Biden’s Invisible Debt Cancellation Policy – POLITICO

THE BRIGHT SIDE OF INFLATION — Everyone hates inflation. Searing price increases in recent months — to four-decade highs of more than 8% — have torpedoed Americans’ feelings about the economy and crushed President Joe Biden’s polls.

Numbers this high are brutal and unsustainable in the long term. They crush purchasing power as consumers are forced to spend more of their money on essentials like gasoline and food. This is why the White House and the US Federal Reserve are scrambling to drive prices down.

But there is at least one good thing going on with inflation: the existing debt burden is reduced.

It seems bizarre to suggest, especially now, that some inflation can help millions of Americans carrying student loans, housing, credit cards and other types of debt. But it is possible.

It may also make public debt — including the roughly $30 trillion owed by the United States — less of a concern. (No, the US doesn’t owe anyone that $30 trillion, but let’s not get bogged down.)

It is an economic phenomenon that is easy to understand. Well rather easy. Americans still have a huge debt. But inflation – and rapid growth rates since the end of the pandemic – mean that the debt in fact has fallen as a percentage of the total US economy over the past year, according to the Fed.

It’s not because Americans are paying back more or borrowing less. We are not. Total household debt in the United States reached nearly $16 trillion in the first quarter of this year, up 1.7% from the same period last year, due to an increase in $250 billion in mortgage debt, according to Fed data.

But $16 trillion isn’t what it used to be. So in what economists call “real” dollars, the debt is smaller.

We pay these debts with money that is worth less now than when we borrowed it. In other words, there’s more money in the system now, and they’re worth less than when a lot of the debt was piling up.

This silent and hard-to-notice method of debt cancellation is one of the reasons why more progressive economists (and some people in the White House) want to see the central bank press the brakes but not slam them on.

“We want to see sustainable job growth, and we obviously want to see costs come down,” Joelle Gamble, chief economist at the Department of Labor, said Friday in a Twitter Spaces chat hosted by POLITICO. At the same time, she suggested not going too fast to stunt growth: “There are gains that have been made that we don’t want to lose.”

Inflation also impacts the percentage of federal debt as a share of the economy, a key metric investors track. judge the fiscal health of a country. And that’s what’s happening in the United States right now: inflation has reduced the value of outstanding debt, measured in current dollars, since Biden took office.

It came even as the federal government pumped trillions into the economy for Covid relief programs.

But that brings us to the “be careful what you wish for” problem. As interest rates rise, the cost of servicing existing debt also rises. So while some inflation can be good for private and public debtors, too much of it is a nightmare.

Welcome to POLITICO Nightly. Connect with news, tips and ideas at [email protected]. Or contact tonight’s author at [email protected] or on Twitter at @morningmoneyben.

THE DOJ ACCUSES NAVARROThe Justice Department has charged Peter Navarro, a former trade adviser to Donald Trump, with contempt of Congress after he defied a Jan. 6 select committee subpoena, write Kyle Cheney and Nicholas Wu.

After Trump’s defeat in the 2020 election, Navarro became an early advocate for the former president’s false allegations of widespread voter fraud and led efforts to void the election. He is charged with two counts of contempt, each carrying a maximum sentence of one year in prison.

The committee subpoenaed Navarro in February and he laconically refused to comply, claiming extensive executive privilege over his efforts. Navarro did not immediately respond to multiple requests for comment.

The indictment marks the first criminal charges related to the Jan. 6 investigation against a person who served in Trump’s White House during the former president’s attempts to overturn the 2020 election results. Steve Bannon , who left the White House in 2017 and also refused to comply with a subpoena from a select committee, was charged last year with two counts of contempt. He is to be tried in July.

Fetterman suffered from a previously undisclosed heart condition: John Fetterman, Lieutenant Governor of Pennsylvania, released a letter from his doctor saying he was diagnosed with “diminished heart pump” in 2017 after arriving because his feet were swollen. The Democratic Senate candidate said in a statement: “As my doctor said, I should have taken my health more seriously. The stroke I suffered on May 13 did not come out of nowhere. Like so many others, and so many men in particular, I avoided going to the doctor, even though I knew I was not feeling well. As a result, I almost died. I want to encourage the others not to make the same mistake.His doctor said Fetterman was “well paid and stable” and “if he takes his meds, eats a healthy diet, and exercises, he’ll be fine.”

