The Risk of BBB
And is the Biden administration serious about breaking up monopolies?
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JAMES C. CAPRETTA writes that BBB is a financial risk.
Over the long-term, it is spending on the major entitlement programs that is the primary source of widening annual budget deficits. The CBO forecasts that spending on Social Security and the major health entitlements will average 15.3 percent of GDP from 2042 to 2051, up from 11.0 percent in 2021.
These projections should be setting off alarms around the government. And yet the nation’s top leaders do not express the slightest concern about what they portend. The prevailing sense is that it will all work out, somehow or another, as it has up to this point. Or at least that the fallout from a debt crisis will occur well past the time when these actors have left the scene.
The dangers from the bipartisan abandonment of fiscal restraint are real. America has never borrowed during peacetime as it is doing so now, and it is inconceivable that continuing down this path indefinitely would have no consequences. For one thing, if the federal government piles up debt as now projected, it is unlikely the U.S. dollar would retain its status as the world’s reserve currency, with all that would imply for borrowing costs and diminished global leadership.
But instead of assembling a gradual plan to avoid such a catastrophe, the nation’s leaders are preoccupied with adding more to the federal government’s benefit commitments.
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To clarify his position on competitiveness, Biden issued an executive order on July 9th in which he declared that “the American promise of a broad and sustained prosperity depends on an open and competitive economy.” Noting that consolidation had become a mainstay of business, Biden argued that “robust competition is critical to preserving America’s role as the world’s leading economy.” Among the industries he singled out were agriculture, defense, telecommunication, and technology. Saying “we must act now to reverse … dangerous trends,” Biden ordered his administration “to enforce the antitrust laws to meet the challenges posed by new industries and technologies, including the rise of the dominant Internet platforms.”
“The order takes an all-of-government approach to address competition,” says Diana Moss, president of the American Antitrust Institute. “That’s good because there is a boatload of empirical evidence for economywide declining competition. It’s a problem every consumer and every small entrepreneurial business should care about.”
But the administration has done more than issue executive orders, recently making news by using antitrust laws in an attempt to protect competition in a legacy industry: book publishing. Last autumn, Penguin Random House, the largest publisher in the world, which itself is part of the German media conglomerate Bertelsman, proposed the acquisition of its main competitor, Simon and Schuster, in a $2.175 billion deal. A review by the government ended on November 2 when the Department of Justice filed in the U.S. District Court for the District of Columbia a civil antitrust complaint attempting to block the purchase.
Hope you had a great weekend. We had half of our Christmas this weekend and the Browns eked out a win, so all in all, a great weekend. The good news? One of my thoughtful siblings replaced the Swiss army knife I lost to the TSA over Thanksgiving. And, much to the consternation of my wife, a new grill is joining the family.
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