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Democrats fear inflation jeopardizes congressional agenda and majorities | american economy


As recently as this summer, Joe Biden appeared to be taking a “keep calm and carry on” approach to concerns about rising inflation.

“As our economy has come back strong, we have seen price increases,” the US president said in July. “Our experts believe and the data shows that most of the price increases we have seen were expected and should be temporary.”

But now, with inflation hitting a 30-year high last month, Biden’s tone has become significantly less optimistic.

“Everything from a gallon of gasoline to a loaf of bread costs more,” Biden said in Baltimore earlier this month. “We always face challenges and we have to meet them. We must face them head-on. “

Americans are taking note of the high prices with growing concern, and their worries appear to negatively affect Biden’s approval rating, which had already fallen in recent months. As the United States takes sticker shock at the gas pump and in grocery stores, Democrats fear inflation could jeopardize their legislative platform and majorities in Congress amid crucial midterm elections looming next year.

While the president and his fellow Democrats had previously sought to minimize the rise in inflation, it has become an inevitable problem as prices continue to rise. The labor department has reported that prices have risen 6.2% in the past 12 months, marking the fastest increase since 1990. Gasoline prices have increased 49.6% in the past year, while prices of food increased by 5.3%.

As prices rise, more and more working Americans are noticing that their bills have grown higher. According to a survey conducted by the progressive firm Navigator Research This month, 54% of Americans now say the cost of groceries and gasoline is a “major crisis,” marking a 17-point increase since September.

Republicans blamed the price increases on Biden’s economic policies, arguing that the rise in inflation underscores the need to oust Democratic lawmakers in next year’s midterm election.

“As Biden and Democrats continue to push for billions of dollars in reckless spending and higher taxes, soaring prices and a shattered supply chain under Biden are crushing American families, workers and small businesses “said Emma Vaughn, spokesperson for the Republican National Committee. “Americans will firmly reject Biden’s failed economic agenda at the polls in 2022.”

There are some early signs that the Republicans’ message strikes a chord with voters, as the party seeks to regain control of Congress in 2022.

An AP VoteCast poll showed that 35% of voters in Virginia named the economy and jobs as the most important problem facing the state, making it the most common answer. Those voters were more likely to support Republican gubernatorial candidate Glenn Youngkin, who beat Democrat Terry McAuliffe by two points in an election earlier this month.

And it’s not just Republicans sounding the alarm bells on price hikes. Senator Joe Manchin, one of the main refractors of the Democrats’ negotiations over their $ 1.75 billion spending program, said he was hearing more voters concerned about their gas and grocery bills.

“By all accounts, the threat posed by record inflation to the American people is not ‘transient’ and on the contrary is getting worse,” Manchin said in response to the latest report from the Department of Labor. “From the grocery store to the gas station, Americans know the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day.”

Manchin has previously expressed concern that the Democrats’ spending program, known as the Build Back Better Act, is contributing negatively to inflation. In a September Editorial For the Wall Street Journal, Manchin warned against approving increased government spending, saying: “An overheating economy has imposed a costly ‘inflationary tax’ on every middle and working class American.

The Biden administration has sought to ease inflation concerns over the bill, which passed the House on Friday. The president has repeatedly boasted a letter of 17 Nobel Laureates in Economics, who argued that the spending program “would ease inflationary pressures in the long run.”

But critics of the bill say the legislation would not solve current inflation and could even cause prices to rise again, urging members of Congress not to approve another major spending program.

“We are not worried about the long term. We have inflation here and now, and this policy will make it worse for the foreseeable future, ”said Curtis Dubay, senior economist at the United States Chamber of Commerce, a pro-business lobby group that opposes to the expenditure program.

“The first rule of being in a hole is to stop digging,” Dubay added. “It would continue to dig. They must therefore not pass it.

Jason Furman, who chaired the White House council of economic advisers under Barack Obama, dismissed this argument. “Building back better will have a negligible impact on inflation over the medium term,” Furman said. “In gross terms, the total expenses are a tenth of what we just did this year. [with the coronavirus relief package]. In addition, these expenses are paid.

For progressives, the Conservatives’ inflation warnings seem like a convenient excuse to overturn a bill they already opposed.

Natalia Salgado, director of federal affairs for the progressive Working Families party, said the legislation would actually help average Americans cope with rising inflation by lowering their health and child care costs.

For example, the Build Back Better Act would establish a universal preschool for all three and four year olds. It would also reduce Affordable Care Act premiums and drug prices by allowing Medicare to negotiate with drug companies.

“If we really want to have a discussion about inflation, let’s talk about the many things that this bill is going to help minimize cost,” Salgado said. “The people coming out of this pandemic were already suffering economically. It is economically imperative to pass the Build Back Better legislation.

Democrats in Congress echoed this message, urging those worried about inflation to support the bill.

“The House Democrats’ infrastructure deal and the Build Back Better Act are tackling inflation head-on with their historic investments,” said Congressman Sean Patrick Maloney, chairman of the House Campaign Committee. Democratic Congress. “Rather than working to solve economic problems, Republicans voted overwhelmingly to block these bills that cut prices for the American people and instead focused on their own extremist agenda. “

But many of the provisions in the Build Back Better bill will not come into effect immediately. Negotiations over the price of Medicare drugs will not begin until 2025, and the universal preschool program will be built over the next few years.

In the short term, it may be difficult for Biden to keep up with the price hike. Even if the Federal Reserve acts quickly to stifle inflation, it would take months for Americans to feel the effect of the change in fiscal policy. And when it comes to gas prices in particular, Biden has little influence over the global oil market, although he appealed Federal Trade Commission to investigate “growing evidence of anti-consumer behavior by oil and gas companies.”

“Politically, people are very sensitive to gasoline and food price inflation because it’s only a visible item that they see,” Furman said. “I was in government when gas prices were going up, and it’s terrible. Everyone hates you. “

On the bright side for Democrats, frequent fluctuations in gasoline and food prices mean those costs could decline over the next year, even if headline inflation continues to rise, Furman said.

This possibility could be Democrats’ best hope of retaining control of Congress after the 2022 election. However, if prices do not improve in the coming year, the president’s party may need to prepare. to a nasty election night next November.