Flashback: One Year Ago, Biden Said Inflation Would be ‘Temporary’
Some anniversaries aren’t worth celebrating.
One year ago, President Joe Biden said the inflation that had marked every month of his presidency would soon be a thing of the past. Last July 19, Biden denied the economy would see “persistent inflation,” because “our experts believe and the data shows that most of the price increases we’ve seen were expected, and expected to be temporary.” By December, Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell said the administration should stop calling rising prices “transitory.”
“Fourteen straight months of inflation above 5% is not transitory,” retorted Family Research Council President Tony Perkins on the morbid economic milestone.
Perhaps Biden meant inflation would seem temporary compared to eternal life in Christ Jesus.
Monthly inflation rates rose above the Federal Reserve’s target of 2% in the second full month of Biden’s presidency and have not looked back. Since Biden’s flubbed forecast, year-on-year inflation has risen to 9.1%, nearly double the 5.4% where it stood last year. While the chairman of Goldman Sachs, David Solomon, said inflation is thoroughly “entrenched” in every part of the U.S. economy, the cost of staples has soared by even higher margins. Gasoline costs nearly 60% more than it did last summer; most protein (beef, poultry, and fish, and eggs) costs 12% more, and 14% higher electric prices left consumers shocked.
Prices are rising in part because retailers have “had double digit inflation now for seven months,” Rep. Kevin Brady (R-Texas), the ranking member of the powerful House Ways and Means Committee, told “Washington Watch with Tony Perkins” on Tuesday. “And that means we’re going to see higher prices for families for a long time to come.”
Financial leaders, who make economic forecasts their life, see no relief in sight. Banking giants JPMorgan Chase, Citigroup, and Wells Fargo signaled over the last few days that they believe more consumers will be unable to pay their home mortgages and loans in the coming months. “We think it’s very much indicative of a view that things will probably get worse,” said Mike Santomassimo, CFO of Wells Fargo. Silicon Valley titans have also braced for an economic downturn, with Apple and Meta — the parent company of Facebook, Instagram, and WhatsApp — canceling job-creating investments and expansions.
“Inflation is going to continue to rage both for families and mainstream businesses,” Brady told Perkins. “A recession will still be looming, if we’re not already in it.” The United States appears to have met the traditional definition of recession: two straight quarters of economic contraction.
Americans’ worsening financial fortunes stand as a stunning rebuke to the favored economic theories of the Democratic Party’s left-wing base. When she proposed her Green New Deal, Rep. Alexandria Ocasio-Cortez (D-N.Y.) said that Modern Monetary Theory “absolutely” needed to be “a larger part of our conversation.” MMT holds that the government can engage in rampant deficit spending, because the government can simply print the necessary funds. The theory was also embraced by Senators Elizabeth Warren (D-Mass.) and Bernie Sanders (D-Vt.). “Trillions in coronavirus spending is putting AOC’s favorite economic theory to the test,” one author noted in August 2020. Last July, when Biden said inflation would be transitory, Americans began receiving advance stimulus payments of the expanded Child Tax Credit, which pumped even more liquidity into the market.
“You’ve got to get all that COVID-era spending out of the economy,” said Brady, who spoke to Perkins between votes. He said any president — or future congressional majority — who wants to resuscitate the economy around needs to “turn the red light into a green light” for domestic energy exploration, as well as increase America’s lagging participation rate. “Part of the inflation problem is we just don’t have the workers to assemble the products in the production lines, deliver them, and service them.”
Biden also seemed out of touch on the worker shortage a year ago, whispering last June that employers should “pay them more.” The president also voiced his opposition to Republican-led states cutting a COVID provision that raised unemployment benefits by $300 a week — in some cases, paying people more to stay home than they would have received in salary. “This is an employee’s bargaining chip,” Biden lectured employers. Economists believe expanded unemployment benefits drove eligible workers out of the workforce; 11.3 million unfilled jobs prove that many never returned. “The massively expanded unemployment insurance (UI) benefits have, arguably, turned out to be the most flawed, wasteful, and, in many instances, damaging component of the federal government’s COVID-19 economic policy response,” wrote Heritage Foundation scholar Rachel Greszler.
Amidst 41-year-high inflation and a looming recession, the Biden administration is still seeking to pass a “slimmed down” version of the president’s signature “Build Back Better” Act, which Brady said last month contains between $1 trillion and $1.3 trillion in tax hikes. “What country raises taxes as you’re headed into a recession?” asked Brady on Tuesday’s show.
“There is no good time to raise taxes on family-owned businesses and farms, on companies that need to invest in the supply chain to get these shelves filled again,” stated Brady. “We’re going to stay vigilant against this until the end of the budget year.”
Ben Johnson is senior reporter and editor at The Washington Stand.