If Biden owned his contribution to inflation, he’d have credibility on his achievements
President Biden has a credibility problem he needs to solve. Instead of admitting that his American Rescue Plan (ARP) contributed to inflation, he blames inflation on the pandemic, Russia’s invasion of Ukraine, and, most recently, what he called the Republican “ultra-MAGA agenda.” But voters aren’t buying it.: 64 percent of them including 46 percent of Democrats blame the President for the increased costs they experience every day.
ARP pumped $1.9 trillion into the economy that boosted consumer spending and fueled inflation. Distributions were based on 2019 tax returns, so many who were unaffected by COVID received money to spend unrelated to pandemic losses.
Only after taking responsibility for his role in inflation will voters believe Biden when he identifies the causes that aren’t his fault. And there are plenty of those.
For example, Donald Trump’s Cares Act, the largest economic relief bill in U.S. history, dumped $2.2 trillion into the economy. Distributions were based on 2018 and 2019 returns — so, like ARP, checks went to many who didn’t suffer economic losses from COVID.
Export curbs imposed by five countries were another cause of inflation, driving food prices up 30 percent from 2021 to 2022. Gas prices surged over last year as oil and gas demand outpaced production and consumers emerged from the pandemic to drive and fly more.
The U.S. labor shortage has also contributed to inflation because it forces businesses to increase wages to attract and keep employees. The shortage has been aggravated by the lowest migration levels in decades. Labor force participation rates fell precipitously in 2020 from 63.4 percent to 60.2 percent and have yet to recover fully — they’re still circling 40-year lows. Meanwhile net migration to the United States dropped significantly due to Trump administration policies.
Household goods and food prices surged to their highest levels in a decade before Biden even took office.
Clearly, such things are not Biden’s fault. But accepting responsibility for the inflationary pressures he did cause will give him the credibility and the pulpit to explain the economic good they did. For example, although ARP contributed to inflation, it also reduced overall poverty by 45 percent and child poverty by 56 percent in the US in 2021.
When Biden took office the unemployment rate was 6.4 percent. By early May it fell to 3.6 percent, its lowest in 52 years. Unemployment is at record lows in 17 states. In May, the economy added 390,000 jobs and state unemployment benefits fell to their lowest since 1969.
More than 10 percent of blue-collar workers have moved up to tech jobs and higher wages as companies waive the need for a college degree and train new hires — a talent upgrade not seen since the preparation for World War II.
Taking some responsibility for inflation would also help Biden counter partisan attacks on his immigration policies. House Republicans frightened voters with accusations that immigrants crossing our southern border are criminals, sex offenders and rapists.
But the fact is, immigrants are more law-abiding than native-born Americans. In Texas, which has America’s second highest immigrant population, crime by illegal immigrants is 45 percent below that of native-born Americans. Crime by legal immigrants in Texas is 62 percent below that of native-born Americans. Nationally, legal immigrants are 74 percent less likely to be incarcerated than native-born Americans. For illegal immigrants the number is 41 percent.
Republicans also criticize Biden’s plan to lift Title 42, which empowers federal health authorities to stop migrants from entering the country when necessary to prevent the spread of disease. Trump used it to block hundreds of thousands of migrants from entering from Mexico, claiming that “tremendous infectious disease is pouring across the border.”
But epidemiologists, physicians and public health experts have debunked Trump’s claim as scientifically baseless and politically motivated, intended to block asylum seekers and return them to dangerous conditions. Their concerns were justified. Over 8,700 of these migrants were kidnapped, raped, or attacked after being returned to their countries of origin.
Florida Gov. Ron DeSantis accused Biden of letting COVID-infected migrants pour over our southern border by the hundreds of thousands — when Florida’s COVID surge was due to the state’s low vaccination rates.
Nonetheless, anti-immigration rhetoric has misled voters: 45 percent of them, including just 22 percent of Republicans, believe immigrants “help the country.” This is a misconception Democrats need to correct. In general, immigrants are a highly entrepreneurial group. They are 80 percent more likely to start businesses than native-born Americans, and they launch new companies at twice the rate. In fact, immigration boosts economic growth, increases job opportunities and wages for native-born Americans, and expands the middle class.
Trump claimed immigrants “compete … against … American workers” and that cutting back legal immigration would “boost wages and … open jobs … to American workers.” Yet, 14 leading economists found immigration has little or no negative effects on overall wages or hiring of native-born workers. Most Americans agree: 77 percent say undocumented immigrants mostly fill jobs U.S. citizens don’t want. There were 11.4 million job openings through May, rivaling the record job opportunity in 2000.
Biden has many economic achievements to tout. But they aren’t resonating with voters because he hasn’t owned his results. If, however, he takes a measure of responsibility for inflation instead of deflecting it, he could gain enough credibility to shift the spotlight onto the remarkable strengths he’s created for the economy.
Neil Baron advised the SEC and congressional staff on rating agency reform. He represented Standard & Poor’s from 1968 to 1989, was Vice Chairman and General Counsel of Fitch Ratings from 1989 to 1998. He also served on the board of Assured Guaranty for a decade.