Inflation on the boxed White House gets

President Biden is boxed in by a high inflation, leaving him with few options to take on the heat of an issue that hurts his party politically.

Biden has limited control over inflation beyond proposing policies and investments that could take months, if not years, to make an impact.

It’s the hardest thing for the president to pass on the buck.

The Federal Reserve is charged with dealing with inflation, and it is under scrutiny when it comes to rising interest rates and taking off the heat.

Blaming the Fed and its GOP Chairman for a Normal Movement

But it would be a tough one for Biden to pull off.

He just nominated Fed Chairman Jerome Powell for a second term, and the Senate confirmed him on Thursday.

That doesn’t make Powell an effective scapegoat for the White House – even if Biden was looking to put on the blame.

The White House has sought to compare its policies to those of a potential GOP administration in self-defense.

It’s not the greatest option, but politically it may be the best bet Biden has had while raising Fed raises rates and rising household costs on a break for the country’s hopes.

“We’re in a period of time where this is much more of a narrative battle than a narrative battle,” said Bill Galston, chair of the Brookings Institution’s governance studies program and a former domestic policy aide.

“The sad fact is that the Federal Reserve Board, bypassing the actions of the Federal Reserve Board, has little to do with the short term impact on inflation numbers,” he added.

Inflation has surged to four-decade highs over the past year amid a rapid recovery of the US economy from the depths of the pandemic. While the US has added more than 8 million jobs since taking office and pushed the jobless rate down to pre-pandemic levels, consumer prices rose 8.3 percent over the past 12 months, according to the Department of Labor.

Both Biden and Powell voiced confidence last year that inflation would be cool as the pandemic faded and businesses worked through labor and supply shortages. Another wave of COVID-19 could upend progress.

While many economists agreed, Biden and Powell warned other policymakers, investors and economists that the combined fiscal and monetary stimulus would push the economy over the edge. Former Treasury Secretary Larry Summers, who passed the Fed in 2014, was among the fiercest critics of the White House and Fed’s patience.

Biden’s American Rescue Plan – the $ 1.9 trillion stimulus bill signed in March 2021 – and the Fed’s resistance to rising interest rates sooner. But neither Biden’s critics nor supporters anticipated a year ago how long COVID-19-related lockdowns would be in China or how the outbreak of war would have severely restrained supply of oil, natural gas, food and other essential commodities.

“I just think he’s a really bad box because of this. Inflation is a global, geopolitical phenomenon that is not just under the control of the Biden administration, ”said Josh Bivens, director of research at the Economic Policy Institute. “I think he’s a really bad spot for some kind of out of control.”

Biden has respected the Fed’s role as an independent entity rather than scapegoating the central bank, in sharp contrast to former President Trump. The Fed sprang into action in March 2020 after Trump’s trade war with China and the only reversed his views on the former president’s repeatedly berated and threatened fire.

Powell, and his other Federal Reserve nominees, reiterated that tackling inflation is his “top domestic priority.”

“The Federal Reserve plays a primary role in combating inflation, and these well-qualified members of the board will bring the skills and knowledge they need at this critical time in our economy and families across the country,” the president said in a statement on Thursday. .

Bivens said the White House has been “pretty strong that the Fed should be independent and not the executive branch.

“Trump has broke that norm,” he added. “They’re going to the Adhere to the Norm. You just don’t Bark at the Fed.”

Turning on the Fed would probably be a bit of a political good for Biden, especially after the Senate confirmed Powell and his other nominees this week. The President has been sparring with Sen. Rick Scott (R-Fla.), A controversial tax proposal over his own party with odds at a prominent GOP senator.

Scott and his proposed tax plan, which includes the White House, are all representatives of the Republicans’ economic agenda.

Other Republican lawmakers have either distanced themselves from Scott’s proposal or declined to embrace it. It calls for imposing federal income taxes on Americans who are currently paying for none and sunsetting five years after federal legislation, presumably including programs such as Social Security and Medicaid.

Scott is the head of the Senate Republicans ‘campaign arm and in charge of the Republicans’ efforts to win Senate seats and flip the majority. On Tuesday, White House press secretary Jen Psaki said that when asked if there are other Republicans behind Scott’s tax plan: “Rick Scott is not a random senator. He’s literally in charge of winning back the Senate for Republicans and what the plan is. ”

“I call it the ultra-MAGA plan, Make America Great Again plan,” Biden said of Scott’s proposal in Remarks on Wednesday. “Right now, most of our republican friends… don’t want to solve inflation just by lowering the cost. Raising taxes and lowering your income. ”

The back-and-forth also escalated this week when Scott said Biden should resign to resolve the high inflation and Biden proclaimed Scott “has a problem.” Other congressional Republicans have said they are working on a plan to combat inflation, but nothing has been done and until then the White House is expected to keep Scott’s plan as the Republican plan.

“It’s definitely true that the Republicans are offering nothing in terms of bringing any inflation down, or bringing it down,” Bivens said. “Two people arguing about how to stop it, there’s really no good solution out there. In my mind, it’s just something we don’t do.

Morgan Chalfant contributed.

.

Leave a Comment