Biden Can’t Avoid Blame for Inflation, a Tough Problem to Fix
(Bloomberg Businessweek) -- If President Joe Biden had scripted the first six months of his presidency, he could hardly have improved upon these recent headlines: a lightning-quick recovery from the Covid-19 recession, strong wage growth, falling poverty levels, record stock markets, and U.S. households flush with cash. Unfortunately for Biden, all these achievements are being overshadowed by a more ominous development: rising inflation.
In October, U.S. inflation spiked to a three-decade high, with prices climbing on everything from cars to gasoline to groceries. Voters have noticed—and sent Biden’s approval ratings falling further, deepening a slump that began this summer. Only 39% approve of his handling of the economy and about half blame him for rising inflation in a Nov. 10 Washington Post-ABC News poll. Turning that around will be difficult. “There’s not much a White House can do to fight inflation,” says Jason Furman, who headed the Obama-era White House Council of Economic Advisers.
For Biden, the political problem is twofold. First, inflation has the pernicious effect of eating into paychecks, thereby undermining all the positive gains in the economy. In October, average hourly earnings grew a robust 4.9% from a year earlier—but consumer prices jumped 6.2%, according to the U.S. Bureau of Labor Statistics, eclipsing those wage gains. In private focus groups and polling, Democratic strategists are encountering a chorus of frustration with higher prices. More than half of respondents (54%) said inflation is a “major crisis” facing the country, a new poll by the Democrat-aligned Navigator Research found, including a sizable share of Democrats (43%) and majorities of independents (54%) and Republicans (66%). That frustration is increasingly being directed at Biden. “Voters hold accountable the person in the White House,” says Bob Shrum, a Democratic strategist who worked for Jimmy Carter, a president kneecapped by high inflation.
Biden’s second problem is that, unlike many other issues troubling voters, he can’t plausibly pin the blame for rising prices on his predecessor, Donald Trump, and Republicans—even if Trump’s pandemic rescue packages contributed to them. While voters give Biden relatively high marks for his handling of Covid, his numbers on the economy have worsened. “It’s very hard to spin inflation,” says Al From, who was a White House adviser on inflation under Carter, during whose tenure inflation peaked at 14.7% in early 1980. “People feel it every time they fill up their gas tank.”
The politics of inflation are a problem none of Biden’s recent predecessors had to face. From Harry Truman’s presidency through Carter’s, periods of high inflation weighed on approval ratings. Since then, however, inflation and job approval are largely unrelated, says Gallup Senior Editor Jeff Jones, probably because inflation has been too low to exert a measurable drag and also because partisan affiliation has become a much bigger factor in how people evaluate presidents.
But Biden isn’t getting much help from members of his own party. Former Treasury Secretary Larry Summers, a vocal critic of Biden’s $1.9 trillion Covid rescue plan, has amplified his warnings about government spending. “Excessive inflation and a sense that it was not being controlled helped elect Richard Nixon and Ronald Reagan, and risks bringing Donald Trump back to power,” Summers, who is a Bloomberg contributor, warned on Nov. 15. Democrats in Congress are also pressuring the White House, with West Virginia Senator Joe Manchin, a pivotal vote, echoing GOP complaints about an “inflation tax.”
Biden’s options for fighting back are limited. He can scale back tariffs to try to ease prices, raise immigration levels to help meet worker shortages, take a stronger hand in attempting to untangle backups at U.S. ports, and possibly tap the Strategic Petroleum Reserve to try and curb gasoline prices, which have nearly doubled in the last year. The administration has also urged foreign producers to increase oil output by 400,000 barrels a day, so far unsuccessfully. But all of these moves would have only a marginal effect on inflation.
More important, say veterans of past administrations, is that voters believe Biden recognizes the problem and is responding to it. Even while insisting inflation will be transitory, the White House has begun to adjust. After months of touting the size of his multitrillion-dollar infrastructure and social spending bills, Biden is now trying to recast them as inflation fighters.
He’ll have to do more.
“The hardest part about sending that message is that it’s difficult for people to get it—you have to do something dramatic,” says From, who toiled for two years battling inflation in Carter’s White House. “People have to understand that you’re really fighting for them.”
Even so, the record of presidents who’ve tried to overcome rising prices is discouraging. Gerald Ford vowed to “whip inflation” but couldn’t and lost reelection. Carter lost, too. From says no one should have illusions about the challenge facing the current president. “Biden’s got a tough-ass job,” he says.
©2021 Bloomberg L.P.