Consider this the first of a two-part series on the White House’s semi-official state of denial on their economic predicament. Joe Biden and his team have had a number of opportunities to reverse course on economic and energy policies to either mitigate or reverse the damage from runaway inflation. Those U-turn opportunities arose a year ago, when the consumer price index measure of inflation first hit 5%; when Biden’s spend-o-ramas died in the fall, with inflation at almost 7% at Thanksgiving; or even in March’s State of the Union speech, when everyone assumed Biden would start adjusting to the economic and political realities his That 70s Show reboot.
Instead, Biden remains insistent that his policies are actually a net positive, and today remained stubbornly determined to stay the course:
"I think our policies help, not hurt," President Biden says when asked if his administration takes any responsibility for inflation.
"Economists think that this is going to be a real tough problem to solve, but it's not because of spending. We brought down the deficit." pic.twitter.com/VVEm7JmESb
— CBS News (@CBSNews) May 10, 2022
“I know that families all across America are hurting because of inflation,” Biden said in a speech from the White House. “I want every American to know that I am taking inflation very seriously and it’s my top domestic priority.”
Biden discussed at length actions his administration is taking to address high prices, such as efforts to reduce the backlog of goods at America’s ports to boost the nation’s trucking workforce. He also mentioned the historic release from the Strategic Petroleum Reserve meant to ease gas prices.
“My plan is already in motion,” Biden said.
To the extent that Biden even acknowledged the corrosive effects of inflation, he sought to slough off blame for it onto Republicans:
BIDEN: Republicans "don't want to solve inflation by lowering your costs. They want to solve it by raising your taxes and lowering your income." pic.twitter.com/fnus8HVLEY
— Townhall.com (@townhallcom) May 10, 2022
“Republicans have offered plenty of blame, but not a single solution to actually bring down the energy prices,” Biden said. “They have no plan to bring down energy prices today, no plan to get us to a cleaner energy independent future tomorrow.”
Evidently, Joe Biden thinks the rest of us are too stupid to see through this argument. Republicans do not control either the House or the Senate, meaning they can’t control what comes to either floor in Congress. They can’t even control what comes in or goes out of committees. Democrats may have the narrowest of margins of control, but they still own what comes out of Congress and the White House. This claim is especially laughable on energy, which Biden himself has controlled by executive order and executive policies that even Congress has no real mechanism to either brake or regulate, especially when Biden’s allies control both chambers.
Voters know it too, which makes this another example of Biden micturating on our heads and calling it precipitation. Thanks to their proximity to the outcome of Biden’s policies on the economy and energy, they know exactly how Biden’s leadership is working out. Gas prices have shot up 79% since he took office and imposed regulatory obstacles on exploration and extraction of oil and gas, but it’s not just energy that fuels Americans’ discontent, if you’ll pardon the pun.
As Heather Long wrote this weekend at the Washington Post, Biden has produced “an age of scarcity,” and voters are tired of excuses over it:
Why are Americans so gloomy about the economy? Jobs are plentiful and unemployment is back at pre-pandemic lows, yet sentiment is in the dumps. The obvious answer is that inflation is at a 40-year high and that wages largely aren’t keeping up. But there’s a deeper force at work that is fundamental to why Americans are so upset: scarcity.
Availability of products, or lack thereof, is as critical an issue as rising prices. The last time Americans experienced this phenomenon was in the 1970s, with long lines at gas stations. Today, more than two years into the pandemic, generations of Americans at a variety of income levels are encountering shortages across a much wider array of products. It is, in many ways, a new age of scarcity. …
Americans aren’t used to this kind of scarcity, and it compounds the frustration that politicians spent much of the past year saying supply chains would be fixed “soon.” Instead, the problems keep coming: as varied as baby formula shortages, Russia’s war in Ukraine triggering a food supply crisis, and China’s covid-19 lockdown shuttering factories and delaying shipments. It’s now taking manufacturers an unprecedented 100 days, on average, to get materials — the longest delay on record since the industry started keeping track in the late 1980s.
Even apart from scarcity, the steps that the Federal Reserve will now take to quell inflation will necessarily put more goods and services out of reach. Mortgage rates are already shooting upward at the fastest pace in 40 years, paralleling Biden’s inflation, Politico reports today. That means that fewer Americans will be able to buy their own homes, and instead will remain stuck in a rental market that’s even worse:
While a softening market may help tamp down skyrocketing housing prices, the rising rates mean fewer Americans will be able to build wealth through homeownership. Those who do take loans to buy a home will have less money on hand to spend elsewhere in the economy at a time when fears of a potential recession are already rising. If prices fall, builders may pull back construction — exacerbating a nationwide supply crunch.
For President Joe Biden, the risk of a housing slowdown heading into the midterms comes as the spike in inflation has already turned Americans pessimistic about the economy, even amid months of exceptional job gains and rapid wage increases.
“It’s going to do damage to the housing market for sure,” Mark Zandi, chief economist at Moody’s Analytics, said of rising rates. “Politically it just adds to the financial difficulties Americans are struggling with, and it makes things more difficult for incumbent Democrats.”
Let’s put this in the perspective of Biden’s actions on inflation. I’ll have more on the actual trajectory of inflation in my next post, but let’s at least take a look at the data from the Bureau of Labor Statistics to get the sense of how long consumers have been living with it. Bear in mind that the Fed generally considers any sustained inflation above 2% to be actionable with monetary-supply tightening measures:
We have had thirteen months of problematically sustained inflation. Biden and his team have responded to this by claiming at various times that (a) it’s growth, (b) it would be “transitory,” (c) “corporate greed,” (d) Republican spin, (e) Vladimir Putin’s fault, and probably a few others we’ve forgotten by now. As late as mid-February, Biden was still claiming that inflation was “transitory,” almost exactly two weeks before Putin’s invasion of Ukraine allowed for Excuse E’s deployment.
And now we’re at (f), which is that Republicans haven’t acted to quell inflation, even though they’re not in charge of anything.
Small wonder, then, that voters have lost confidence in Biden, whose speech today might end up being the equivalent of Jimmy Carter’s “malaise” address. What about the rest of the White House? Stay tuned for Part II, coming up soon.