Talk about chutzpah. Interest rates are soaring and a recession is looming.
And amidst this chaos, Joe Biden is claiming there is “zero evidence” that the American Rescue Plan (a COVID-19 relief bill) caused inflation. (Cough) Bullshit (cough).
“You could argue whether it had on the margin a minor impact on inflation,” Biden told Associated Press this week. “I don’t think it did. And most economists do not. But the idea that it caused inflation is bizarre.”
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What is actually bizarre is Biden’s revisionist history. As Vox put it last month, “Biden’s American Rescue Plan worsened inflation. The question is how much.” But don’t take that left-leaning site’s word for it. Back in November, Biden himself seemed to concede as much.
“The irony is: People have more money now because of the first major piece of legislation I passed. You all got checks for $1,400. You got checks for a whole range of things,” he said. “But what happens if there’s nothing to buy and you got more money?...It creates a real problem.”
Indeed, it did create a real problem. And moments later, Biden got around to explaining it. “[W]ith more people with money buying product and less product to buy, what happens?” Answering his own question, the president said: “Prices go up.”
I’ll be the first to admit that Biden’s often-incoherent and always-discursive style of rhetoric makes it hard to pin him down. But what Biden finally got around to explaining sounds like a textbook recipe for how inflation is created: “Too much money chasing after too few goods.”
To be sure, nobody is denying that supply chain shortages—as Biden insists—played a major role in lowering the supply. But Biden has suddenly decided to gaslight us on how his stimulus spending helped stoke demand.
Now, you might argue that there isn’t much that can be done to fix this problem now, so why waste so much time trying to set the record straight?
Consider what the injection of $1.9 trillion (actually, more like $3 trillion, when you count the $900 billion bipartisan deal passed in late December 2020) did to prices, and then consider that progressives wanted to spend an additional $6 trillion in the Build Back Better spending bill.
Imagine how much worse inflation would have been had Biden and the Democrats gotten their way. And imagine what will happen if they can still persuade moderate Democratic Sen. Joe Manchin to help ram through some scaled-down version of Build Back Better. (As an aside, I realize that progressives argue that passing BBB won’t drive up inflation for a variety of reasons, including the fact that it would be spread out over 10 years. But it’s hard for me to take their assurances seriously, given their failure to see inflation coming, in the first place.)
Ideas have consequences, and people who fail to learn from history are doomed to repeat it. This is all to say that it’s important to hold politicians accountable for their policies—if for no other reason than to disincentivize future (and current) politicians from repeating the same mistakes.
Of course, some progressives (such as Rep. Alexandria Ocasio-Cortez) could be forgiven for not remembering the last time inflation reared its ugly head. In the 1970s, politicians of both major parties supported policies that led to inflation.
The painful experience of inflation chastened American political leaders to the point that it took nearly four decades for their successors in elected office to grow dismissive of inflationary warnings. It is ironic that the man at the helm of government the second time around would be someone who made his legislative bones back in the 1970s.
It’s become a cliche, but cliches are often based in fact—Biden’s presidency is now resembling Jimmy Carter’s. And he has no one to blame but himself.
Aside from serving in the Senate through the 1970s, Biden had plenty of people warning him about overheating the economy this time. As CNN’s John Harwood reported, after former Clinton administration Treasury Secretary Larry Summers began sounding the alarm about inflation in February 2021, “Biden aides responded that, while they were monitoring inflation risks, the danger of spending too little to recover from the effects of the pandemic exceeded the risks of spending too much.”
Once we started seeing signs of inflation, Biden wrongly insisted that it was merely “temporary” or “transitory.” Biden’s latest talking point is to say, “If it’s my fault, why is it the case in every other major industrial country in the world that inflation is higher?”
There’s an element of truth to this, as well. As Vox notes: “Inflation has been happening across the world, caused by pandemic-related disruptions, and exacerbated this year by Russia’s invasion of Ukraine and China’s COVID-19 lockdowns,” but “regarding the exact amount of inflation, the U.S. stands out. And it started to stand out shortly after President Biden took office.”
Even with his reputation as a plain-speaking, no-bullshit working class Joe—it’s hard to read Biden’s comments and not conclude that he’s not shooting straight with us. First, he was wrong when he dismissed legitimate concerns about inflation—a pattern repeated in other areas, including violent crime (“more pronounced” in the summer) and the (“cyclical”) migrant surge—and now, he’s denying any culpability.
It’s impossible to fix a problem when your first impulse is to deny its existence, and when you subsequently lie about how your past behavior contributed to said problem.
The first step is admitting you have a problem. For this reason, it’s hard to imagine Joe Biden can ever turn this mess around.
