It's the Economy, Stupid

Why Joe Biden is likely to lose the election

Ric Edelman: It's Wednesday, March 27th. On today's show, it's the economy, stupid. That phrase was coined by James Carville back in 1992. He was Bill Clinton's political advisor, and he nailed it. When it comes to voting for president, people tend to vote with their pocketbook. If they've got a good job and able to pay their bills pretty well, then they're pretty happy, and they tend to reelect the incumbent. 

But if they're out of work, or struggling to pay their bills because of big healthcare costs, or education expenses, or high taxes, high interest rates, or high inflation, well then, you're probably looking at a one term president. And this is Joe Biden's dilemma. Oh, for sure, maybe it's not the economy this year that will determine how people vote. 

A lot of people hate Donald Trump or his policies. Most of the women in this country are furious over the Republican position on abortion that was proven in the 2022 midterms, how angry women really are, and that's all good news for Joe Biden. But my bet is that at the end of the day, people will vote with their pocketbooks. And right now, most Americans are finding their pocketbooks looking pretty empty. President Biden and his economic and PR teams are pretty much unhappy about this. After all, they can truly point to the fact that they have right now the lowest unemployment in 20 years, the highest average household wealth ever, stock prices at an all-time high, 401k balances the biggest in history. 

And yet, despite all of this, Joe Biden's approval rating is only 39%. At this point in his presidency, it's worse than it was for every president at this time since Harry Truman. So President Biden and his team are trying hard to make the case that the economy is strong. And their biggest argument is that inflation is once again under control. 

But if that's true, why is Joe Biden complaining about shrinkflation? You're not stupid. You know what's going on. You noticed that that bag of chips you just bought is filled with mostly air. Your can of soup is smaller than it used to be. So is that box of detergent. Companies are making their products smaller, or giving you fewer items, like a smaller candy bar, or fewer almonds in it, or a roll of paper towels that has fewer sheets. 

You pay the same price, you get less. Paying the same, but getting less? That's the same as getting what you used to get, but paying more. Both are inflation. So when a company cuts down on the quantity, instead of raising the price, it's called shrinkflation. This has been going on for decades, you know, but that doesn't matter. 

It's going on right now in a big way and voters hate it. So now President Biden says he hates it too. He said recently, quote, “What makes me the most angry is that ice cream cartons have actually shrunk in size but not in price.” Really? That makes the President of the United States most angry? 

Like, angrier than Putin? Or China? Or Hamas? Or the immigration crisis? He's most angry about skinnier Oreos? Two years ago, inflation peaked at 9.1%. Joe Biden and his team are bragging that inflation is now only about 3%. The White House seems to be flabbergasted that you aren't happy about this. But you're not happy about this because it's the economy, stupid, and you're not stupid. 

The rate of inflation might be lower than it was a year or two ago, but inflation is still there. Joe Biden seems unable or unwilling to accept the fact that you're unhappy with two aspects of inflation. First, prices are still rising. It's just that the rate of increase is lower than before. If you were driving 100 miles an hour, and now you're only driving 30 miles an hour, would you say you're going backward? Of course not. You're still going forward, just a little more slowly than before. So inflation isn't gone. Prices are still rising, and you know it. And those smaller packages? Well, they're still smaller. Companies haven't started putting more chips in the bag or more almonds in the candy bar.  

And the other thing you know, which Joe Biden doesn't want to acknowledge, is that his Treasury Secretary is a liar. Janet Yellen has been saying for years that this high inflation is nothing to worry about because it's transitory. You've heard her say that on every news talk show. In other words, she said, inflation might be high, but it's transitory, meaning temporary. It's going to come down. She's flat out wrong. When the price of health care and health insurance went up with inflation, it stayed up. The inflation rate might have come down, but your monthly cost of insurance sure hasn't. There's been nothing transitory about it. The same goes for food costs, and education, and transportation. With the high interest rates in the 20 years that we've got right now, we're looking at bigger monthly payments for cars, and houses, and college, and everything else you borrow money for. Where's the transitory stuff, Janet? And all of this is why you're annoyed, and why you're not happy with the economy. 

So no, President Biden isn't getting any credit for the so-called great economy. Yeah, unemployment's low, but you probably have two jobs. And you might have a higher salary than ever, but you're also spending more than ever for everything. Food, clothes, cars, energy, insurance, education. Oh, and taxes, too. Tax rates across the country are, for everything, higher than ever. 

Sales taxes, property taxes, use taxes, you name it. And stock prices might be at an all-time high, but only 60% of US households own any investments. The other 40% feel left out. The president and his team either don't understand this, or they aren't willing to admit that they do. But you get this because you know, it's all about the economy and you're not stupid. 

And since they haven't seemed to figure it all out or fixed it, the President and his fellow Democrats are trying to distract you from it by commiserating with you about it. That's why President Biden has been complaining lately about shrinkflation and junk fees. But neither of those things are going away. 

There's a problem with the cocoa harvest, for example. That means fewer cocoa beans and higher prices for them. So you're going to see higher prices for chocolate bars later this year. Right around the election, or you're gonna get smaller candy bars or bars that are filled with cheaper ingredients like fruit that fill up the space, and more people are traveling than ever. 

This is inviting airlines and hotels to increase their prices and to add more junk fees to boost their profits. None of this is going away any time soon. And until our elected leaders in Washington, all of them, by the way, not just Democrats, until they realize that we care about current prices relative to current incomes and not so much on the fact that prices maybe just aren't rising as fast as they were rising, we're going to have continued discontent among the voting public. And that's going to shape the election's outcome and not just for the presidency, but for the House and Senate as well. Because of this, right now, we might be looking at November's election outcome, and you can be sure the president knows this. 

That's why he's busy throwing money at as many people as he can. The president just forgave another $6 billion in student debt for 78,000 people. That works out to $77,000 per person that he just gave away. That brings the total to $138 billion in student loan debt cancelation for almost 4 million voters. And in his State of the Union address last month, the president proposed giving $10,000 to first time homebuyers and a separate $10,000 to current homeowners who sell their homes and buy a bigger one. Well, George Washington gave voters whiskey on Election Day, so I guess government giveaways is nothing new. Like I said, it's the economy, stupid.  

On tomorrow's show, how Bitcoin is creating financial freedom in Africa. 

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