What an incredible mess Joe Biden will be leaving for Donald Trump on Jan. 20.
It isn’t just the $36 trillion in federal debt (up $13 trillion since 2020), which has increasingly (and foolishly) been financed by short-term borrowings; it is also inflation that refuses to die despite slumping energy prices, a Strategic Petroleum Reserve that has been drained to perilous levels, a weapons stockpile that is dangerously low, a Department of Justice that has lost the confidence of Americans, billions upon billions of taxpayer dollars that have been invested in losing enterprises (here’s looking at you, Intel), an educational curriculum that teaches kids to hate their country but fails to deliver youngsters able to read and write, a housing crisis, a manufacturing slump and so much more.
Biden also leaves Trump the nightmarish task of extricating the U.S. from Ukraine’s war with Russia and — once again — having to restore a sustainable balance of power in the Middle East.
No wonder Trump is preparing to hit the ground running.
If Joe Biden were a decent fellow and a patriot, he would be using his remaining weeks as president to fix some of the disasters he has created. Instead, he is doing just the opposite.
Biden and his apparatchiks are trying to spend every last dollar authorized by the misnamed Inflation Reduction Act so that the Trump administration cannot recapture those funds. The IRA gave the White House some $375 billion in taxpayer funds to be strewn about the country as they see fit, under the total control of former Hillary Clinton campaign chair John Podesta.
Because the Biden White House has almost no one with private-sector experience — no one with a history of building successful businesses — the hapless crew proved unable to spend the many billions available. Pete Buttigieg’s laughable effort to build charging stations for electronic vehicles, in which the Transportation secretary spent $7.5 billion on eight such facilities after promising 500,000, or Kamala Harris’s total failure to roll out internet access to rural areas despite the $42 billion at her disposal, are emblematic of this administration’s capabilities.
Anyone who knows anything about Washington will understand that leftover money is about as popular as the fourth turkey sandwich served up after Thanksgiving. The money must be spent! And so, rather than help the Trump team (and the U.S.) by recycling unspent IRA money, they are putting it to work — at least, in theory.
A recently released video from investigators at Project Veritas catches an adviser to the EPA saying via hidden camera, “Now we’re just trying to get the money out as fast as possible before they come in and stop it all. … It truly feels like we’re on the Titanic and we’re throwing gold bars off the edge.”
The adviser, Brent Efron, admits that while typically his department had been making “sure the proper processes are in place to prevent fraud and prevent abuse,” now they are shoveling money to tribes, nonprofits and states at warp speed. Efron explains to the undercover reporter, “We gave them the money because it was harder if it was a government-run program, they could take the money away, if Trump won.”
Elon Musk commented that the video suggests “The U.S. government is actively working to undermine the American people.” Or at least the newly elected president.
In yet another example, Biden has just agreed with the American Federation of Government Employees to protect some 42,000 workers at the Social Security Administration from having to return to the office, a key issue for the Trump team as it reforms the federal workforce.
Elsewhere, if Biden wanted to help the country, he would authorize the rapid refilling of the Strategic Petroleum Reserve. He drained that store of crude oil in 2022 in the midst of roaring inflation, trying to lower gasoline prices and help Democrats in the midterm elections. When Biden took office, the reserve held 638 million barrels of oil; today the country has only 392 million barrels of emergency reserves, the lowest in 40 years. Although the reserve is up 12 percent over the past year, we are not protected against a serious price shock.
Biden is also leaving behind a portfolio of Treasury debt that is dangerously weighted toward short-term instruments. Instead of financing our recent $1.8 trillion federal budget deficit by issuing 10- and 30-year bonds, Janet Yellen has instead loaded up on two-year Treasury bills in a nakedly political effort to avoid a massive jump in mortgage rates. Writing in the New York Post, Charles Gasparino quotes Robbert van Batenburg of the well-known Bear Traps Report, who estimates that around 30 percent of all debt is now in short-term notes, compared to 15 percent in 2023. Given the enormity of the government’s borrowings, that is an almost unimaginably sharp move.
Since we have had an inverted yield curve for most of the past two years, it would have made sense to borrow long. Yellen did not, leaving her successor to navigate higher costs going forward. As Bratenburg writes, “The Treasury now faces a substantial volume of short-term debt maturing annually, which must be refinanced at significantly higher interest rates … [which] is driving a substantial increase in the government’s interest expense.”
There are so many problems facing this country. Detroit auto makers are losing billions and laying off workers thanks to Biden’s harmful electric vehicle mandates; we have millions of undocumented migrants busting blue city budgets; violent crime is higher because Democrats have undermined law enforcement; and military leaders are warning that we are running low on weapons. The Biden years have planted land mines on many fronts for the incoming Trump team.
Shamefully, rather than trying to repair the damage they’ve caused, they are racing to do more.
Liz Peek is a former partner of major bracket Wall Street firm Wertheim and Company.
