Biden should pay a high price for inflation

Biden deserves to pay a high price for inflation
Tuesday started exactly as badly for Joe Biden as the White House knew it would. The Bureau of Labor Statistics this morning announced that consumer prices rose 1.2 percent in March and were up 8.5 percent over a year earlier. That is the fastest rise in forty years.

The numbers reveal the problem with the administration’s effort to blame inflation on Russia. “Putin’s price hike” is only part of the story. Prices for all items except for food and energy rose by 6.5 percent year on year. And…

Biden deserves to pay a high price for inflation

Tuesday started exactly as badly for Joe Biden as the White House knew it would. The Bureau of Labor Statistics this morning announced that consumer prices rose 1.2 percent in March and were up 8.5 percent over a year earlier. That is the fastest rise in forty years.

The numbers reveal the problem with the administration’s effort to blame inflation on Russia. “Putin’s price hike” is only part of the story. Prices for all items except for food and energy rose by 6.5 percent year on year. And even the more complicated story that the administration sometimes tells — one that cites Covid disruption and Chinese lockdowns as adding to rising prices for consumer goods — ignores the most awkward fact of all for this administration: the inflation problem is significantly worse in the United States than it is in other advanced economies.

Why is this the case? Recent research by economists at the Federal Reserve Board of San Francisco comes to a pretty clear conclusion: “Estimates suggest that fiscal support measures designed to counteract the severity of the pandemic’s economic effect may have contributed to this divergence by raising inflation about three percentage points by the end of 2021.”

Meanwhile, the president denies the existence of any trade offs when it comes to government spending and price rises. “The American people think the reason for inflation is the government spending more money. Simply not true,” he claimed in a speech at a recent retreat for House Democrats. This is not a throwaway line by a geriatric president but the statement of a delusion held across the Democratic establishment. (Thank God for Joe Manchin.)

The economic news keeps getting worse and the administration does very little to suggest it has a handle on the situation. Around the same time as the inflation figures broke this morning, Ron Klain was retweeting snarky jokes about turkey shortages at Thanksgiving. A small thing, but not the work of a man aware that he is on the frontline of a major crisis.

The hard truth for the White House is that there may only be so much the Biden administration can do about the problem. Today Biden will announce that he is waiving EPA regulations on ethanol to allow the sale of higher ethanol blend gas this summer, a small but welcome tweak. The most important thing within Biden’s control is the avoidance of further harm: don’t splash the cash on all manner of progressive policies that risk making things worse. And yet the Democratic feeding frenzy is only limited by votes in the Senate, rather than any sense of sensible economic stewardship. But even if Biden sees the error of his ways, the mess that he helped get America into may not be one that he can get America out of.

That unappealing job falls to Fed Chair Jay Powell. Reining in rapid inflation without tipping the economy into recession is, historically speaking, not something that many Fed chairs have managed to pull off. All the options the American economy now faces risk making people poorer. Just as there are costs to overheating the economy with taxpayers’ money, so too are there costs to fixing that problem. That’s one reason why stoking price rises is such an unforgivable offense. And, come November, why Biden may pay a deservedly high political price for this mistake.

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A northern Democrat at the border

“Our frontline personnel need significant, additional numbers, people, on the ground at the border. They need more technology. They need access roads and, in some places, they need physical barriers. The administration really needs to step up here, develop a plan and get more resources to the southern border.”

These words came from a Democratic senator. On a visit to the US-Mexico frontier in Arizona yesterday, New Hampshire’s Maggie Hassan delivered a pointed plea to the White House to keep Title 42, the pandemic-era restriction on border crossings. That Hassan, a senator from a state a long way from Mexico, feels the need to intervene in the immigration debate in this way demonstrates the national salience of the issue and its importance ahead of November. Hassan’s re-election race is scored as “lean Democrat” by the Cook Political Report. It’s exactly the sort of contest that Democrats could end up losing if things go from bad to worse between now and November.

Anxiety about the politics of immigration among moderates like Hassan can’t be helped by the Biden administration’s deer-in-headlights approach to the issue. As a recent insidery New York Times piece on immigration debates inside the White House made clear, Biden’s team is fatally divided on the issue and the president himself seems incapable of deciding on a practical and politically viable immigration strategy.

Doug is the star of the show

Doug Emhoff was the star of a mock trial hosted by the Shakespeare Theatre Company and presided over by Supreme Court Justice Stephen Breyer in Washington last night. According to a Guardian write up, the event was true to the Second Gentleman’s goofy persona, and replete with cringey proud-husband jokes: “You know, not too much has changed in my life – except for the Secret Service, Air Force Two, the selfies, the cameras following me everywhere, and oh: my wife is the vice-president of the United States.”