In a recent speech, President Biden tried to empathize with the plight of average Americans struggling with high inflation. But as might be expected of someone who prioritized acquiring luxury real estate over paying taxes that fund Medicare and Obamacare, the plutocrat’s attempts to deflect a politically toxic issue for Democrats fell flat.
Beyond trying to pin skyrocketing prices on Vladimir Putin—as if inflation didn’t start until the invasion of Ukraine began in February—Biden wants to turn the inflation issue from a referendum on his (lack of) leadership into a choice between his approach and Republican proposals. But playing the political blame game has about as much policy merit as its chances of political success—which is to say, slim and none.
Irony 1: High Inflation Is Rarely ‘Transitory’
High inflation falls into the same category as events like fiscal crises and wars: Much easier to start than to finish. Once inflation expectations become unmoored—i.e., when people believe prices will continue to rise for a sustained period—economies often fall into a “wage-price spiral.” In this scenario, workers demand higher wages to reflect a higher cost of living, employers pass on those higher wages in the form of higher prices, and the cycle repeats.
In most cases, only a sharp rise in interest rates, likely resulting in a severe recession, can break a wage-price spiral. For this reason, policy-makers should act before inflation gets out of control, because once the horse has bolted from the proverbial barn, it’s too late to fix the problem—or at least fix the problem easily.
By trying to focus on what Republicans would do now, Biden, perhaps unsurprisingly, misses the point. Republicans can and should argue that if they had controlled Congress in 2021, there wouldn’t be an inflation problem now to begin with—they would have stopped federal over-spending before price rises got out of hand. By contrast, Biden’s largest error came by ignoring all the warning signs over the past year-plus showing that inflation continued to accelerate.
Irony 2: Biden’s Agenda
A Reuters report on Biden’s address noted that “the President did not announce new policy measures in the speech”—perhaps the best news coming out of that address. Of late, Biden’s proposals have ranged from ineffective to potentially harmful. Attacking companies for “price gouging,” and pledging investigations of same, likely falls into both buckets—discouraging companies from achieving the revenues necessary to grow their enterprises, while not solving the underlying problems.
Biden didn’t mention it by name in his speech, but his Build Back Bankrupt legislation would exacerbate inflation. The bill’s budget gimmicks seek to mask its full cost, likely in the neighborhood of $5 trillion or more over a decade. Coming on the heels of the gusher of government spending over the past two years, these new entitlements would only worsen inflation.
Irony 3: Republicans Do Have Solutions That Would Lower Prices
Contrary to Biden’s claims, congressional Republicans do have two obvious solutions on hand that would address the spike in inflation. Here they are.
Repeal Biden’s “Covid Stimulus:” Press reports have listed some of the many wasteful projects that governments funded using the $1.9 trillion “stimulus” measure Democrats passed last March under the guise of “Covid relief.” The extravagant pork-barrel spending goes from coast to coast, from irrigation systems at a golf club in Colorado Springs to upgrades to a minor league baseball park in New York.
But the Congressional Budget Office notes that chunks of that spending have yet to go out the door. CBO estimates the bill will increase the deficit by $529 billion in the current fiscal year (which ends September 30), $114 billion in the upcoming fiscal year (which begins on October 1), and $59 billion in the fiscal year after that.
In his speech, Biden said that “reducing the deficit is one of the main ways we can reduce inflationary pressures.” Repealing last year’s “stimulus,” and rescinding any amounts not already obligated, would do just that. How about it, Mr. President?
Energy Exploration: In his speech, Biden also claimed Republicans “have no plan to bring down energy prices today.” That claim is false.
Republicans have proposed numerous ideas to would bring down energy prices. I outlined some of them in a recent article, starting with efforts to increase energy exploration in our own backyard. Because oil and natural gas operate in “spot” markets, any announcements signaling an expansion of American energy would bring down prices almost immediately, well before any new oil or gas wells come online.
But leftist climate warriors don’t want to increase energy exploration activities, which explains why the Biden administration recently canceled oil and gas sales in Alaska and the Gulf of Mexico.
Therein lies the underlying problem. While Biden and his elite colleagues remain firmly ensconced in their mansions, they want you to pay the price for their “climate sins.” All of this demonstrates that, while Biden may sound sympathetic to families’ inflation plight, he has no real intention of doing what it takes to bring the American people true relief.