President Joe Biden and congressional Democrats have had a cavalier “trust us, we know what we’re doing” attitude toward the economy for the last two years despite rampant inflation that’s increased the cost of everything from food prices to interest rates.
Between the America Rescue Plan and the ironically named Inflation Reduction Act, Biden pumped trillions of taxpayer dollars into the economy, with much of the stimulus shoveled out the doors of the White House during months when demand was already coming back.
All that Biden stimulus pumped up demand even more despite a pandemic-related breakdown of global supply chains that made many goods nearly impossible to find.
We’re seeing the inevitable consequences of all that easy money now as prices for necessities rise along with interest rates. The economy is on shakier ground than it has been in a long time, and the floor has dropped out of consumer confidence as household budgets stretch to the point of breaking.
The purchasing power of the typical American household is at an all-time low as wages have not kept up with price spikes. Meanwhile, the value of most Americans’ biggest asset — their home — is declining. Home prices are now posting the most significant monthly declines since 2009.
Other Biden administration policies have contributed to the supply crunch, especially restrictions on energy production, which have further exasperated inflation as energy costs are inescapable and affect all parts of the supply chain.
Inflation has increased every month of the Biden presidency, hitting rates Americans have not seen since the 1980s — a decade no one is particularly eager to revisit. Inflation is especially hard on low-income households that must spend a larger percentage of their budgets on necessities like food, housing and energy.
Energy prices have steadily increased since early 2020, with gasoline prices rising nearly 50 percent and diesel rising 55 percent between January and June of this year. Tight supply and greater demand have maintained upward pressure on gas prices despite a slight retreat from summer peaks.
Electricity prices, meanwhile, are just starting their march upward as winter sets in and global demand for natural gas grows due to the war in Ukraine and the tightening of sanctions on Russian energy exports. American families may soon pay more than 15 cents per kilowatt hour on average for electricity. More than 20 million families are already behind on their utility bills, and the situation is only worsening.
Despite all the evidence to the contrary, the administration insists everything is hunky dory. Treasury Secretary Janet Yellen declared inflation “transitory” even as it has become the greatest threat to the U.S. economy. Perhaps the bigger threat is incompetent leadership.
Biden’s policies have directly and indirectly contributed to the triple threat pummeling family budgets — stagnate wages, rising prices and energy insecurity.
If Americans vote with their pocketbooks this November, Democrats should be concerned about their chances. Economic worries are the No. 1 issue weighing on voters’ minds with less than five weeks before they head to the polls. The looming threat of a deepening recession is a black cloud hanging over the heads of Democrats.
Midterms are traditionally a referendum on the party in power, and there’s no sign this year will be different. Republicans have too often been their own worst enemy on the campaign trail, but it’s Democrats who control both chambers of Congress and the White House, and they are facing a tough judgment day from voters.
The party in power inevitably takes the blame, but realistically, options are limited for bending the global economy to a party’s political will. Even if some grace is given on this front, though, Democrats have fallen short in ways that reach beyond their unsuccessful policy actions.
The rhetoric deployed by Democrats at all levels of government ignores the reality facing millions of Americans. That messaging dissonance could affect political fortunes come Election Day just as profoundly as bad policy.
Month after month, Democrats have gone to bat for their party’s fledgling efforts to combat inflation by basically printing money. Biden repeatedly claims his inflation plan is working despite repeated jumps in Consumer Price Index numbers. His allies on Capitol Hill and elsewhere have been quick to chime in and support his claims.
Inflation, unfortunately, does not respond to rosy press releases, nor has it helped Americans who see their paychecks stay the same — if they are lucky — while prices continue to climb.
If there’s a silver lining here, perhaps the White House has at least begun to acknowledge that inflation is an issue. However, the administration has also pivoted to blaming greedy capitalists — a favorite, if somewhat tired, boogeyman.
There has been no clear statement of accountability and recognition that Biden’s best efforts have failed to put a dent in inflation. Moreover, repeated rate hikes at the Federal Reserve have done more to crush markets than drive down inflation. With more rate hikes on the horizon, consumers should budget for more rough seas ahead.