Rising prices may be Democrats’ midterm downfall, so it’s no wonder Joe Biden gets upset when asked about it
US President Joe Biden has landed in hot water after insulting a Fox News correspondent in a hot mic gaffe. Peter Doocy seemed more amused than angry, however, at being called a
“Stupid SOB” by the big man in the oval office. And with most of the US media on the Democratic side, the president will hardly be branded an enemy of the free press over the incident, unlike his Republican predecessor.
The invective reaction was sparked by a question about inflation and whether Biden saw it as a liability for the midterm elections.
“It’s a great asset, no more inflation”, the president mused, before delving into Doocy’s mental abilities.
The response arguably demonstrated just how worrisome rising consumer prices at a rate not seen in decades are for his party. The consumer price index in the United States rose 7% last year, according to Labor Department data, marking the biggest 12-month rise since June 1982.
So what is inflation? What actually caused it?
For consumers, inflation is quite simple: you pay more for your groceries or when you fill up than you did the previous month. Most likely, your salaries aren’t keeping up. You may become frustrated, angry and wish the other party was in power.
Seen from above, inflation is a complicated process with multiple causes and, according to some, the current frenzy is unique because of the circumstances. One of the main factors is the increase in global demand for energy, as the global economy recovers from the Covid-19 pandemic. Prices are further pushed higher due to the phasing out of fossil fuels in some countries and the management of a shortage of renewable energy generation.
Then there is the disruption of global supply chains due to the pandemic. It has been exacerbated by the “just on demand” logistics approach that large companies have adopted in an effort to increase their profit margins.
Another aspect is more direct corporate greed. Big business is making record profits despite all the difficulties the United States has faced as a nation. Voters across the political aisle seem to agree that the lack of competition in a country that is supposed to champion the market economy is to blame for inflation.
What can the White House do about it?
The Biden administration has been putting its energy into addressing supply chain issues. The White House has allowed congested container ports to operate 24 hours a day and contacted major retailers about their logistical disruptions. The White House has also promised that in the long run, the infrastructure spending program it managed to get through Congress will help address supply issues and curb inflation.
Measures have also been taken to deal with the energy situation. The United States tapped into the strategic oil reserve and publicly pressured OPEC nations to increase supply. Biden could also scrap Trump-era tariffs with China, take an aggressive stance on price-fixing and other monopolistic shenanigans, or rely on the Federal Reserve to do more to regulate inflation. But all of these approaches would likely come at a political cost, as they would upset the war hawks and big cats protecting their defense contracts and generous Fed loans.
Does the labor movement have anything to do with it?
Part of the pressure on the US economy is coming from the revitalized labor movement, which appears to be waking up from decades of slumber and baring its teeth at employers.
Last year’s strikes at John Deer and Kellogg won better contracts for employees and put a damper on the so-called tiered pay system, under which workers doing the same job can be paid differently depending on when they were hired.
Amazon and Starbucks have faced fierce battles against organizing efforts with varying degrees of success. Entertainment giant Activision is facing pressure from its quality testers, which could pave the way for the US gaming industry’s first syndicate. The syndicate is still “pending approval” by Activision.
Meanwhile, companies that can’t or won’t offer better conditions to workers are struggling to fill vacancies, as many workers prefer to give up unsatisfying jobs and sink into uncertainty. Some may not like the national walkout, even
compare to a disease, but it cannot be ignored. And that has fueled inflation to some degree as shipping companies have struggled to get everyone on deck to make deliveries.
But didn’t the Biden administration call “inflation” a good thing?
Before inflation hit hard and sent Biden’s approval ratings deep under water, some in the White House argued that a slight price hike could actually be good news. It’s just that things are going where they are supposed to be as the economy recovers, let’s not overreact, Bharat Ramamurti, the deputy director of the National Economic Council, assured in May 2021.
As the seriousness of the consumer price storm became apparent, some media outlets continued to put a positive spin on it. Covid-19 is unique in that even the poor may not be as affected by it as in previous economic crises, so they may withstand some inflation, MSNBC suggested, chastising CNN for its gloomy coverage. Oh yes, inflation will eat up fixed-rate debt like mortgages and could ultimately hurt the rich the most, the network agreed.
Can he finally put an end to the career of an American president?
Finding a silver lining can ultimately be an exercise in futility. Since at least the dreaded stagflation of the 1970s, Americans have seen price stability as a major goal and punished those who couldn’t get to the polls.
Inflation may not have been the main cause of Richard Nixon’s downfall, but his successor Gerald Ford lost to Jimmy Carter as inflation averaged nearly 9% over his three years. of presidency. Carter also failed to tame him, and Reagan ran out four years later. Part of its revered status among Republicans comes from the fact that Reaganomics controls prices.
Given this toxic legacy, it’s no surprise that the GOP is doing its best to harass Biden personally and his party with predictions that if he pushes his social spending agenda ahead of internal dissenters, inflation would get out of hand. And it doesn’t take a degree in political science to see a red wave coming in November, to hell with margaritas and kickboxing classes.