Want fewer goods and services and higher taxes to pay for them? If so, Biden is your man.
Davis-Bacon Act Changes
The Biden administration is redefining the Davis Bacon act, so that your tax dollars buy fewer and fewer services.
The Davis–Bacon Act of 1931 is a United States federal law that establishes the requirement for paying the local prevailing wages on public works projects.
A change in how prevailing wages are defined will drive up the costs of anything government touches. The cost of wind turbines, EV charging stations, road repairs, and everything federal construction project will rise as a result.
Free Raises for Everybody. Not.
The Wall Street Journal reports Free Raises for Everybody. Not.
“We are updating this law and giving workers across the nation a raise,” Vice President Kamala Harris proclaimed last week. She cited a heavy-equipment operator on federally funded construction projects in Allegheny County in Pennsylvania who would see his pay increase to $28 an hour from $17.
The new rule lets DOL adopt prevailing wages determined by state and local governments rather than contractor surveys. That means Big Labor’s friends in Albany and Sacramento will be able to dictate wages on public works. Prevailing wages in metro areas will also cover nearby rural counties where wages are typically lower.
The new rule extends the mandate to broadband, solar panels, wind turbines and electric-vehicle charging stations that are financed in part by Washington. Semiconductor firms receiving federal grants for new factories will have to pay construction workers the new prevailing wage.
The Inflation Reduction Act includes “bonus” tax credits that are five times larger for renewable projects that pay the prevailing wage. Because most aren’t profitable without the bonus credits, nearly all green-energy developers could have to pay the prevailing wage. That means the law may cost even more than the $1.2 trillion that Goldman Sachs estimated.
One obvious result will be higher costs on public works and probably fewer of them since federal dollars won’t go as far. States and localities may have to borrow more and raise taxes to fund projects. Fewer semiconductor fabs and renewable projects will probably be built since private capital won’t go as far.
Inflation Promotion Everywhere
- The EV push is inflationary
- Clean energy tax credits are inflationary
- Cap and Trade is inflationary
- Deglobalization is inflationary
- Tariffs and sanctions are inflationary
- Push for more unions is inflationary
- Student loan forgiveness is inflationary
CPI Rises 0.2 Percent, Shelter Again Accounts for Most of the Increase
The price of rent has risen 0.4 percent for 18 straight months. For discussion, please see CPI Rises 0.2 Percent, Shelter Again Accounts for Most of the Increase
Evection moratoriums and the third round of fiscal stimulus contributed at least a bit towards rising rents. The Fed played a role as well. But Biden is responsible for everything in the bullet list above.
He also has his fingers in the militant push by the United Auto Workers (UAW) for preposterous demands.
UAW Demands
- 32-hour workweek
- 46 percent pay raise over 4 years
- Right to strike over plant closures
- Increased retiree benefits
- Defined pension plan for all workers
- Cost of living adjustments
UAW Declares War on Corporations, Seeks 46 Percent Wage Hike, September Strike Looms
For discussion of militant unions, please see UAW Declares War on Corporations, Seeks 46 Percent Wage Hike, September Strike Looms
Even if the price of rent starts dropping, temporarily suppressing the CPI, the inflationary pressures by this president are piling up, one after another after another with no end in sight.
Davis-Bacon is a real porker. We will have an inflation inferno if Biden’s polices continue for another four years.
Joe Biden’s policies reflect New Deal (or earlier) socialist thinking that society prospers when the bottom large percent is paid more (,and the top receives less…). At the extreme, the idea that bosses like Henry Ford, Thomas Edison, Steve Jobs are a cost to the economy, a negative, while their (unionized) workers are the essence of it is absurd. The UAW wouldn’t know how to design and build an assembly line and would struggle to establish a supply chain. It is thus a good question what is the ideal and fair distribution of wages between bosses and workers.
Mish lists many Joe projects that are inflationary. That leaves out a necessary step. As Milton Friedman pointed out, you get inflation from too much money chasing too few goods. All those items in Mish’s list are inflationary only if the Federal Reserve provides lots of money to enable them. If the Federal Reserve holds money supply constant, then there will have to be nasty budgeting taking money from other things to pay for what Joe wants.
Out of what Joe is proposing and intends to enforce we could easily see third-world economics like in Mexico, where legal businesses are ham-strung by strong labor unions and high costs, and much of the population has to resort to work in the “informal” sector.