More monkeypox cases expected: The Centers for Disease Control and Prevention today warned that monkeypox could spread from person to person in the United States, after the agency confirmed three cases in people with no recent links to international travel. The public health agency has confirmed 20 cases of monkeypox in 11 states. Most of the patients traveled overseas and likely had overseas exposure, the CDC said, but three did not, and either may have had contact with a case. known or not known how it was infected.

Special Olympics cancels vaccine requirements: The Special Olympics canceled its Covid-19 vaccine mandate for upcoming competitions in Orlando after Florida threatened event organizers with a $27.5 million fine over the requirement. Special Olympics today released a statement saying it will be lifting its mandate as directed by state officials on May 27 “based on the Florida Department of Health’s interpretation of Florida law. Florida”.

Hiring remains strong: After months of robust hiring, U.S. employers may have retreated slightly in May, to levels that would still be consistent with a healthy labor market, despite high inflation and rising borrowing costs. Economists estimated the country added 325,000 solid jobs last month, down from 428,000 in March and April, according to forecasts compiled by FactSet, a data provider. If so, it would break a record streak of 12 straight months in which job growth topped 400,000.

West Point may have to remove Robert E. Lee portrait: For 70 years, slave-owning Confederate General Robert E. Lee watched West Point cadets from a massive portrait in the academy’s library, a slave leading his horse in the background. But this portrait could fall. The commission that was created to rename military bases that honor Confederate generals should recommend that West Point remove the 20-foot portrait of Lee in his gray Confederate uniform, according to two people familiar with the group’s deliberations.

FEDERAL PRIVACY ACT UNDER DRAFT — For decades, Congress tried unsuccessfully to pass a law to protect the privacy of Americans’ data. A bipartisan bill suggests lawmakers in both chambers are finally on the verge of making it happen, according to multiple people who have viewed a draft text, Rebecca Kern writes.

A bipartisan group of leaders from key House and Senate committees has crafted a bill that undermines two of the biggest sticking points in federal privacy negotiations, according to four people familiar with the bill circulating among voters. legislators, industry and privacy. advocacy groups.

Such a bill would provide a uniform national standard on what data companies can collect from individuals and how they can use it. The current situation is a patchwork of state- and industry-specific privacy laws, such as a 1999 law that protects financial information, a 1996 law that protects health information, and a 1974 law that protects collected information. by the government.

WHAT WAS REALLY AT ISSUE IN THE DEPP-HEARD TRIAL — Katelyn Fossett writes in Women Rule:

Jurors returned a verdict on Wednesday in the libel case that actor Johnny Depp filed against ex-wife Amber Heard. The seven-person jury sided with Depp, awarding him $10 million in compensatory damages and $5 million in punitive damages, while also awarding Heard $2 million for a case of defamation by Depp against her.

In its early days, most people couldn’t have fathomed how the trial would become a significant cultural moment, swallowing up social media feeds and launching countless accounts dedicated to destroying Heard and celebrating Depp. It also became the final event by which we measure #MeToo progress. Some recent takes have argued that the verdict is a deathblow to the movement. On the other hand, some argue that not every individual case related to gender-based violence poses an existential threat to a broad grassroots social movement.

But it’s now very difficult to argue that the lawsuit, which has sparked the kind of misogyny we’ve seen previously at times like Gamergate, is inconsequential – especially for anyone hoping to understand the current state of backlash at #MeToo. I called Mary Anne Franks, a University of Miami law professor who focuses on the First Amendment and technology, who argued not only that the trial is a big deal, but ignoring it has actually created all the misogyny he triggered even worse. “I just saw so many people bragging about not paying attention to it, like it was some kind of badge of honor,” she said. “But the problems are quite serious.”

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