Continued Inflation Threatens Biden’s Agenda

Continued Inflation Threatens Biden’s Agenda

WASHINGTON — At least once a week, a team of President Biden’s top advisers gather on Zoom to address the country’s supply chain crisis. They discuss ways to clear backlogs in U.S. ports, ramp up semiconductor production for struggling automakers, and increase the ranks of U.S. truck drivers.

The talks are focused on one goal: to tame accelerated price increases that hurt the economic recovery, alarm US consumers and dent Mr Biden’s popularity.

A rise in inflation poses a new challenge for Mr Biden, who for months insisted that rising prices were a temporary hangover from the pandemic recession and would soon disappear. Instead, the president and his aides are now bracing for continued high inflation into next year, with Americans continuing to see faster — and sustained — price increases for food, gasoline and other consumer goods than at any time in this century.

That reality has complicated Biden’s push for sweeping legislation to incentivize workers, increase access to education, and fight poverty and climate change. And it’s dragging the president’s approval ratings, which could threaten Democrats’ already weak hold on Congress in the 2022 midterm elections.

Recent polls show that Americans’ concerns about inflation are eroding their economic confidence and obscuring their view of Mr Biden’s performance. National surveys from CNBC and Fox News show a sharp drop in voter ratings of Mr. Biden’s overall performance and his handling of the economy, even as unemployment has fallen rapidly under his watch and economic output has soared to its highest pace. since Ronald Reagan was president . Voters’ concerns about price increases have increased in the past month.

Government officials have responded by framing Mr. Biden’s push for what would be his signature spending bill as an effort to reduce the costs faced by American families, citing provisions to limit childcare costs and subsidies for higher education, among other plans. And they’ve mobilized staff to explore options to unclog supply chains, get more people back to work, and lower food and gas costs by fostering more competition in the economy through executive actions.

“There are clear challenges to getting the economy back on track after the pandemic that we’re bringing together with state and local officials, the private sector and labor to deal with — driving prices down,” said Kate Berner, deputy communications director for the company. the White House. an interview.

Mr Biden’s top officials emphasize that the administration’s policies have helped accelerate America’s economic recovery. Employees are making their biggest wage gains in two decades. Growth picked up in the first half of the year, fueled by the $1.9 trillion economic aid bill the president signed in March. America’s expansion continues to outpace other wealthy nations around the world.

Inflation and deficits are the flip side of that equation. Car prices are rising due to strong demand and a lack of semiconductors. Gasoline has hit its highest price per gallon in seven years. A shift in consumer preferences and a pandemic contraction in supply chains have slowed the shipment of furniture, home appliances and other consumer goods. Millions of Americans, who have been saving money from government aid through the pandemic, are waiting to return to work, raising corporate labor costs and food prices in many restaurants.

Much of it is beyond Mr Biden’s control. Inflation has risen in wealthy countries around the world as the pandemic has hampered the movement of goods and parts between countries. Consumers wary of viruses have shifted spending to goods rather than services, travel and tourism remain low, and energy prices have risen as demand for fuel and electricity has risen due to the resumption of business activity and some weather shocks that related to climate change.

But some economists, including veterans of previous Democratic administrations, say Biden’s inflation struggles are largely his own. Lawrence H. Summers is among those who say the stimulus bill the president signed in March over-stimulated consumer spending at a time when supply chain disruptions have made it difficult for Americans to get their hands on things. they want to buy. Mr. Summers, who has served in the Obama and Clinton administrations, says inflation is now spiraling out of control and other Democratic economists agree there are risks.

“Original sin was too great an American rescue plan. It contributed to both higher output and higher prices,” said Jason Furman, a Harvard economist who chaired the White House Council of Economic Advisers under President Barack Obama.

That has some key Democrats concerned about price-related downsides to the president’s ambitious spending package, complicating Mr Biden’s approach.

West Virginia Senator Joe Manchin III, a centrist, has repeatedly cited rising inflation by urging Mr. Biden to scale back the $3.5 trillion effort to expand the social safety net.

Biden has tried to show that the investment in his spending account will moderate price increases over time. But he struggles to identify things he can do right away to ease the pain of high-profile price spikes, such as gasoline. Some in his administration have called for the National Guard to be mobilized to help unclog ports full of imports waiting to be delivered to consumers across the country. Mr. Biden has suggested the option of tapping the strategic petroleum reserve to modestly boost oil supplies, or negotiating with oil producers in the Middle East to increase oil supplies.

Speaking at a CNN town hall last week, Mr. Biden admitted the limits of his power, saying “I don’t have a short-term answer” to cutting gas prices, which he expects to fall only next year.

“I don’t see anything going to happen in the meantime that will significantly lower gas prices,” he said.

Janet L. Yellen, the Secretary of the Treasury, told CNN’s State of the Union on Sunday that she expects an improvement in overall inflation “by the middle to late next year, second half of next year.”

With an American public that hasn’t seen – or worried – about inflation for nearly 40 years, the issue offers an opening for the opposition. Republicans have turned price spikes into a weapon against Biden’s economic policies, warning that more spending would exacerbate the pain for ordinary Americans.

“It’s everywhere,” Texas Representative Kevin Brady, the top Republican on the Ways and Means Committee, said in an interview. “You can’t live your life without seeing your salary buy less.”

White House officials have been monitoring inflationary pressures for months. They remain convinced, as in April, that price increases will not spiral out of control and will force abrupt Federal Reserve rate hikes that could slow growth.

The president and his top advisers remain convinced that price growth will begin to decline well before the midterms. Defending the scale of the bailout, they say Americans are now focusing on inflation because the success of the stimulus bill accelerated economic and employment growth and took a bigger problem — the availability of jobs to people they want — off the table.

“It’s a highly incomplete picture to try to judge the economy, and even people’s opinion of the economy, just by looking at inflation,” said Jared Bernstein, a member of Mr Biden’s Council of Economic Advisers. , in an interview. “You also have to appreciate the robustness of the expansion, and how it is eliminating jobs and profit opportunities.”

Mr. Bernstein and other advisers say many of the causes of inflation are already improving. They point to calculations by Mark Zandi, an economist at Moody’s Analytics, which suggest that Americans who have left the workforce will re-enter the workforce in December or January, likely to have exhausted their savings.

The advisers also continue to explore further actions they could take, including efforts to increase the number of truck drivers near ports and to force lower prices and more competition in the food industry.

“We are always involved in everything,” said Ms. Berner.

To which many officials add a caveat: Almost anything the White House could do right now will take time to bring prices down.

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Rachel Meadows

Rachel Meadows

Trending topics news writer who enjoys cooking, walking her dog and travel.

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