Why do you think the price of rents will start dropping? There has been no evidence for such moves! Continuing leases continue to get adjusted upwards every year, just as has been the case for time immemorial!!
DON’T the sodomites in big bad cities produce all the GDP in pax dumbphuckistan. all the hicks always think they work hard. cracks me up.
IRA (Greatest mal investment in history) sanity check
should be renamed Greatest Inflation Act ever
link to mdpi.com
” Proposals for electrifying the 80% of non-electrical energy demand overlook crucial facts, namely that the national-scale transmission systems and grids required for electrified land transportation do not even exist today, nor is the needed build-out likely given material, energy, and financial constraints ”
“3.1.1. Big Picture Sanity Check
Transitioning the U.S. electrical supply away from FFs by 2050 would require a grid construction rate 14 times that of the rate over the past half century [32]. The actual installed costs for a global solar program would have totaled roughly $252 trillion (about 13 times the U.S. GDP) a decade ago [33], and considerably more today. A recent report describing what would be needed to achieve 90% “decarbonization” and electrification by 2035 neglects to mention that, in order to meet such targets, the United States would have to quadruple its last annual construction of wind turbines every year for the next 15 years and triple its last annual construction of solar PV every year for the next 15 years—only to repeat the process indefinitely since solar panels and wind turbines have average lifespans of around 15 to 30 years [34,35]. In addition, Clack et al. [36] found that one of the most cited studies on 100% electrification in the United States is error-prone and laden with untenable assumptions.”
“heavy-equipment operator on federally funded construction projects in Allegheny County in Pennsylvania who would see his pay increase to $28 an hour from $17.”
Where I live you would be lucky to get someone to mow your lawn for $35/ hour and the prevailing wage for equipment operators is $77/ hour.
No one in the US is running a crane or bulldozer for $17/hr.
Unless he’s part of the family and under 20.
Look for the Inflation Reduction Act to greatly increase metal inflation going forward. The Act has been called the greatest mal-investment in history. Put me down in agreement. Much like Biden has railed against the oil industry and called for it to shut down and then later calling for the oil industry to ramp up, the same is true for much of the metals.
link to oilprice.com
“The S&P Global report, like so many before it, suggests that government support, including direct financial support in the form of subsidies, will spur a lot of demand for metals and minerals. There will be so much demand, in fact, that suppliers will be physically incapable of responding in a timely manner.
McKinsey earlier this year put the gap at 10-20% for nickel by 2030 and a whopping 70% for a rare earth metal called dysprosium, which is used in electric motors. All because of the rush to electrify and lower emissions.
In other words, those jumpstarting the transition with massive subsidy packages are essentially dooming that same transition by creating levels of demand they have no realistic way of meeting.”
Any thoughts on base metal inflation on Bidens worlds greatest mal-investment in history? Copper shortfalls expected to start as early as next year. I posted a report that should Canada go full bore, wherever you see any power generating structure, it will require another 2 beside it. Same for the US.
link to mining.com
“S&P Global Market Intelligence goes a bit further out, projecting that annual global copper demand will nearly double to 50 million tonnes by 2035. Last year, global copper mine production sat at approximately 22 million tonnes, short of even the current demand.”
Start buying copper stocks. Instead of complaining about the IRA, you should be looking on how to profit from it.
BHP FCX TECK SCCO RIO
You’re welcome.
thanks poppa. i’ve traded BHP, RIO and FCX for ages. great equities.
i used to see world HQ of FCX from my backyard pool? they did. a very interesting thing when market busted about 15 years ago, they were building a new tower, and instead leased the first half 20 or so floors to a fine hotel. used the top 20 or so floors for their world HQ. as a r/e guy, i thought that so saavy.
“We are updating this law and giving workers across the nation a raise,” Vice President Kamala Harris proclaimed last week.
It may unemploy more workers with the incentive to create more robotic automation. Nothing happens in a vacuum.
How are you going to have a robotic animated construction worker or heavy equipment operator???
Heavy equipment operation will often be easier to AI automate than ordinary street driving. Street driving involves a vast variety of edge cases. Sometimes these unusual incidents are literally edge cases – emergency vehicles parked on the edge of the road – which Teslas keep crashing into in spite of their bright colors and flasjing lights.
Input the dirt work blueprints into a fleet of AI heavy equipment. and keep the humans safely away until the job is done.
