Live from Music Row Wednesday morning on The Tennessee Star Report with Michael Patrick Leahy – broadcast on Nashville’s Talk Radio 98.3 and 1510 WLAC weekdays from 5:00 a.m. to 8:00 a.m. –  host Leahy welcomed all-star panelist Crom Carmichael in the studio to breakdown the potential of inflammatory effects on America’s economy from COVID and Democratic grifters.
(Chuck Schumer clip plays)
Leahy: That is perhaps one of the most dishonest grifters in American political history. Senator Chuck Schumer of New York trying to explain why they should pass a $1.9 trillion giveaway to big blue cities and big blue states and he’s using a false claim.
Carmichael: Yes. As Mitch McConnell pointed out one percent of the bill, which is, by the way, one percent of 1.9 trillion.
Leahy: It’s one percent?
Carmichael: One percent goes directly to COVID. Goes directly to COVID.
Leahy: And then eight percent indirectly?
Carmichael: Indirectly. But 91 percent doesn’t go to COVID or anything related to COVID.
Leahy: Either directly or indirectly.
Carmichael: But one percent of one point nine trillion is still $20 billion. So that is still $20 billion.
Leahy: One point nine trillion, one percent of one point nine trillion.
Carmichael: Did I get my math wrong?
Leahy: You are correct.
Carmichael: I am correct.
Leahy: You are correct sir because 10 percent of one point nine trillion would be 190 billion. One percent is 19 billion. You are correct in your math.
Carmichael: So it’s a very very large amount for COVID. And so what Schumer’s doing is what all grifters do. He’s just making stuff up. And if it were not for the willful complicity of the media you couldn’t get away with this. This is the great dilemma for our country. You have now Big Tech and big media that is in bed with the Democrat Party and in bed with all their policies.
And so you have about probably 20 to 25 percent of the population that benefits from all this grifting. And the balance of the population gets hurt. Now deficits do matter. And one of my great pet peeves is when politicians say these deficits are going to hurt our children and grandchildren. That’s false. They’re hurting us now. And what they do is they act kind of like a wet blanket.
And what they do is if productivity is growing at four percent then you ought to have real income rising at four percent. But if you have deficit spending that’s equal to more than four percent of the economy, then you may see a rise in your paycheck. But you’re going to see inflation in some of your basic goods. For example in housing prices. housing prices now across the country are going up because you see commodity prices like lumber, copper, and many of the materials that go into a home are rising at very very high rates.
And so the inflation is almost hidden. But it’s there. Let’s just say that inflation affects you at $1,000 and infects everybody at $1,000. Well, somebody’s making $50,000 dollars a $1,000 is two percent of their income. If you’re making a million dollars then $1,000 is imperceptible. If you’re a multi-billionaire, you’re making far more money on the increase in the value of your stock than you are worried about the effects of inflation.
Leahy:Â So I’ve got some data here. This is from a website called The Balance. It looks at the deficit as a percentage of the gross domestic product. And it’s been quite high. When Ronald Reagan took office ’19 in 1980 It was two point six percent that fiscal year. Of course, he took office and it would have been fiscal in 81 when it was two point five percent. When George H.W. Bush took office it was three point seven percent in 1990. Then we fast-forward.
It was actually a surplus during the last years of the Clinton administration. And that was due to the sort of the internet bubble. George H.W. Bush and the crash of 2008. In fiscal 2009, 9.8 percent of GDP. the deficit. it’s been really really high pretty much ever since it went down to three-point four percent in 2017. It shot back up in 2020 at 17.9 percent because of the COVID impact. And it’s going to be about 10 percent in fiscal 2021 except probably more than that now.
Carmichael: It will be more than that if this bill passes. And then they’re talking about another great big bill in behind it. And so the aging of the baby boomers is going to affect Medicare in the coming years. So under Trump the deficit as a percentage, I think you said it got down to like three-point six percent.
Leahy: Yes. Under Trump in 2017, it was three point four percent.
Carmichael: What was it in ’18?
Leahy: In ’18, it would be three-point eight percent.
Carmichael: Okay, what was it in fiscal ’19?
Leahy: Up to four-point six percent.
Carmichael: Okay. All right. And so then it was in fiscal 2010 that it exploded. So part of ’19 perhaps had something to do with COVID. I don’t know.
Leahy: No it would have been ’20.
Carmichael: All fiscal year ’20?
Leahy: Because fiscal year ’20 goes from September to October 1, 2019, to September 30, 2020.
Carmichael: But here’s what’s interesting. With all of those numbers in there, I think that the federal government is doing a very poor job of collecting the right data to understand productivity gains. I think there are a lot more productivity gains due to technology than that is being captured. I think the productivity gains that they’re capturing are in an old-school way. And productivity gains are much different now.
Leahy: That’s a very good point. Despite COVID productivity gains probably have limited the depth for people that that are involved in certain jobs it’s had less of an impact.
Carmichael: If we come out from the other side of COVID a lot of the changes that were made because of COVID will enhance productivity. If I can do a Zoom meeting and make a sale and I don’t have to go do a business trip to make that same sale then I can make perhaps three or four sales calls a day and not spend any money in doing so.
Leahy: And not travel.
Carmichael: And not travel and do all that. And so that would actually be a gain in productivity.
Leahy: In certain segments. But for instance restaurants. Making stuff in a manufacturing facility that kind of thing got hurt badly. At least on the restaurant side.
Carmichael: That’s not a manufacturer, that’s a restaurant. So what you’re seeing is that if there are a lot fewer business lunches and dinners then that hurts the restaurant business. But in terms of the macro, if people are doing things more efficiently and accomplishing the same goal then there’s a particular…
Leahy: Because one thing that you and I are not Crom, we are not Luddites. (Laughter) Luddites were the people that wanted to go in and break all the new machinery that made it easier to manufacture clothing and other things back in 19th century Great Britain.
Carmichael: So what I’m saying is that if you have a productivity gain of four percent and you have deficit spending four percent more or less than increase the money supply, then theoretically you’d have an inflation rate of close to zero. But if you have productivity gains and four percent and you have an increase in the money supply of 10 to 15 percent and that’s done consistently at some point that catches up with you and it doesn’t affect the wealthy nearly as much as it affects middle and lower class demographics.
Leahy: You’re exactly right and the people that are being hurt by all of this deficit spending really middle-class Americans.
Carmichael: And lower-income people.
Leahy: You are exactly right.
Carmichael: And all these policies the Democrats’ the school policies, in particular, they hurt lower-income children far more than they hurt anybody.
Leahy: They absolutely do. We’ll close that talk off.
Listen to the full third hour here:
– – –
Tune in weekdays from 5:00 – 8:00 a.m. to the Tennessee Star Report with Michael Patrick Leahy on Talk Radio 98.3 FM WLAC 1510. Listen online at iHeart Radio.Â
