Former Treasury Secretary Janet Yellen is perhaps best remembered for repeatedly insisting that the persistent inflation plaguing the Biden administration was merely “transitory” — right up until the day she declared she was “ready to retire the word transitory.”
Speaking at the Wall Street Journal’s CEO summit in December 2024, Yellen expressed regret over the administration’s lack of progress in reducing the national debt “especially now that we’re in an environment of higher interest rates.”
Noting that the cost of servicing the national debt had exceeded $1 trillion, Yellen acknowledged, “It’s one of the largest contributors to the increase in the budget deficit.”
At the time of her remarks, the U.S. national debt stood at $36,163,442,396,226.
When former President Joe Biden took office in January 2021, inflation was just 1.4%, and the federal funds rate hovered near zero. The United States was emerging from the COVID-19 recession, with people returning to work and the economy poised for growth.
Despite this, the Biden administration pushed through the $1.9 trillion American Rescue Plan Act in March 2021 and the $1.2 trillion Infrastructure Investment and Jobs Act that November.
This excessive, reckless, and unsustainable spending drove inflation to its highest levels in 40 years. In response, the Federal Reserve’s Open Market Committee raised the federal funds target rate, the interest rate for overnight lending between banks, by 525 basis points between March 2022 and July 2023.
Although the rate hikes eventually slowed inflation to more normal, though still relatively high levels, mortgage rates doubled, pricing many first-time homebuyers out of the market and forcing others to remain in homes they planned to sell. The cost of servicing the national debt soared, and federal budget deficits neared 7% of GDP.
Meanwhile, the 20% increase in prices across the board became permanent.
Barring major crises such as World War II or the COVID-19 pandemic, the U.S. economy was never more dependent on the federal government than when Biden shuffled out of the Oval Office for the last time.
According to a report from Bank of America Global Research, by the end of the Biden administration, the public sector was responsible for 85% of U.S. job growth and 33% of all spending.
I suppose some people don’t particularly mind that the U.S. has started to resemble a socialist state. But for the rest of us, reclaiming our position as a global leader and restoring our former greatness is the priority. That requires steering the ship away from a government-driven economy and back toward a thriving private sector.
It’s a monumental task, but President Donald Trump is off to a strong start. The road from where Biden left us to where we need to be won’t be easy, and there will be challenges along the way.
Those complaining that Trump hasn’t “fixed” the economy after just two months either forget or never truly understood the extent of the damage the Biden administration inflicted on America.
It will take time for Trump’s policies to ripple through the economy. During his address to a joint session of Congress last week, he candidly acknowledged that his administration’s implementation of tariffs would cause a “little disturbance.”
The stock market is undergoing a correction, possibly due to uncertainty surrounding the tariffs or simply because it had become overvalued and was due for an adjustment. Anyone familiar with financial markets knows that corrections are normal, healthy, and even necessary.
As a former financial consultant with Merrill Lynch, I witnessed numerous corrections — and even a few crashes. They always pass, the market always rebounds, and those who panic and sell during the darkest moments take the biggest losses.
Treasury Secretary Scott Bessent provided a reasonable explanation for the recent stock market swoon during an appearance on CNBC’s Squawk Box. “The market and the economy have become hooked, become addicted, to excessive government spending, and there’s going to be a detox period,” he said.
Financial analyst Charlie Gasparino pointed out in a recent article that another familiar change agent, former President Ronald Reagan, faced a tumultuous stock market during the first two years of his presidency. The markets were reacting to uncertainty as Reagan worked to implement his agenda.
For those concerned about the value of their 401(k) plans, it’s worth noting that the Dow Jones Industrial Average had a net gain of more than 150% during Reagan’s presidency.
Gasparino offered some sound advice to his readers: “Ignore the stock market.”
Trump’s tariffs have faced significant criticism from those who fail to understand how much the rest of the world exploits the U.S. in trade. Washington Post writer and Fox News contributor Marc Thiessen recently shared on a Special Report panel that, last year, the U.S. paid $370 billion in tariffs to foreign countries while receiving only $70 billion in return. If these figures are accurate, is it any wonder why Trump is working to balance the scales?
Additionally, those complaining the loudest about the tariffs ignore the administration’s expected deregulation and tax cuts. Already, corporate CEOs, both foreign and domestic, have promised nearly $2 trillion of new investments in the U.S. Not bad for two months.
While I hope it doesn’t take as long for Trump to get things right as it did for Reagan, we may have to endure some short-term economic instability. In any case, Commerce Secretary Howard Lutnick reassured Fox News host Laura Ingraham that much of the uncertainty surrounding Trump’s tariffs will be eliminated following the administration’s planned assessment on April 2.
TRUMP ADVISER CHRIS LACIVITA SAYS MUSK WILL NOT CUT SOCIAL SECURITY: ‘HE’S NOT PRESIDENT’
Let’s give Trump, Bessent, and Lutnick, all people who have built successful businesses in the real world and understand the economy far better than Biden’s team of academics, a chance.
I, for one, would not bet against Trump.