AI driven GPS guided tractors and combines are already at work on American farms.
They can already 3D print homes and other structures. It won’t eliminate all construction workers, but I would imagine as time progresses, these building systems and will be refined, replacing more manual labor. Also, see how automation with robotics has advanced over the years in factories, especially high volume automotive assembly.
link to youtube.com
The difficult job to automate is the one swabbing the floor and counters in the fast food joint with bleach solution.
Now I dont know about swabbing countertops…but my nephew has a side business
selling robotic floor cleaners (made in China) to malls and universities in Canada.
Its doing well from all reports
Dr Nathan Bryan, Nobel prize winner, Nitric Oxide discoveries , u tube, Dhru Purohit min 11: 30 : US gov declared a biological warfare against the American people.
Save yourselves !
U paid SS for decades, but u might get deflated SS and higher medicare deductions.
The CPI is down for COLA. UPS and UAW wages are rising. Heavy equipment
operators will get a raise from $17/h to $28/h, +65%.
Yup, that first dollar I paid SS tax on is now worth $10.22.
922.4% inflation.
Finally, the workers that aren’t in a Government job will get some relief. And the really great thing is it will be a year or two before they get clobbered by prices inflating to compensate for the wage increases.
But it is imperative the pay raises be implemented a few months before November 2024, for obvious reasons.
We do have a system that is working so far. Do you think the future will ever run out of money to borrow?
Hi Mish
I have been noticing the 10 and 15 year US government bond yields have recently begun increasing and have broken above the long term decline in yields. I am also getting quite nervous about the health of the stock market, given the number of job losses, companies shutting their doors etc as well as the decline in real incomes for consumers. I have cashed out of a number of my long term equity holds as a result and have gone to a significant cash position. I realize Powell will likely have higher for longer interest rates in his attempt to control inflation. What goes unsaid is the ongoing qualitative tightening in the feds balance sheet. With a currently inverted yield curve, (short term rates higher than long term rates), it looks like we may dive into, if we are not already in a recession. What are your thoughts on having some exposure to longer term US GOVT bonds…a smart move or not. Secondly, when Powell does eventually begin to ease rates, I am a bit worried about the potential decline in the USD….especially after the 2nd downrating of the US by Fitch. It would be nice to get your take on these issues.
I think a treasury ladder is a pretty good idea. US stocks will underperform treasuries IMO. I do not know if this plays out in a big bang or over time.
Natural disasters and extreme weather are inflationary too.
Inflation is a policy goal. It’s not a bug, it’s a feature. Eventually, the Fed will move to yield curve control to have real rates while redefining inflation to make it appear lower.
That way real inflation can run above government borrowing costs and the deficits can be financed while monetization of the debt occurs.
It’s the best path for the government and the owners of the Fed.
The problem as usual is how to balance labor’s share of GDP. It has been steadily declining. When either side (business or labor) has the advantage they push too far (which is typical with almost anything). So rather than feel like the sky is falling I just see this as the reversal of a trend.
The best solution I believe is to have more business competition and more anti-trust enforcement even if it means rewriting the laws. When businesses and labor compete without an upper hand it is best for the country as a whole.
“The Inflation Reduction Act includes “bonus” tax credits that are five times larger for renewable projects that pay the prevailing wage.”
Once you are providing the prevailing wage to your union workforce you will also be providing childcare for those employees that meets the new federal standards.
Biden is pushing for child care, not sure it’s a mandate.
I’m surprised no one has suggested starting public school at a younger age. Teachers unions would love it. Parents with toddlers would love it. And it could be called something like ‘Education head start’. Anyone opposed to it hates children.
Anyone advocating more public “education” hates children.
Agreed, the Democrats need to start the liberal progressive indoctrination processes even earlier. /s
still shocked anyone thinks deflation is in the cards. stagflation is where we are. on top of a crumbling nasty empire of debt. but alas, it’s still a wonderful world to live in and invest in. DEFLATION. bwaaaaaaaaaaaahhhhhhhhhhhh
Deflation will never happen with fiat currency, they will simply print money to buy votes and support, give the money to the friends in various industries, and blame others for the inflation with cover from the media.
I think we’ll have inflation in some parts of the economy and deflation in others. Technological advancements will make some things a lot cheaper. Always have.
