“Increased regulation and increased taxation of capital—two Biden Administration policy priorities” will “make recession more likely,” warns Hoover Institute’s David Henderson and former Council of Economic Advisers Chairman Casey Mulligan in an op-ed for the Wall Street Journal.

“Most discussion about the possibility of recession focuses on the Federal Reserve’s monetary policies. But there are also factors on the supply side of the economy that may tip the U.S. economy into a recession. Among them are the tax and regulatory policies of the Biden administration.”

This comes amid reports that the majority of top job creators believe a recession is unavoidable, while more than half of Americans believe the U.S. is already in a recession. 

KEY TAKEAWAYS:

The Biden Administration’s economic policies have made a recession all the more likely by 

• … Botching the recovery from the pandemic: “Biden’s mask mandates [disrupted] hiring and employee retention when supply chains [were] already strained. His regulatory agenda will likely cause employment growth to fall by 0.2 percentage point a year and real GDP growth to fall by 0.7 point a year.”
• … Threatening crippling tax hikes: “Mr. Biden is almost certain to let temporary capital-taxation provisions in the 2017 tax cut law expire. The effect will be to reduce growth of real GDP by about 0.4 percentage point a year. The combined effect of increased regulation and increased taxation of capital is a reduction in employment growth by about 0.25 percentage point a year and of real GDP growth by about 1.1 points a year.”
• … A war on work worsening the labor shortage: “The $300 weekly unemployment bonus created an implicit tax on work: If you got a job, you lost the bonus.”