🇺🇸 🤦♂ Democrats lose their way: Why has fiscal policy become a playground of daily catchphrases?

The Biden administration has entered what is known in the aviation world as a stall. A precipitous fall due to insufficient political support.

The steep drop in approval ratings for the current White House is alarming:

The perceived fragility of the president, the legislative gridlock and the disastrous exit from Afghanistan are some of the elements that explain this loss. However, the Democrats' own lack of consistency also seems to be playing a key role.

Since taking the White House, House and Senate last November 2020, Democrats have been obsessed with delivering on an agenda of poorly formulated big spending commitments at any cost and with no viable governing strategy to back it up.

Tax policy is perhaps the best example. Democrats want to raise money but don't know how to do it without being exposed politically. The result is a worrisome hodgepodge of proposals, last-minute ideas and announcements cancelled after a short time. All of this without any prior debate and without considering the consequences that these fiscal policies could have on the US economy.

Thus, one day a sharp rise in corporate tax is announced, another day a carbon tax and soon after, as nothing goes together and there is no support, a minimum tax calculated on the accounting result that would establish a parallel process to the tax rules themselves, which would not take into account the losses of a year and would affect some companies and not others. Long live legal certainty!

They have even advocated taxing companies' own share buybacks – which of course is neither a manifestation of wealth nor has any sound economic reason to support it.

The latest crazy idea, proposed by the Secretary of the Treasury herself, Janet Yellen, has been to tax the latent – not realized – capital gains of the ultra-rich. That is, taxing the potential capital gains derived from the fluctuations in the price of shares on the stock exchange.

Something that not only could be manifestly unconstitutional but also, among many other consequences, would encourage start-ups not to go public and push the relocation of innovation and technological entrepreneurship outside the United States. In addition to being an unfair measure, because, would the Treasury reimburse those amounts paid if the contributions turn around?

Why is it important?

Tax policy has to raise money to finance the government while causing as little interference and damage to economic activity as possible. Precisely for this reason, tax reforms must be well thought out, properly considered and consistent with economic reality.

The Democrats, however, have turned fiscal policy into a kind of cafe noticeboard with daily musings that only fuels uncertainty. Democrats have big promises of spending and social transformation but lack a consistent policy plan to achieve them. 

Worse still, they are putting their partisan interests before the economic reality of the country: for example, what sense does it make to approve large spending plans with significant inflationary effects at a time when economic activity has picked up strongly and when the problem facing families is beginning to be inflation? Ladies and gentlemen of the Democratic Party: Please come back down to earth!