November. Young voters struggling with various issues, from minimal wage increases to their inability to afford their first homes, are increasingly disillusioned with his leadership. This disenchantment is more than just a statistic; it reflects their real-life struggles and concerns, as seen in their pessimism on the TIPP Presidential Leadership Index’s monthly tracking. In the chart below, his leadership readings are in pessimistic territory, below 50. For those in the 18 to 24 bracket, his May reading is only 44.7, and for the 25 to 44 group, it is 40.5.
We define momentum as the difference between the 3-month and 6-month exponential moving averages. Our momentum analysis further shows the underlying weakness in Biden’s approval among young people.
Biden has a history of using student loans for election purposes. In one of his gaffes after the 2022 midterms, President Biden let slip that his actions to reach out to younger voters had paid dividends for his party at the polls. Biden said, according to Politico:
I especially want to thank the young people of this nation, they voted in historic numbers. Those young voters voted to continue addressing the climate crisis, gun violence, their personal rights and freedoms, and the student debt relief.
The GOP House should investigate the inherent dishonesty of Biden’s monthly student loan cancellation agenda.
Fairness Concerns
Biden’s policy reeks of unfairness on many fronts.
The forgiven debt of $167 billion equates to $500 per American citizen. When Biden cancels $167 billion in student loans by fiat, the burden falls on all taxpayers, which is inherently unfair, especially to those who did not attend college or have already repaid their loans. In the current inflationary environment, many Americans struggle to make ends meet and pay taxes. The $500 additional burden is simply insensitive and harsh.
Furthermore, many of Biden’s waivers benefit those with an old graduate degree who are among the top 5% earners. So, with his plan, Biden is taking money from middle-income families and helping benefit higher-income borrowers.
It is also unfair that many borrowers who refinanced their original federal loans with private entities will not benefit because they are no longer in the federal loan system.
Legal Concerns
Biden’s plan is an overreach of executive authority, particularly given that the Supreme Court recently blocked a previous student loan forgiveness plan to erase up to $20,000 in student debt for about 43 million borrowers, ruling that such actions required Congressional authorization.
Inflation Concerns
The dark reality of Bidenomics is 19.2% inflation under the President’s watch, which is 5.9% annually.
The President’s action will boost the M2 money supply and counteract the Fed’s tightening. The M2 money supply measures the amount of money readily available in the economy, which reflects overall liquidity. It includes cash, checking deposits, savings accounts, money market accounts, and small certificates of deposit. The “net effect” will be inflation exceeding 3.0% in the foreseeable future. It can also increase the nation’s debt, already $35 trillion.
Like skyrocketing mortgage rates, many student loan borrowers’ interest rates have increased primarily due to Bidenomics. Biden is both the arsonist and the firefighter. What an irony!
Bad Precedent
Biden’s forgiveness does not tackle the rising cost of education, which is the root cause of the problem.
Canceling student debt serves as an incentive for colleges to increase their costs. They can point to the likely forgiveness borrowers would receive from the government down the road and justify the higher cost of education to students.
Biden’s reelection comes with a hefty price: devolving the country into a banana republic through lawfare, implementing social engineering maneuvers like student debt cancellations, turning the strategic petroleum reserve into a strategic political reserve, and abandoning our loyal Middle East ally. Elections do have consequences.
TIPP Takes
Geopolitics, Geoeconomics, And More
1. Troops Advance Deeper Into Rafah, Battle Gunmen In ‘Precise’ Operation, IDF Says – The Times Of Israel
Operations in the southern Gaza City are being carried out in a “precise manner… while preventing harm to the civilian population as much as possible, after the civilians have evacuated the area,” the IDF says in a statement.
Israeli troops in Rafah killed several Palestinian gunmen in close-quarters combat, and airstrikes across Gaza took out several terror group operatives, the Israeli military says.
2. After Release Of Hostage Video, War Cabinet Okays Resumption Of Stalled Truce Talks – The Times Of Israel
A source says ministers approved new guidelines for negotiators to try and reach a breakthrough. Egypt is said to be making initial contacts with Israel and Hamas.
Talks have revolved around the format of a staged hostage release in return for a temporary truce and the release of at least several hundred Palestinian security prisoners held by Israel. The largest stumbling block has been Hamas’s insistence on Israel ending the war.
3. Egypt Warns It May Withdraw From Gaza War Mediation Over ‘Attempts To Doubt’ Its Role – Reuters
Egypt threatened to withdraw as a mediator in Gaza ceasefire negotiations after CNN reported that Egyptian intelligence changed the terms of a recent proposal and scuttled a deal.
CNN, quoting sources familiar with the discussions, said on Tuesday that Egyptian intelligence changed the terms of a ceasefire proposal that Israel agreed to earlier in May. When Hamas announced on May 6 that it accepted the agreement, it was not the proposal that fellow mediators from the U.S. and Qatar thought was submitted to Hamas for review, according to CNN.
4. U.S. Worried Netanyahu May Torpedo Normalization Deal With Saudi Arabia – The Guardian
Israel’s prime minister, Benjamin Netanyahu, may be willing to make such a move if it entails ending the war in Gaza and having to commit to working towards a two-state solution to the decades-old Israeli-Palestinian conflict.
The U.S. Secretary of State, Antony Blinken, told the Senate’s foreign relations committee:
There’s an opportunity for Israel to become integrated in the region, to get the fundamental security it needs and wants, to have the relationships it’s wanted since its founding. The Saudis have been clear that this would require calm in Gaza and a credible pathway to a Palestinian state. It may well be at this moment, Israel is not able or willing to proceed down this pathway.
