Most discussion about the possibility of recession focuses on the Federal Reserve’s monetary policies. But there are also factors on the supply side of the economy that may tip the U.S. economy into a recession. Among them are the tax and regulatory policies of the Biden administration.
This is the opening paragraph of David R. Henderson and Casey B. Mulligan, “Biden is Practically Engineering a Recession,” Wall Street Journal, March 22, 2022 (March 23 print edition.)
Another excerpt:
The combined effect of increased regulation and increased taxation of capital is a reduction in employment growth by about 0.25 percentage point a year and of real GDP growth by about 1.1 points a year.
Read the whole thing. It’s gated, but I’ll publish the whole thing here on July 23.
READER COMMENTS
Thomas Lee Hutcheson
Jun 24 2022 at 10:28am
Taking as given that a spate of bad regulations is reducing supply (but why focus on regulations when there are bigger anti growth fish to fry like the deficit, immigration, and trade restrictions?) how does that cause recession which is usually understood as a fall in nominal GDP and unemployment of resources.
David Henderson
Jun 24 2022 at 10:31am
You asked:
And you know this how?
By the way, we did talk about immigration restrictions.
Thomas Lee Hutcheson
Jun 26 2022 at 10:03am
Sure, but not nearly enough in relation to the size of the economic distortions of immigration and trade and the deficit hardly at all.
Of course neither these nor the regulations mentioned in the referenced article have more then epsilon effect on inflation. That’s the Fed’s business.
Monte
Jun 24 2022 at 12:09pm
You’re, of course, referring to his administration. Given recent revelations about the president’s simple cue card, I doubt he’s capable of engineering much of anything on his own.
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