As inflation accelerates, Biden has no idea what to do
Core inflation, which excludes food and energy, accelerated in April, rising 0.6 percent from the previous month, while the March increase was 0.3 percent. That is bad news. In addition, the headline print on 12-month price hikes was 8.3 percent, worse than the consensus expectation of 8.1 percent.
The only life raft for President Biden? That 8.3 percent year-over-year boost is modestly lower than the 8.5 percent inflation recorded for March.
The friendly media clung to that bit of flotsam for dear life. Inflation “slowed in April”, as USA Today reported, asking: “Will it bring a bit of relief to price-weary shoppers?”
No, it’s doubtful that people paying almost 11 percent more for groceries, 44 percent more for gasoline, 80 percent more for fuel oil and 23 percent more for a used car than they did a year ago will be comforted to know that it could have been worse.
No matter. The good news is: Joe Biden has a plan for curing inflation.
That sounds promising, until you remember the president also promised he had a plan to shut down COVID-19. That one didn’t pan out so well.
Biden laid out his plan in a much-promoted address and a White House statement the day before the inflation release, probably aware that the sizzling report would cause more headaches. In his speech he told Americans that, “I’m taking inflation very seriously and it’s my top domestic priority.”
The new and improved plan to battle inflation sounds a lot like the ones we’ve heard before because…it is. It’s the same stew of futuristic green energy policies, punitive investigations into price-gougers, Big Government intervention of our farming industry (the most productive on the globe) and higher taxes that the White House has been pushing for months.
What is new is Biden’s more strident and pitiful efforts to blame rising prices on Republicans, nasty meat processors, greedy oil producers, Russian President Vladimir Putin and his unruly dog Major.
No, actually, Major (who has been “rehomed” to family friends due to a biting problem) didn’t figure in Biden’s newly fashioned approach to inflation but, every other possible culprit was hauled on the carpet.
What is also new is Biden’s eagerness to pass the buck to the Federal Reserve, which he said “plays a primary role in fighting inflation in our country.” You can almost hear the entire White House exhale with relief. The cavalry is coming, led by inflation warrior Jerome Powell.
Curiously, Biden said he agreed with Fed Chair Powell that “that the number-one threat is the strength — and that strength that we built is inflation.” I’m pretty sure Powell did not actually say that.
Presumably, what Biden meant is that the economy, and especially consumer spending, is strong, which has exacerbated the imbalance between the demand and supply of goods. He is correct.
Democrats, in passing the $1.9 trillion American Rescue Plan even as the economy was growing at better than 6 percent, spewed $1,400 checks and expanded benefits on a population flush with $2.5 trillion in excess savings. That reckless stimulus pumped up demand at the same time as COVID-related hiccups were throttling supply, thus kicking off this round of inflation.
That’s what happened, but the White House refuses to shoulder any blame for the over-the-top spending. Instead, Biden crows about having reduced the federal deficit, a claim that even left-leaning CNN has debunked.
In fact, Biden spent the past year pushing Democrats to pass the Build Back Better bill, which analysts conclude would cost another $3 trillion to $5 trillion. He has claimed that monstrous additional boondoggle would bring prices down. Virtually no one believes that.
Here is the truth: Americans are worried about inflation, and they have no confidence that Biden will lead us out of this uncertainty swamp. The president, in his most recent fumbling effort to reassure the public, refused yet again to launch the one initiative that might actually help families make ends meet.
That would be an all-out effort – a Warp Speed push, if you will – to raise U.S. oil and gas production. How? By assuring American energy producers that the White House will not follow through on threats to impose higher fees and taxes, that they will make new leases immediately available in regions tagged most promising by the industry, including Alaska, that the gummed-up process for acquiring drilling permits will be streamlined and that barriers to natural gas pipeline construction will be removed.
And codify these proposals in legislation so that the next administration cannot undermine the economics of an industry that must plan far in advance.
As President Trump did getting a COVID vaccine to market in record time — make it happen.
Yes, climate warriors would have hissy fits and threaten to burn down refineries or blockade gas stations. But imagine the respect the country would have for a president that steps in at a time of national emergency to help American working families.
Relief would not come overnight. But ramping up oil and gas output in the U.S., where we have ample supplies and proven know-how and infrastructure, is a whole lot cheaper and easier than massive “landmark investments to help build a clean energy future”, “energy and vehicle tax credits” and the “historic investment in charging infrastructure” the president is calling for.
After all, Joe Biden promised to send more natural gas to Europe, to help that continent’s shortage of fossil fuels. Won’t he make the same effort for American consumers?
It is doubtful that the White House can pivot. The ideologues in charge are dug in and seem indifferent to the looming disaster that will likely befall Democrats come November.
Biden is like the truck driver barreling the wrong way down a one-way street at 60 miles per hour. He’s in trouble but has no idea how to turn around.
Liz Peek is a former partner of major bracket Wall Street firm Wertheim & Company. Follow her on Twitter @lizpeek.
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