White House scrambles on inflation after Biden complains to aides

Article happily posted for:  MugsMalone

Tyler Pager, Jeff Stein

The White House launched a new push Tuesday to contain the political damage caused by inflation after President Biden complained for weeks to aides that his administration was not doing enough to publicly explain the fastest price increases in roughly four decades.

Aiming to demonstrate to the public that it is responding to its concerns, Biden met with Federal Reserve Chair Jerome H. Powell in the Oval Office, wrote an op-ed in the Wall Street Journal about inflation and sent top aides across major networks to push the administration’s economic message.

The flurry of activity comes after Biden has privately grumbled to top White House officials over the administration’s handling of inflation, expressing frustration over the past several months that aides were not doing enough to confront the problem directly, two people familiar with the president’s comments said, speaking on the condition of anonymity to describe private conversations.

The flurry of moves reflects a new urgency within the White House as it grapples with the growing likelihood that high inflation will extend through the midterm elections, eclipsing Biden’s agenda and undermining his ability to tout his accomplishments — and that there may be little Biden can do about it.

With price hikes reaching 8 percent in April, the pressures appear unlikely to abate soon amid the ongoing fallout of the war in Ukraine, coronavirus lockdowns in China and a surge in gas prices likely to be exacerbated by the summer driving season, all factors beyond the president’s control.

Fuel prices hit a record high Tuesday, with a gallon of gas now costing $4.62 on average — a 52 percent increase from last year — according to AAA, after the European Union announced progress on a deal to ban Russian energy imports.

How policymakers repeatedly misjudged inflation

That leaves Biden struggling to show that at least he understands that Americans are suffering and is doing what he can.

On Tuesday, the administration’s top economic officials fanned across cable news channels and appeared in the White House press briefing room to underscore their efforts to fight the price increases.

While not announcing any new measures to combat inflation, the White House insisted the American economy is in strong position for the Federal Reserve to tame high prices, because high growth and low unemployment create a buffer against future interest rate hikes.

Appearing with Powell and Treasury Secretary Janet L. Yellen in the Oval Office, Biden said he and the central bank share a “laser focus” on addressing inflation. “My top priority … is addressing inflation in order to transition from a historic recovery to a steady growth that works for American families,” Biden said.

But the message was complicated, because while the president sought to take credit for the Fed being well-positioned tackle inflation, he also emphasized that he is not interfering with its policies, as President Donald Trump was accused of doing.

Biden said his inflation plan “starts with a simple proposition: Respect the Fed and respect the Fed’s independence, which I have done and will continue to do. … I’m not going to interfere with their critically important work.”

The new activity comes after Biden had complained to aides that they were not doing a good job explaining the causes of inflation and what the administration is doing about it. A White House spokesman declined to comment on Biden’s instructions to his aides on inflation.

Yellen acknowledged that the administration didn’t expect the last year to play out the way it has. “I think I was wrong then about the path that inflation would take,” she told CNN on Tuesday. (A Treasury spokesperson said later Yellen was merely noting that “there have been shocks to the economy that have exacerbated inflationary pressures which couldn’t have been foreseen 18 months ago, including Russia’s decision to invade Ukraine, multiple successive variants of COVID, and lockdowns in China.”)

An NBC News poll released earlier this month found that 33 percent of Americans approve of Biden’s handling of the economy, while 23 percent approve of his handling of the cost of living.

A Washington Post-ABC News poll in early May found that more than 9 in 10 Americans are concerned, at a minimum, about the rate of inflation, which has been at a 40-year high for months. That included 44 percent who say they are “upset” about the problem.

In what might be worse for the president and his party, 68 percent said they disapprove of Biden’s handling of inflation, compared with 28 percent who approve.

The White House has grappled unevenly with how to respond to this threat since it emerged last summer. The administration initially downplayed the extent of the problem, inaccurately saying it would prove “temporary.”

When price increases persisted, the administration pivoted last fall to acknowledging that inflation was real but arguing that the Democrats’ Build Back Better legislative agenda was best suited to respond to families’ cost pressures.

Since Build Back Better collapsed after opposition from Sen. Joe Manchin III (D-W.Va.) and Republicans at the end of December, the White House has scrambled to find new responses to inflation, highlighting its actions to improve supply chain bottlenecks and its investments through the bipartisan infrastructure bill.

The White House has also stressed all the ways the American economy is quickly rebounding, as the unemployment rate plummets and gross domestic product surges. But that, too, is a tricky message, as the administration tries to simultaneously celebrate a booming economy and acknowledge that people are suffering.

