The Price of Biden’s Excuses for Inflation Keeps Rising
‘Make no mistake,’ the president said last week, higher costs are ‘largely the fault of Putin.’
By Gerard Baker
March 14, 2022 12:52 pm ET
‘Make no mistake, inflation is largely the fault of Putin.”
Even by the high standards of political mendacity, the attempt by President Biden last week to assign blame for the acceleration of prices that began just over a year ago to a war that began just under three weeks ago is remarkable for its cynicism, its dishonesty and its desperation.
The cynicism is so sweeping that you have to sit back and marvel.
How much contempt do they have for the intelligence of Americans to think that there are enough who would believe such a proposition?
In fact we have a good sense of the depth of the disdain the president has for Americans’ understanding of their economic circumstances. In that same speech, to the House Democratic Caucus Issues Conference, he bemoaned that all his hard work doesn’t get the respect it deserves.
“The American people just trying to stay above water don’t understand this. You tell them what the American Recovery Act was, and they look at you like, ‘What are you talking about?’ ”
(He seems to have meant the American Rescue Plan, but the mislabeling proves his own point. If he doesn’t know what he’s talking about, why should they?)
It’s cynical in a much more dismaying way too: as
a grotesque effort to enlist an act of brutality by an autocratic aggressor in the service of domestic political expediency. The arts of political message creation may be darker than Vladimir Putin’s soul, but did someone in the White House really watch Ukrainian cities burn and images of wounded pregnant women being ferried from maternity hospitals and think “#Putinpricehike!”?
The dishonesty is as grim as the cynicism. The surge in inflation, which began in November 2020 when the year-over-year increase in the consumer-price index was 1.2%, obviously isn’t all Mr. Biden’s fault. As the economy began to open up after the initial shock of the pandemic, a wave of pent-up demand met a supply constricted by disruption and diminished capacity. The resultant price surge was global.
While this may absolve policy makers of responsibility for the initial rise in inflation, it serves also to highlight their culpability in their failure to respond to it.
Primary responsibility lies with the Federal Reserve, which by its passivity in the last year may have executed the most significant failure of monetary policy in most Americans’ lifetimes.
But
the Biden role is not to be diminished. To use a religious taxonomy the president will be familiar with, his administration is guilty of sins of both commission and omission.
The
sin of commission was principally that American Rescue Plan that nobody now gives him credit for. Adding a demand boost of $1.9 trillion was a reckless gamble—and the Democrats know it because they were repeatedly told so by some of their most prominent economic thinkers.
But there are other sins of commission—or at least attempted ones. The
effort to pass Build Back Better was one. While the measure contained some elements that might eventually have eased some supply constraints, the anticipated shorter-term fiscal impact was enormous, with the real cost of the legislation much higher than the $1.7 trillion claimed. Another error was to respond to labor shortages by
making it more remunerative for many workers to stay home with generous unemployment benefits.
The
sin of omission is serious too. It is as negligent for a government to watch a rising threat and do nothing about it as to enact measures that harm the economy. But almost every month the inflation rate has been rising, the
Democrats have dismissed concerns with a now familiar litany: it was “temporary,” it was a “high class problem,” it was the fault of corporate greed. Now, it’s the war.
Let’s be generous and date the start of the “Putin price hike” to mid-December, when anticipation of trouble in Ukraine began to weigh on energy markets. Since then the price of crude oil has risen by roughly 50%. Prices had already risen in the prior year, also by about 50%. Again, this isn’t all Mr. Biden’s fault. Oil prices hit a low in the early stage of the pandemic on fears of a global depression and have been rising since.
But the
Biden administration can’t have it both ways. It can’t pursue rhetorical and regulatory policies that are explicitly designed to make fossil-fuel production scarcer and then say they have nothing to do with any price increase. The U.S. is the largest oil producer in the world, accounting for about a sixth of total production. Markets notice these things.
Cynical, dishonest—and above all desperate. The Democrats know time is rapidly running out. The depletion of their excuses is proceeding much more quickly than the depletion of U.S. energy supplies. Those responsible should pay a political price as punishing as the inflation Americans are enduring.
https://www.wsj.com/articles/biden-e...g-11647275414?
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