5. Ukraine Updates: Russia Baltic Sea Border Claim Sows ‘Doubt’ – D.W.
Russia’s Defense Ministry published but later deleted a draft decree proposing changes to its Baltic Sea borders. Finland said it wasn’t consulted, and Lithuania said Moscow was trying to spread doubt.
Following reactions from neighbors and comments from the Kremlin recommending reporters ask the Defense Ministry for details, the original ministry post was taken down without further comment or explanation.
6. Norway Slaps Further Restrictions On Russian Visitors – RFE/RL
Norway first introduced restrictions on visas for Russian visitors in the spring of 2022, after the start of Russia’s unprovoked full-scale invasion.
Under the new restrictions, police can refuse the entry of certain Russian citizens, the Justice Ministry said in a statement. “The decision…is in line with the Norwegian approach of standing by allies and partners in the reactions against Russia’s illegal war of aggression against Ukraine,” it said.
7. Britain Accuses China Of Working To Provide Russia With ‘Lethal Aid’ – RFE/RL
Citing U.S. and British defense intelligence, Defense Secretary Grant Shapps said there was evidence that “lethal aid is now, or will be, flowing from China to Russia and into Ukraine.”
The British defense minister did not provide details or evidence to back up his claim, but his assertion, the first such accusation from a Western official, would indicate a new level of Beijing’s support for Moscow and that China had pivoted to directly supporting Russia’s military.
8. ‘Strong Punishment’: China Starts Two Days Of Military Drills Around Taiwan – Al Jazeera
Military spokesman Colonel Li Xi said the joint exercises involving the army, navy, air force, and rocket force were a “strong punishment for the separatist acts of ‘Taiwan independence’ forces and a stern warning against interference and provocation by external forces”, according to a post on China’s Weibo messaging platform.
The show of strength, code-named Joint Sword-2024A, comes three days after Taiwan’s new president, William Lai Ching-te, took his oath of office and called on Beijing to stop” intimidating” the island, which China claims as its own.
9. Chinese Blogger Jailed 4 Years For COVID-19 Reporting Says She’s Been Released – UPI
Zhang Zhan, a Chinese blogger and citizen journalist imprisoned for four years in China for her coverage of the COVID-19 pandemic, said in a recorded statement that she has been released from prison, though worries remain over her safety.
“Today, we finally received confirmation that Zhang Zhan …. has been released from prison,” Jane Wang, a Chinese activist based in Britain who has been advocating for Zhang’s release, said in a statement. “However, she only has limited freedom.”
10. Tesla Pushes Suppliers To Produce Parts Outside Of China And Taiwan – Nikkei Asia
The move comes amid rising geopolitical tensions and competition from Chinese rivals.
Six supply chain executives with direct knowledge of the matter, say suppliers making components such as printed circuit boards, displays, and electronics control unit systems for use in Tesla models sold outside of China, have received the request from the American EV maker.
11. Russia Likely Offering N. Korea Technology Aid To Expand Threats To U.S., Others: Pentagon Official – Yonhap
Russia has likely given technology assistance to North Korea and Iran in return for their arms transfers to Moscow, a senior Pentagon official said, casting it as an apparent move to expand security threats to the U.S. and others.
Deputy Assistant Secretary of Defense for Space and Missile Defense John Hill made remarks in response to a senator’s question about how Washington is handling emerging space security cooperation between Tehran and Moscow as he attended a Senate subcommittee session.
12. Pentagon Looks To Increase Air Defense Systems In Gulf As Iran Threats Increase – Al Arabiya
Pentagon officials kicked off meetings in Riyadh with GCC counterparts to discuss what a senior U.S. defense official said was one of the region’s “most challenging periods” in recent years, including persistent threats from Iran and its proxies.
A senior defense official said the main goals of the meetings will be to examine ways to strengthen cooperation on integrated air and missile defense, including increased early missile warning data sharing.
13. In A First, Kim Jong Un’s Portrait Is Displayed Next To His Predecessors – RFA
Experts say a large portrait of North Korean leader Kim Jong Un was placed alongside portraits of his father and grandfather in a public place for the first time in a move to boost the cult of personality surrounding him.
Photos of the first two dynastic leaders, national founder Kim Il Sung and his son and successor Kim Jong Il, are displayed in every public building and private home. They are treated with such respect that citizens have been praised in state media for dashing into their burning homes to rescue the portraits.
14. Daily Marijuana Use Outpaces Daily Drinking In The U.S., A New Study Says – A.P.
For the first time, the number of Americans who use marijuana just about every day has surpassed the number who drink that often, a shift some 40 years in the making as recreational pot use became more mainstream and legal in nearly half of U.S. states.
The number of daily users suggests that more people are at risk for developing problematic cannabis use or addiction, Dr. David A. Gorelick, a psychiatry professor at the University of Maryland School of Medicine, said.
15. Regular Fish Oil Use May Harm Those With Healthy Hearts – HealthDay News
Healthy people taking fish oil supplements had a 13% increased risk of developing atrial fibrillation, a heart rhythm problem that increases the risk of heart attack and stroke, researchers found. They also had a 5% increased risk of stroke, results show.
However, the long-term study also found that fish oil can help those whose hearts are already in trouble, potentially slowing the progression of heart problems and lowering the risk of death.
Republished with permission from TIPP Insights
