ELAM: Spending blow out on edge

Infrastructure sounds better than spendathon, central planning, corporate bailout, Solyndra or Green New Deal.

Kimi Strassel, Wall Street Journal

The Congressional Budget Office (CBO) announced that the $1 trillion infrastructure bill would increase the budget deficit by $256 billion over the next 10 years. That hardly supports the claim that it is paid for. Forget the Harry Truman, Jack Kennedy Democratic party. Today, the party is led by Socialist Bernie Sanders and supported by Pelosi, Schumer, and Durbin. And that deficit is before the $3.5 trillion (or is it really $5.5T) takes hold. And, Pelosi demands the $3.5T pass before the $1T “infrastructure” bill is considered.

When Sanders claims all this spending will lift the lives of working families, don’t be distracted. It will be a multi-generation power grab for the Department of Transportation, which is now destroying “racist roads” and planning nationwide charging stations. The EPA will get billions to “invest” in the next bankrupt Solyndra. In short, this will allow more federal intrusion into your life than ever.

Meanwhile, President Biden declares there is no turning back. He demands a 52 mpg CAFÉ standard by 2026, erasing the Trump standard of 43.3. This is not possible with internal combustion engines unless you are moving to a Citroen 2CV, or perhaps a 50 cc moped. So automakers have no choice but to go electric, hybrid, or hydrogen. If we can’t weather a 4-inch snowfall without crashing the electric grid, how are we going to support 50% EVs by 2030?

It is not clear exactly what a new Exxon net-zero pledge would entail.

Exxon plans a net zero emissions plan by 2050 except no one knows what that means. Apparently a complete departure from all carbon fuels is planned, but then no one now on the Exxon board will be in 2050. An electric Kawasaki Mule to run errands in the two-mile radius I usually traverse would make sense. Asking all those in love with their 2.5 ton pickups to somehow go green is another matter. And automakers are going along with this idea, never mind the lack of being able to do this now, hoping for more federal subsidies.

Crude oil is trading just under $70 and will likely hit the mid 60s in the near future. Tom McClellan notes that the spending spree is pushing overall tax rates above the 18% of the economy threshold. Historically this has always resulted in lower, much lower, stock prices. The markets have peaked for the time being. Expect the usual lower seasonal price slump going into this fall. New highs are recorded all around, and that is precisely how a high in the markets is made. Watch NFLX and AMZN which are already off 10%.