As far as government waste goes, paying higher wages is near the bottom of problems. Those who get paid more will pay more in taxes, buy more goods etc… . So much of the raise will go back into government coffers. Another plus is it might attract better job candidates, so you may get better results for the same amount of hiring.
Much better than sending money to Ukraine.
The problem with the government creating higher wages is that it’s only for certain people.
Everyone else becomes poorer. Government buys votes from union workers and borrows money to do it. That $1.2 Trillion IRA never gets paid back. Interest payments forever. That’s exactly why government spending has a negative money multiplier.
It is why economic growth keeps slowing. Eventually taxes will need to be raised on everyone, including the people that did not get the higher pay.
We deserve what we get, from the government we elect.
Don’t disagree. But I would much rather the money go into the pockets of a US citizen who worked for it than the vast majority of what the gov’t spends.
“Inflation Promotion Everywhere…”
You missed the biggest inflationary issue: social security. Handing out free money to people for doing nothing is far worse than anything else listed.
link to fiscaldata.treasury.gov
I’ve been paying into SS for decades. Whatever I get out of it, I earned. It’s not a free handout to me.
That was exactly what I just posted. Well said.
You have been paying taxes for decades at a discounted level and anything you receive now is an inflation adjusted boondoggle. There is no way you paid anywhere near what you’re gonna get out of it. And remember those social security payments you made 20 years ago weren’t for you, they were for other socialists collecting SS at that time. It wasn’t your personal 401k run by the government.
But this misses the whole point anyway….unions have a grand total of 14 million people (7m in private and 7m in public unions). There will soon be 80 million people on social security handouts. Higher wages for union workers = more social security taxes anyway so why complain?
Union Source: link to bls.gov
“… anything you receive now is an inflation adjusted boondoggle. There is no way you paid anywhere near what you’re gonna get out of it.”
The same is true of 401ks, except they can earn a return above inflation, unlike SS. There’s nothing free about that money at all unless one received it without paying in. Money has a time value.
Not only is that money not free, it actually is a net cost to get it. The CPI understates inflation thanks to hedonic adjustments that only go one way and I would have generated a better return in my retirement account.
“But this misses the whole point anyway”
You did not make that point so there was nothing to miss. You linked inflation to “free money to people for doing nothing.” You said nothing about unions and taxes in your initial post.
MPO45v2
Your clueless the money was confiscated from the checks there was no opt out
and the company had to pay in also for each person same amount . People got statements for what the contributions was yearly and the projected benefits based on contribution level under their social . Your point is idiotic because there is no opt out the gov forces you to play the game .
Also for years there was a surplus that the govt used to fund their budget. If it was even invested in treasuries the current deficit would be less or non existent.
That’s a common sentiment, but the money you earned was already given away to people older than you. Anything you get will be taken from people currently working and given to you.
“I’ve been paying into SS for decades. Whatever I get out of it, I earned. It’s not a free handout to me.”
How on Planet Anything, does handing money to some conman, who then promptly, and openly, spends every penny at Epstein Island; “entitle” you to force the children of someone completely unrelated; who never saw a dime of your gifts-to-conmen; to work his rear off in order to hand you money?
The money you insist you “paid in” has been spent. By all means, if any of those dollars, are still found laying around unspent, feel all the entitlement in the world to those dollars.
But: none do. They have all been burned. You haven’t _saved_ anything. You haven’t paid anything “in” to some magical; or for that matter non magical but just well ran; safekeeping institution where your money is now sitting, for you to take it out.
Instead of PAYING IN; all you have done is PAY: You have paid for the self promotion, coke and underaged prostitutes of two+ generations of conmen. Who have, duh, lived it up on the money you handed them. Those conmen have long since spent every penny of those dollars. With the result that there are no money left anywhere, laying around for you to “take out.” It all gone. Just like the rest of once-was America.
All that the “I’ve paid in…” nonsense is: Is trying to make up excuses for why it is somehow a-ok for you, to rob completely unrelated children, who weren’t even born when the conmen took your money and burned it.Those kids never took a dime from you. Hence owe you not one single penny worth of “taxes” stolen from them. It’s not their responsibility to bail you out, despite the clear and obvious fact that you took what could have been put under the matress as pension savings, and instead handed it to conmen, to freely burn as they saw fit, instead. Never will be, no matter what devoid-of-logic tripe anyone tries to pass off as some sort of justification for why it somehow is.
