United States President Joe Biden speaks in the State Dining Room of the White House in Washington DC on July 19, 2021 about the economy during the Covid-19 pandemic.
Saul Loeb | AFP | Getty Images
WASHINGTON – As consumer prices rise across much of the U.S. economy, President Joe Biden has a message for voters: If you’re worried about inflation, support Biden’s infrastructure and domestic spending plans.
“My ‘Build Back Better’ plan will be a force to drive lower prices for Americans looking ahead,” Biden said in a speech at the White House Monday.
Biden argued that the infrastructure and family support investments included in his $ 4.5 trillion domestic spending plan will fund decades of economic growth, increase the workforce, and keep prices down.
“If your main concern right now is inflation, you should be even more excited about this plan,” said the president.
However, the fact that Biden looked at inflation in the first place is a sign of growing concern among Democrats that rising prices will be a strong political stick for Republicans in next year’s midterm elections.
At the moment, Biden still enjoys high approval ratings, and most voters approve of the programs he wants to fund with his two bills.
But the endangered House and Senate Democrats have good reason to worry about the coming year.
Republicans already have an advantage in that historical trends favor the opposition party in the first half after the election of a new president.
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In addition, consumer prices rose 5.4% yoy in June, the highest increase since 2008, according to the Ministry of Labor.
In a recent survey by Marist and PBS NewsHour, 26% of adults said their biggest economic concern right now is inflation, more than unemployment.
Meanwhile, the opinion of Biden’s economic advisors is largely unchanged: They do not deny that prices are rising, but insist that the effect is temporary and should go away within a few months.
“We’re going to have a few more months of rapid inflation so I’m not saying this is a month-long phenomenon,” Treasury Secretary Janet Yellen told CNBC in an interview that aired Thursday.
“But I think in the medium term inflation will return to normal levels,” she added.
If inflation continues for the rest of the year, however, it will fuel the Republican case that Biden’s domestic spending agenda is ruthless and that Democrats are trying to pump trillions more government dollars into an already overheated economy.
That argument was on full display in the Senate last week, where minority leader Mitch McConnell accused the Democrats of trying to fight their way out of inflation.
“Now the big idea for the Democrats is to try to get out of inflation,” McConnell said Thursday. “Inflation out of inflation is going to be a wild ride for working Americans.”
Meanwhile, Texas Republican Senator John Cornyn railed against what he called the Democrats’ “irresponsible spending on money.”
Joni Ernst from Iowa went a step further and set up props that looked like the game show “The Price Is Right”. The Senator’s Message? “The price has gone up.”
There are several loopholes in the GOP’s argument: First, the fact that any money Congress uses for Biden’s domestic spending bills this year will not actually flow into the economy for at least six months after the bills have been signed, and therefore little impact on the economy current price increases after the pandemic.
The other problem with the Republicans is that a significant portion of the current price increases are due to pandemic-induced imbalances in the supply chain. Biden gave a figure of 60%.
Most notable of these is the semiconductor chip shortage, which has forced automotive plants across the country to stand still this spring, reducing the supply of available cars and driving up the prices of existing cars.
Global supply chain disruptions upset the White House this spring. Biden workers have privately admitted that there is little the government can do to fix them.
“When demand returns, there will be global challenges in the supply chain,” said Biden on Monday.
The president acknowledged that the chip shortage is a major challenge.
“My government is doing everything we can to address it. But again, these disruptions are temporary,” he said.
With 477 days to go until the midterm elections, the big question for the Democrats is how temporary they will be.