When economies are good, presidents often get the credit. When they’re bad, they get the blame. But economists on both sides of the aisle will tell you, most of the time it’s neither.
Neil Erwin, author of The Alchemists: Three Central Bankers and a World on Fire, has written, “Presidential economic records are highly dependent on the dumb luck of where the nation is in the economic cycle. And the White House has no control over the demographic and technological forces that influence the economy.”
Forces like war. Like politics. Like pandemics.
Right now though, while most markers in an economy that had sunk under the weight of the pandemic have been good and getting better under President Biden, inflation is a killer. So the Republicans, always looking for a fuse to light, have lit that one. They blame Biden. They hang it on his pandemic relief bill, the Covid relief package formally called the American Rescue Plan.
It pulled 1.9-trillion dollars from our Treasury and put it back into our hands. Left unsaid is, the economy was staggering, the Covid relief package helped save it.
What the Republicans overlook— no accident, you can bet— is that Biden’s wasn’t the first pandemic relief bill to come out of Congress, and if one is inflationary, they all are. The first two, for more than $3-trillion, were signed by then-President Trump. The trouble when Biden moved into the White House was, the pandemic was only getting worse. Society needed another boost.
So Biden’s bill provided stimulus payments for most families in America, to make up for income lost to the lockdown, although some economists argue that like the relief bills before it, by putting more money in people’s pockets, it provided too much stimulus, which can be inflationary in and of itself. It extended compensation for unemployment as people abruptly were out of work. It made special grants to businesses, including restaurants, that had lost their customers to the shutdown. It increased the child tax credit, which put food on the table in low-income homes and according to surveys, actually reduced the rate of hungry children by almost 25%. It returned money to state and local governments to make up for tax revenues they’d lost. It put funds into schools to help them reopen.
Simply put, it kept the economy alive. And by subsidizing programs to test and vaccinate for Covid, it also kept many Americans alive. The economy depends on healthy buyers and healthy workers.
True, the outlay was one of the largest in history, and there’s no denying that spending that much, as both Trump and Biden did, contributed to inflation. But what Republicans don’t mention about Biden’s bill is, the economy would have been a whole lot worse without it.
Furthermore, pandemic relief was hardly the sole cause of inflation and others have nothing to do with the president. A few facts: the global supply chain, impeded in particular by the pandemic downturn in China, is a clear culprit. Russia’s war on Ukraine, which has strained global energy supplies and global economies, is another. And with profit margins at publicly traded companies even higher now than before the pandemic, price-gouging is a suspect.
But for Republican politicians these days, facts aren’t part of the playbook.
They just blame Biden, and for their minions enmeshed in the myopic bubble of rightwing media, it’s sticking.
They omit other facts too, because the playbook does not permit it
One is, Biden inherited Trump’s tax cuts, which not only took the deficit to record levels but led to more personal spending. Which led to demand chasing supply. Which led to inflation. That’s Economics 101.
Another is, arguably the Federal Reserve kept interest rates at record lows for far too long, meaning, until only two months ago, it did nothing to discourage inflationary spending by making money more costly. Demand chasing supply again. Chairman Jerome Powell said Wednesday when he announced the biggest rise in interest rates in almost 30 years, “We are highly attentive to the risks high inflation poses to both sides of our mandate, and we are strongly committed to returning inflation to our 2-percent objective.” Too little, too late?
But what Republicans most egregiously omit is that what a president can do, Biden’s doing. On Tuesday, for example, it was reported that he is eyeing a rollback of President Trump’s tariffs on Chinese goods. Since you barely can make a purchase any more without a “Made in China” stamp on the product, that should make those products cheaper.
He has issued executive orders to relieve supply chain shortages, which have squeezed the balance of supply and demand and, where products have been hard to get, pushed prices up. The heart of the president’s program is to move more manufacturing and production back to the United States, so we’re not dependent on foreign suppliers. From healthcare supplies to microchips to cutting-edge technology, even rare earth materials.
After the nation’s largest domestic producer of infant formula shut down to combat contamination in its product, which made baby formula scarce, the president put flights together to import 4-and-a-half million bottles from abroad.
And then there’s gas. Even at record prices here in the U.S., it’s worth reminding that it still is cheaper than what people have paid— even pre-war, pre-pandemic— in Europe. But yes, higher gas prices do hurt because it’s not just about what we pay at the pump, it’s about everything we buy, from food to furniture to frying pans, that has to be delivered from Point A to Point B. The higher price of gas means a higher price for delivery which means, of course, a higher price tag for the end product.
Here too, Biden’s not to blame. In her daily blog here on Substack, Helen Cox Richardson cited an analysis in the newsletter Hoaxlines by E. Rosalie, a scholar at the Johns Hopkins Bloomberg School of Public Health. U.S. production of crude oil during Biden’s first year, Rosalie points out, was actually higher than it was in Trump’s first year. Furthermore, in the interest of increasing domestic production, Biden’s administration has issued more permits on federal lands than Trump’s did in his first three years.
Biden’s moving right now to control fuel prices, next week meeting with oil company executives, next month with the Saudis. This is where a president’s bully pulpit might project some power.
And, it’s worth mentioning, he is indefatigably trying to shift energy to renewals, so this doesn’t happen again.
So when the Republicans try to lay inflation entirely on Biden, where’s their case?
Over almost five decades Greg Dobbs has been a correspondent for two television networks including ABC News, a political columnist for The Denver Post and syndicated columnist for Scripps newspapers, a moderator on Rocky Mountain PBS, and author of two books, including one about the life of a foreign correspondent called “Life in the Wrong Lane.” He has covered presidencies and politics at home and international crises around the globe, from Afghanistan to South Africa, from Iran to Egypt, from the Soviet Union to Saudi Arabia, from Nicaragua to Namibia, from Vietnam to Venezuela, from Libya to Liberia, from Panama to Poland. Dobbs has won three Emmys, and the Distinguished Service Award from the Society of Professional Journalists.
Thanks Greg. Spot on!