Biden's dishonesty on inflation and Exxon

Americans are being mugged by inflation. Joe Biden may feel mugged, or at least ambushed, but he should have seen it coming.

Biden’s mugging is condign punishment for the left-liberal view of the economy as a the goose that lays golden eggs, regardless of how much Washington constrains it, as long as the goose keeps receiving steroid injections from the government .

Condign though it is, Biden isn’t taking his punishment well. He blames the inflation partly on Putin but mostly on corporate greed.

It’s rich for Biden to denounce greed. His family enriched itself by trading off of Joe Biden’s name — for example, by landing Hunter Biden seats on corporate boards to which he offered nothing other than that name. At least Hunter put his ill-gotten gains to good use — on strippers, prostitutes, and cocaine.

Greed is a constant in human affairs so we shouldn’t be surprised that, as we will see, it doesn’t account for this inflation.

Yet, Biden continues to blame inflation on corporate greed. Last week, he went after Exxon:

Why don’t you tell them what Exxon’s profits were this year? This quarter? Exxon made more money than God this year,. Exxon, start investing. Start paying your taxes.

Is there any truth behind this tirade? No. Even accounting for normal political hyperbole, there isn’t.

Ed Morrissey looked at Exxon’s report on earnings and profits for the first quarter of this year. He found:

ExxonMobil did a bit better on net profit margin this quarter at 6%, compared to 2021Q1’s 4.6%, but both are generally in the range of the oil industry’s normally narrow profit-margin average of about 5%. Their tax rate on income was hardly zero; they paid a 32.8% effective income tax rate in 2022Q1, far higher than their 22.2% effective income tax rate in 2021Q1.

As it turns out:

Basically, everything Biden said about ExxonMobil’s bottom line was a lie. They had to spend $82 billion to make $5.5 billion, so they didn’t make “more money than God” in Q1 or any other quarter. A 6% return on investment might not be bad, but it’s hardly spectacular. In fact, as CFA Journal notes, that’s about the average for the energy sector as of mid-2021, and far lower than other industries.

In fact, at 5.85 percent, the average profit margin in the energy sector lags well behind such sectors as financial (almost 24 percent), capital goods (19 percent), and technology (12 percent). Of the ten sectors analyzed by CFA Journal, energy ranked ninth in profit margin.

Ed drives home the point by noting that the bottom lines of Exxon Mobil, and of corporate America generally, have been remarkably consistent between the pre-inflation and inflation eras. “The level of ‘corporate greed’ hasn’t budged, so that’s clearly not the explanation for inflation,” Ed concludes.

Biden was also dishonest in suggesting that Exxon isn’t investing in its business. It has been investing, despite Biden delivering on his campaign promise (a rare example of it) to prevent the oil industry from drilling.

Biden went on to blame shipping companies for inflation in non-energy sectors. Ed shows why this excuse doesn’t fly, either.

Biden’s flailing on inflation reminds me of Trump’s flailing on the issue that undermined his presidency — the pandemic. But the pandemic was a once in 100 years disaster and the result of developments outside the U.S.

Inflation is a much more common occurrence. Moreover, although some of the current inflation stems from Russia’s war against Ukraine, much it is the product of policies of Biden’s administration.

Fortunately for Biden, or whoever runs for president as a Democrat in 2024, inflation hit early in this presidency — unlike the pandemic which began in a presidential election year.

Unfortunately for Biden and the Democrats, inflation isn’t easily flushed out of the economy. And the rising interest rates used for the flushing will likely produce an economic slowdown and possibly even a recession

Biden, no doubt, will have excuses for this, too. They will be similar to, and no more valid or persuasive than, his excuses for inflation.