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Liz Peek: Biden's economy is stalled. Here's what he must do now to unfreeze our supply chain

Liz Peek: Biden's economy is stalled. Here's what he must do now to unfreeze our supply chain

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Instead of playing hide-and seek with White House journalists or whining about Republicans blocking the $5 trillion tax and spend scheme, President Joe Biden can be useful.

President Obama could work to lower inflation. How can the president do this? To help reduce rising energy prices, we must get people back to work, address supply chain issues that increase the price of almost all consumer goods, and do everything to improve U.S. oil production.

That’s what Donald Trump would be doing if he were in the White House. The former president, just like he launched Operation Warp Speed against Covid-19 would remain laser-focused on today’s squashing of inflation.

Despite his many faults, Trump is rarely considered inert.

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Unfortunately, an administration that views climate change as America’s most serious threat and that has deep pockets in organized labor will not be able to address any of the above. Biden wants to place green lobbyists above voters. Climate change is ranked eighth by them, after COVID and poor leadership. 

He’s also not going to demand that unions loosen work rules that have our ports operating at 60 percent to 70 percent of capacity or that crimp the number of hours truckers can stay behind the wheel. There has been some progress on this issue, but not nearly enough.

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Biden doesn’t want to face progressives from the Democrat Party that are determined to eliminate incentives for work. There is ample evidence of the harm done by providing extra unemployment benefits, imposing rent moratoriums or increasing food stamps while allowing billions to student loans. Those policies keep workers off the frontlines, it is clear. Biden’s vaccine mandate and demand that certain jobs be filled only by union workers further shrinks the available labor force.

The latest employment report, which reflects the shortage of labor, showed that average hourly earnings increased by 0.6 percent from month to month, or at 4.9% annually, an increase that is 40 years high. This is positive news except for the fact that it falls short of inflation. Ed Hyman, a leading Wall Street economist, projects that this week’s consumer price index report will likely show a rise of around 5.35 percent year-to-year, topping wage increases.

Biden should convene union leaders, CEOs of transportation companies, doctors, and others to address ongoing supply chain issues. They will discuss how to free the ports that have become clogged up and any other bottlenecks. This would help alleviate pressure on retailers, builders and consumers.

US ports struggle against supply chain crunch Video

According to Beijing’s Global Times, in late July “China Central Television (CCTV)… reported that, since April, freight rates have surged by around five times compared with the same period in 2019.” Cost surge was caused by container shortages, and “falling turn efficiency at overseas ports”.

Our ports pose a serious problem. Just recently, there were 147 ships waiting to be unloaded at the ports in Los Angeles and Long Beach – a record. The process of unloading ships is complicated by labor restrictions, Covid protocols, and other shortages. Truck drivers, chassis, crane operators, warehouse space – everything is in short supply.

To be fair, the President Biden requested a 100 day assessment of supply-chain vulnerabilities in February. It at least admits that there is a problem. The June report primarily focused on ensuring long-term supply of green supplies such as batteries for electric cars and rare earth minerals as well as medical supplies. 

These priorities are vital, but it will take many years for the investments to become reality. Now is the time to get help. 

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Walmart and Home Depot, along with other major box retailers, decided that chartering smaller container ships was better than using large vessels stuck in overcrowded ports such as Los Angeles. 1000-container ships are able to sail to areas not easily accessible by the vessels of 20,000 units which importers depend on and deliver goods much faster.

It will obviously be more costly to bring items in on small ships.  Retailers will pass the higher costs along to consumers, who, desperate for a new refrigerator or toys for their kids’ Christmas, will have to pony up more.

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The President should encourage U.S. producers, who are expected to decrease this year, to raise their output to help reduce gasoline prices. Biden could accomplish this by not slowing down sales of drilling acreage, delaying the implementation of methane emission rules for drillers, and expediting construction of natural gas pipelines. He also might be able to ditch the threat of raising taxes. 

The number of drilling rigs in operation today is 533, an increase over the 269 that were idled last year. But we’re nowhere near the level that today’s $75 price tag for West Texas oil should be encouraging. In 2005, when oil prices were roughly today’s level, we had nearly 1,400 rigs operating in the U.S.

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Biden is facing a dilemma due to rising energy prices, particularly with the highly anticipated global climate conference just weeks away. He will most likely want to make further costly pledges to cut U.S. emissions, increase our reliance upon renewable energy. If the president wants it, a crisis could be brewing in the United States.

Everyone is suffering from inflation, but especially those of middle- and lower income Americans that Biden claims to be concerned about.  If he wants to prop up his dreadful approval ratings, he should act now to stem rising prices and to show he’s on their side.

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