The White House messaging has also been inconsistent in part because its attention has been seized by such powerful events as Russia’s aggression and a pair of horrific gun massacres. Yet unrelenting inflation threatens to undermine a central part of Biden’s political identity — that he knows and understands the problems of working-class Americans.

This week, the White House is making a “concerted effort” to “communicate our accomplishments to date on the economy,” while emphasizing Republican economic proposals that the administration believes will help create a favorable contrast, according to a White House official, who described the administration’s planning on the condition of anonymity to reveal internal deliberations. Democrats argue that Republicans embrace low taxes for the wealthy while paying little attention to the needs of ordinary Americans.

The administration’s top economic officials — including Yellen, Commerce Secretary Gina Raimondo and Deputy Treasury Secretary Wally Adeyemo — will be appearing on television this week as part of that push. Those appearances started in earnest Tuesday.

In recent weeks, Biden and his allies have taken particular aim at Sen. Rick Scott (R-Fla.), who runs the Senate Republicans’ campaign arm, and his 11-point conservative policy platform that includes language White House officials say could raise taxes on all Americans.

“It’s the ultra-MAGA agenda,” Biden said in a speech in early May.

Biden aides are also ramping up their push on Capitol Hill for an economic bill that would tackle the high cost of prescription drugs, child care and other items — remnants of Biden’s once-expansive Build Back Better agenda. The bill probably would be supported only by Democrats, and party leaders believe that would let them make the case that they are fighting to help ordinary Americans while Republicans are standing idly by.

But even those close to the administration acknowledge the messaging changes might not be enough to address voter unrest, and some in the White House orbit are pushing for more dramatic action.

The White House openly toyed with embracing a federal gas tax holiday to bring motorists relief at the pump but eventually abandoned that idea. Internal debates have erupted among administration allies over whether to adopt a more full-throated populist message and blame corporate greed for higher inflation.

While Biden has occasionally criticized consolidation in such industries as meatpacking, he has never been comfortable with a sharply anti-corporate stance and has largely shied away from the rhetoric deployed by such liberal leaders as Sen. Elizabeth Warren (D-Mass.).

The White House has taken some actions to alleviate inflation, including a large release from the nation’s oil reserves and waiving ethanol rules to generate more fuel supply. Those steps do not appear to have materially altered the trajectory of high prices.

But much of the response has been rhetorical. Biden has taken to calling the rising cost of fuel “Putin’s price hike,” for example, referring to Russian President Vladimir Putin and the strain on gas prices from Russia’s war in Ukraine.

“It seems like they’ve given up doing anything and have settled into figuring out what the best thing to say is,” said one person in close communication with senior White House economists, speaking on the condition of anonymity to reflect private conversations. “There’s almost more debate about the right narrative than the right policy stance.”

Mark Zandi, chief economist at Moody’s Analytics, said the Biden administration “is doing as good a job as possible.” But rising prices are “psychologically debilitating” for Americans, he added, and the White House needs to be persistent in explaining to the public why inflation is so high.

“People are using inflation as a political cudgel, so it’s just complicated people’s understanding of what’s going on,” Zandi said. “But I think the American people understand this is the number one financial issue. They’re not going to feel good about anything until inflation is back down to something that is more comfortable.”

Republicans have argued that the Biden administration lost credibility on the question of inflation long ago, when it initially dismissed it as a “transitory” effect of the economy reopening after the pandemic, only for high prices to become a long-lasting and stubborn problem.

Conservative economists and many centrist experts also argue that Biden’s $1.9 trillion stimulus plan last year exacerbated inflation by overstimulating the economy and driving up demand. And GOP economists dismissed the notion that Biden’s promise to let the Federal Reserve do its job is an inflation-fighting strategy.

“’Trust the Fed’ is not a plan. It’s not something the White House is doing to get inflation under control,” said Donald Schneider, who served as a top aide to House Republicans on the Ways and Means Committee. “It’s consistent misdirection, and people can see through it. … It’s too little, too late.”

Some critics of the White House’s economic management, such as former treasury secretary Lawrence H. Summers, praised Biden for refraining in the Fed’s affairs. But it remains unclear whether the central bank has the latitude to tame inflation without causing a recession, and if that were to occur, it could prove an even worse headache for the Biden administration.

“I don’t think there’s a durable reduction in inflation without a meaningful reduction in wage growth,” Summers told The Washington Post on Tuesday. “When inflation’s been above four percent and unemployment’s been below four percent, we’ve always had a recession within the next two years.”

https://www.msn.com/en-us/news/politics/white-house-scrambles-on-inflation-after-biden-complains-to-aides/ar-AAXWha1?ocid=msedgntp&cvid=32df51f15aff4669abbdfb60bcf2b106

 

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