I’m not saying it’s in any way, directly at least, “your fault.” You very likely had little direct say on the matter. Instead, you were just robbed. Like the rest of productive America. But me successfully getting away with robbing you, then burning the proceeds on hookers and blow, doesn’t somehow make it the duty of Mish’s kids to work their rear off in order to hand you a pile of money. Instead: You just happen to suffer the misfortune of being born in country which has degenerated into little more than a kleptocracy. Which sucks for you. Just as it does for most Americans.
All too true. Social Security is a Ponzi scam, and we are all victims of the scam operator, the US Government.
There is a simple, successful, and widely used solution: seize the remaining asserts of the Ponzi scammer, and sell them at auction to repay the victims. The Federal Government owns 30% of all onshore US land and all of the oil and gas rich continental shelves around the US. Seize those assets and liquidate them for the benefit of 80, 000,000 Social Security theft victims.
Huge bonus: putting these properties in private productive hands would cause an immense economic boom – a non-inflationary boom resulting from an increase in the supply of goods and services relative to the money supply.
There is no Constitutional authority for the Feds to own zll this real property anyway; this is not just the district of Columbia and “forts, dockyards, and other needful buildings.”
Social Security is a Social contract. It is supposed to be almost a generational pay it forward kind of thing. The problem is that the Baby Boomer generation sold out this country with their obsession about finacialization and retirement. Today’s payers of Social Security have a lot less vibrant civilization to pay it forward.
Baby Boomers were groomed by a handful of economic deviants 10 years their senior, but they were willing participants in the financial preversion. Basically building assets by moving them around rather than creating new ones.
The Robber Barons of old were a much better example of humanity, and the whole generation of Baby Boomers were taught to hate them, and America. While they were looking at the past, the Financial Charlatans were busy fleecing America of substance and replacing it with virtual icons.
How many of these same people will be hanging from an IV tree: spending their last dollars, to have a few more breaths, to somehow capture the true joy that they missed. Imagine someone whose last word is Rosebud.
Social Security was taken from our payroll to pay it forward to ourselves. It was taken, used by our government and occasionally “borrowed” from our payroll contributions within then Social Security system to fund other projects but not yet repaid as of this date. I’m not sure but I think I rather say rosebud than angry.
If you regard people using social security that they paid into ‘far worse’ than anything else or that these payments are ‘handouts’ then your opinion is a symptom of a profoundly sick capitalist system. Or better said, a predatory crony capitalist system.
Not quite as much of a problem as SocSec adjustments lag inflation in the true cost of living by at least 50%, usually more. The real advantage is folks being ratcheted into higher tax brackets and more income tax on SocSec payments.
Social Security is our money that was taken from our payroll. So it was free money, from us to the government, and freely mismanaged. I apologize in advance for assuming but you are not from the USA are you?
How can we normal folks fight against this inflationary enslavement all around us?
Secession
Stop earning and spending.
By not going out and shopping. After 9/11, people were sitting at home, watching events unfold at Ground Zero. Bush Jr. told people to go out and shop. He was concerned about the economic result, if people didn’t go out and buy stuff.
Forget it. They hate us.
Move to Seattle, Portland, Chicago, Baltimore, Atlanta, and L.A., and STEAL everything.
“Move to Seattle, Portland, Chicago, Baltimore, Atlanta, and L.A., and STEAL everything.”
According to great multiple alias scam artist, Realist (imgreen, mpo, papascam, jeffgreen), those places are going to lead the renewable transition. Today he claims he doesnt know anyone whose suffering from bidenomics. He must be currently looking at housing in those cities along with Detroit.
I had the scam artist on ignore but I have to admit it is comical watching the idiot. Dont talk politics but the idiot in every post praises democrats and slams republicans.
Hey. Thanks for saying I am Realist! I consider that a badge of honor. I have made millions from Realist’s advice on this blog.
As far as “Bidenomics” goes, I don’t personally care. As long as I can keep making scads of money, who cares about politics. And I have never said “ I don’t know anyone whose suffering from bidenomics.” Where did you come up with that one? Lol!
Still doing great with my portfolio that is heavily weighted to oil stocks. Another sweet day today.
How’s your portfolio doing?
I also wish there was an IGNORE button. Then we could both ignore each other.
live simply. don’t spend much. put yourself on gold standard. half your net worth in money that still is worth alot after thousands of years.