President Joe Biden wants you, the American voter, to know that he is sick and tired of taking the blame for inflation. “I don’t want to hear any more of these lies about reckless spending. We’re changing people’s lives,” the president said Tuesday. But while President Biden was boasting of “the greatest job recovery in American history,” he made “no mention of the largest increase in the cost of living and inflation in 40 years,” criticized Family Research Council President Tony Perkins, host of “Washington Watch.”
In fact, despite Biden’s promise to make inflation his top priority in June, it seems like he doesn’t want to focus on it at all. Instead, Biden will spend Wednesday afternoon hosting an LGBT Pride event at the White House and unveiling more executive actions to promote the transgender agenda and fight back against state laws protecting children.
But for many American families, life has changed under President Biden. A mere 18 months after he took office, statements that would have astonished before now seem commonplace. “Sorry, kids, we can’t go to the lake this weekend; driving there is too expensive.” “Shoot! I forgot to pick up milk at the store. Guess we’ll have to make do until next month.” “What do you mean you’re sold out of chicken?”
“He’s just upset we’re calling him out,” said former congressman Dr. Dave Brat, Dean at Liberty University School of Business. “The more the American people hear,” the less they approve. A Fidelity study on retirement found 71% of Americans are “very concerned about inflation’s impact,” while nearly half (45%) of adults aged 18-35 “don’t see a point in saving until things return to normal.” According to Gallup’s latest survey, conducted May 2-22, only 14% of Americans rate current economic conditions positively, while 46% rate them negatively. Current opinions about the economy probably correspond closely with whether a person lives on a budget.
Biden’s two-part plan to fight inflation from Tuesday’s speech demonstrates his utter haplessness. Get ready to have your mind blown by this creative, genius strategy. Part 1: “Blunt Putin’s gas price hike” (stop prices from rising). Part 2: “Bring down gas and food prices” (lower prices). Now why did no one think of doing those things before? These kiddie pool solutions can only be carried out by someone with a high-dive understanding of how to achieve them.
The bottom line is, Biden is desperate to do something, but he has no clue what to do. In addition to squandering America’s strategic oil reserves by selling them on the market, the White House is also considering suspending the national gas tax (18.4 cents per gallon) and threatening oil companies with emergency powers unless they increase refinery output (refinery capacity is a problem, National Review’s Jim Geraghty explains, but only because opposition from activists and regulators have discouraged oil companies from making needed, long-term investments). Why won’t these endeavors have the desired effect? “As Milton Friedman said, ‘inflation is always an everywhere, a monetary phenomenon,’” Brat explained. The government has other ways to temporarily impact particular prices, but none of them can combat inflation unless they address the underlying cause of currency losing its value: too many dollars chasing too few goods.
President Biden’s problems run deeper than some bad PR on inflation and a stalled policy agenda. Over the past weekend, stock markets went skydiving, and they have yet to pull their parachute cord. “Those stock prices represent earnings and profit statements coming out,” Brat explained. “The real economy, the thing that really matters, is tanking, along with every variable under the sun.”
Brat said the stock market and other economic indicators are slumping now because “the Fed now is having to take away the sugar high — the artificial pumping and creation of money — and then the federal government stimulus is also wearing off.” On Wednesday afternoon, the Federal Reserve Board increased the federal-funds interest rate by 0.75 percentage points, to a targeted rate between 1.5% and 1.75%, the largest increase since 1994, although still a tiny one. Other interest rates are tied to the federal funds rate, so this announcement will create the highest interest rates in a decade.
Ever since the Great Recession, explained Brat, the Fed has employed a policy of artificially reducing interest rates to extremely low levels — practically zero percent. Meanwhile, the federal government’s debt has increased by leaps and bounds to nearly $30 trillion. If we were paying 10% interest on all that debt, “that’s three trillion a year. That’s the size of the U.S. budget,” Brat explained. So “the Fed has shielded us from having to see the true price … of borrowing money. … Now, the voters are going to see very clearly the cost of that debt, and they’re going to be horrified.”
Brat predicted the Federal Reserve is now planning “to run 5% inflation going forward as a way of paying down the debt.” Americans who save for retirement and work for a living will see their standard of living steadily erode. “This is all those political promises made, government programs expanded that are coming home to roost,” Perkins pointed out. “There’s no free lunch, and the American people are going to pay for it.”
“The American voter is responsible for all of this,” said Brat. “They have elected the people who have put them $30 trillion in debt.” They also elected President Biden, who re-nominated Jerome Powell to serve another term as chair of the Federal Reserve. Despite Powell’s record of encouraging cheap credit and depressing interest rates, last November President Biden slapped him on the back, said “good job,” and handed him the reins for another five years.
In popular political discourse, presidents often receive undeserved credit or blame for the economic conditions during their presidencies, which are often caused by their predecessor’s policies or circumstances beyond their control (a global pandemic, for instance). But President Biden has earned much of the blame he now shoulders. He renominated Powell, under whose leadership the Fed has done too little, too late to stave off inflation. He hamstrung domestic energy production instead of encouraging it, and he treated the first flames of inflation with the oil of more federal stimulus, instead of a fire extinguisher of fiscal restraint. American voters are paying for this, and only American voters can fix it.
Joshua Arnold is a senior writer at The Washington Stand.
