Inflation-Focused Voters Resist Biden’s Attempt to Change the Subject Efforts by the president and his supporters to divert the debate to labor market recovery, and other accomplishments are failing to gain momentum.
After months of discussing reproductive rights, dangers to democracy, climate change, immigration, and crime, America’s midterm elections will be determined by how Americans feel about inflation and the economy.
In August of 1982, according to Jeff Jones, senior editor of the Gallup Poll, Americans last ranked inflation as their top concern during an election year. The nation was experiencing a severe recession at the time, and a Republican was in the White House. This year, according to Jones, “inflation has been a major concern throughout the whole year.”
Early in the summer, the Democratic party hoped to defy the historical trend of losing seats in midterm elections by gaining the support of important voters, such as White suburban women, and by concentrating on abortion access and gun control.
These hopes, however, have been dashed by an autumn frost of negative economic news, including soaring mortgage rates and falling home prices, a slow but steady drumbeat of layoffs in tech and other predominantly white-collar industries, and choppy stock and bond markets. All of these are largely the result of the massive interest rate hikes the Federal Reserve is implementing to tame persistent inflation. As analysts at Wall Street banks modify their models to reflect the most severe round of monetary tightening in four decades, the term “recession” is now on everyone’s lips.
As the election draws to a close, the Biden administration has shifted its focus to a more economic theme. The White House and its congressional supporters are attempting to convey more forcefully the argument they’ve been making for months: that the most significant economic indicator of Biden’s success is not inflation but the solid labor market recovery. Within two and a half years of the pandemic putting millions of Americans out of work, the national unemployment rate has plummeted to 3.7%. This is about the same as before the lockdowns, and it took twice as long to regain the jobs lost during the Great Recession.
Polls indicate that despite recent efforts, the White House has failed to reclaim the economic narrative from the GOP, which has pushed to lay the responsibility on Biden for inflation that has hovered around 8% for many months, the highest level in forty years. The New York Times, in collaboration with Siena College, conducted a study that showed that by a 2-to-1 ratio, people who are most concerned about the economy had confidence in Republicans to manage economic concerns.
About the newly enacted Inflation Reduction Act, Gary Cohn, from the National Economic Council, states the $2 trillion stimulus package was unnecessary, and they continue to do inflationary things. If they were serious about combating inflation, they would withdraw currency from circulation and make it more costly. They continue to inject money into the economy.
Republicans have maintained a consistent stance over inflation, but Democrats have avoided the subject for months. AdImpact, a business that monitors political spending, reports that in recent weeks, Republican candidates are spending four times as much as their Democratic opponents on election commercials that reference inflation.
Celinda Lake, a Democratic pollster who worked for Biden during the 2020 presidential campaign, said Democrats erroneously believed that inflation was a transient issue and simply didn’t explain it enough because they were scared by the topic.
The White House began to take inflation far more seriously as a political issue last fall when surveys revealed that the president’s support rating was falling as prices continued to increase. According to two persons familiar with the conversations, the president was unhappy that his advisers had convinced him that the inflation problem was “transient,” a result of pandemic-induced shortages and other supply-chain hiccups.
In addition, he questioned if his advisors had heeded the warnings that the $1.9 trillion American Rescue Plan would flood the economy with too much cash, igniting inflation. Larry Summers, an economics professor at Harvard University who served under Obama alongside Joe Biden and remains close with the president, advocated for a smaller stimulus. Even several of Biden’s economic advisors privately voiced concerns about the extent of the stimulus plan before its approval, namely the scope of the direct stimulus checks and the amount of state and local help.
According to three persons familiar with the conversations, Biden took out his aggravation on National Economic Council Director Brian Deese during meetings, despite his tendency to lose his temper in front of his West Wing staff. Klay contests this account.
Deese and others in the White House who underestimated the price trend are not alone: Janet Yellen, a Ph.D. economist who led the Federal Reserve for four years, has stated that she misjudged inflation, as has Jerome Powell, who followed Yellen as Fed chair.
The same White House official remarked, “I wish inflation were less severe. I haven’t seen our detractors comment on what we may have done differently.”
Suppose Biden and his economic advisers, including Deese and Jared Bernstein, erred on the side of a larger stimulus. In that case, it is because they all worked in the Obama White House following the global financial crisis and saw firsthand how a too-small rescue package contributed to a delayed labor market recovery.
A high unemployment rate harms families, communities, and children whose parents are unemployed. Therefore, reducing the unemployment rate was the top objective. Obama White House veteran Jason Furman says that Republicans and other Biden opponents have focused too much on the role of Covid-19 relief expenditure in increasing inflation. Three things contributed to inflation: excessive fiscal stimulus, the Fed’s delay in raising interest rates, and global misfortune, argues Harvard economics professor Furman. Sincere individuals might discuss the ratio of all three criteria.
In a Wall Street Journal opinion piece published at the end of May, Biden argued that the Fed had “the main obligation to manage inflation.” During a rare in-person meeting with Powell at the White House in the same month, he emphasized allowing the central bank to work freely to combat the inflation issue. The encounter and its political stakes were reminiscent of President Ronald Reagan’s meeting with then-Fed Chair Paul Volcker nearly four decades earlier when he sought re-election amid soaring prices.
Biden and his economic team have spent the better part of the last year and a half searching for methods to alleviate the burden of rising costs on American consumers. In June 2021, the White House established a supply-chain task team and attempted to alleviate congestion at the nation’s ports while bringing more semiconductor and chip production back to the United States. Oil from the Strategic Petroleum Reserve was made available after months of negotiations with Senator Joe Manchin of West Virginia to control gas prices. Congress passed, and President Joe Biden signed the Inflation Reduction Act, which reduced the cost of prescription drugs for seniors and allocated billions for clean energy initiatives. Biden has highlighted its efforts to combat unwarranted bank fees in recent weeks.
Within the West Wing, White House staffers continue to be annoyed by the high prices of everything, including meat, plane tickets, and rent – not because of the inflation message, but because of the actual facts. Their hair is ablaze, and they are beyond outraged, according to a person in frequent contact with the White House who requested anonymity because they are not allowed to discuss the topic.