From 40-year-high inflation to recovery: How Trump is undoing Biden’s damage

After a four-year economic bacchanalia, America was left with a cost-of-living crisis. Runaway government spending and overregulation pushed up prices for many essentials at a breakneck pace, like the cost of homeownership doubling. Fortunately, the Trump administration has been undoing the damage and setting the stage for an American comeback this year.

It’s no exaggeration to say that President Joe Biden left behind an economic mess, including a genuine affordability crisis. Consider the following six data points showing what happened during his tenure in office:

• The monthly mortgage payment on a median price home more than doubled.
• The inflation-adjusted value of the average American’s weekly paycheck fell 4 percent.
• Native-born Americans were losing jobs while net job growth went to foreign-born workers.
• The cost of servicing the national debt exploded 117 percent.
• Bureaucratic government jobs exploded by more than 160,000 in two and a half years.
• Multi-trillion-dollar annual deficits were enshrined into statute.

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The runaway spending by Biden and a profligate Congress crushed the American dream with 40-year-high inflation, the fastest rise in interest rates in just as long, a frozen housing market and more. The irony is that all this government spending had the initial effect of making the economic numbers look better or making consumers feel better temporarily.

When the government under Biden repeatedly fired off the cash cannon via “stimulus” payments, people thought their personal financial situations had improved because they had more money to spend. But all that cash was chasing the same quantity of products and services in the economy, so everyone quickly bid up prices everywhere.

Similar, whenever the government spent a dollar, that was added to gross domestic product (GDP), a measure of economic activity. Runaway government spending, financed by borrowing printed money, sure made GDP look great, until the predictable inflation arrived and robbed wage earners of their savings and incomes.

The same happened with the job market. Every government bureaucrat hired under Biden boosted the monthly jobs report, but didn’t add any production to the real economy. Likewise, every illegal alien hired boosted payrolls without employing more Americans. It wasn’t economic health, but more like cancerous growth.

Last year, President Donald Trump’s economic agenda was like a shock treatment of chemotherapy to kill the cancer of Bidenomics. The Trump administration has slashed more than a quarter million government bureaucrats, cutting the federal workforce to its lowest level in more than a decade. The deficit is down 27 percent from this time in the previous fiscal year. And immigration law is actually being enforced.

Changes like these are obviously good in the long run, but can result in short-term pain, like how chemotherapy eliminates a tumor, but makes a patient feel worse initially. Slashing all those duplicative and counterproductive federal jobs pulls down the headline payroll number in the monthly jobs report. Similarly, the contraction of government expenditures in the first half of last year reduced the headline figure in the GDP reports.

It can be tempting for the government to just spend more money and hire more bureaucrats to make GDP and payroll numbers look better, but that’s not the path to long-term economic health. Fortunately, President Trump is resisting that temptation.

Equally fortunate, the pain is nearing an end. Reducing government spending has put downward pressure on inflation, helping earnings rise faster than prices. The average American’s weekly paycheck today can buy 1.6 percent more than when Mr. Biden left office.

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And there’s more good news in the labor market for Americans. All the net job growth over the last 12 months has gone to native-born Americans, not foreign workers. Furthermore, all net job growth has come from the productive private sector, not government.

There’s even been some relief in the housing market, with the monthly mortgage payment on a median priced home falling almost 5 percent. Much like the increase in inflation-adjusted weekly earnings, this improvement in the housing market clearly hasn’t undone all the damage from Biden’s tenure. Homeownership affordability remains near a record low.

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But things are moving in the right direction and are set to accelerate this year because of the Trump administration’s pro-growth agenda. Tax reform, including no taxes on tips or overtime, as well as full business expensing, will incentivize working and investing. That’ll boost growth and wages for folks across all income groups.

The economic cancer created in the previous administration was certainly large and far-reaching, but chemotherapy is mercifully nearing an end. Once the old, failed public policies are out of the system, the productive private sector economy can start running at a healthy pace in 2026. Cheers to that in this New Year!