Welcome to reality, Mr. President. Inflation has Americans worried about paying the bills.
President Joe Biden deflected blame for inflation, pledged to support the Federal Reserve and returned to tired campaign talking points.
On a recent trip to visit my parents in Oregon, I was shocked at the numbers staring back at me from the gas pump. It cost more than $70 to fill their Honda Accord – typically a car that doesn’t gouge one’s wallet for fuel.
That week, gas in the state had jumped above $5 a gallon for the first time.
Even the gas station attendant seemed taken aback (it’s quirky I know, but Oregonians don’t pump their own gas).
“That’s not something you see every day,” he observed of the Honda's costly fill-up.
Unfortunately, it is something too many Americans are seeing too often lately, whether at the gas station or the grocery store. Inflation remains at a 40-year high, with consumer prices up more than 8% from a year ago.
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Even worse, a JP Morgan analyst forecasts the national average price per gallon will soar to an agonizing $6.20 by Labor Day. Gas prices are now averaging $4.62 around the country, which is up more than $1.50 from a year ago. Expect those numbers to spike this summer following the European Union’s recent announcement that it would partially ban Russian oil imports in response to that country’s war on Ukraine.
Americans don't like how Biden is leading the economy
All of this has led to less than stellar poll numbers for President Joe Biden. He’s averaging in the low 40s for job approval, and even worse when it comes to his handling of the economy.
That could spell bad news for Democrats heading into the midterm elections in November. In Michigan, the battleground state where I live, a recent poll commissioned by a leading business group – the Detroit Regional Chamber – found that nearly 73% of the registered voters surveyed thought the economy was on the wrong track, with inflation topping the list of concerns.
Biden and his administration seem to be slowly waking up to the fact that inflation actually isn’t “transitory” as they once claimed. Treasury Secretary Janet Yellen admitted that she had been “wrong” in assuming inflation would be short-lived, something you don’t hear often from anyone in the political realm.
In an attempt to ease the minds of the public, the president penned an op-ed in The Wall Street Journal this week, laying out his plan for tackling rising prices and following up on an earlier promise that inflation would be his top domestic priority.
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It wasn’t very comforting. Rather than acknowledge the driving factors of inflation, Biden deflected blame, pledged to support the Federal Reserve and returned to tired campaign talking points that don’t do much to address the crisis.
Biden also failed to address how U.S. oil production remains more than 10% below pre-pandemic levels and the fact that gas prices were already rising before Russia invaded Ukraine.
EJ Antoni, an expert in economics at The Heritage Foundation, says Biden tried to spin the economy in a positive light, but citizens – especially those who are struggling financially – see things differently.
“Inflation is a tax, a hidden tax, no one votes for but everyone has to pay,” Antoni says.
Student loan forgiveness would add to inflation
The president did pay lip service to the importance of reducing deficits to relieve prices, but that seems like a hollow promise. Biden continues to tease student loan forgiveness, which could come any day. It’s expected he’ll push $10,000 per borrower in debt cancellation. Because Congress is unlikely to take this up, he’ll probably try to do it through executive action, even though his authority to do so seems tenuous.
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While Biden hasn’t bowed to intense pressure from the progressive wing of his party to forgive $50,000 per borrower – or even all of it – his executive order would still be costly for taxpayers (as much as $320 billion) and help fuel the inflation he says he’s trying to stop.
Biden started out his presidency signing the $1.9 trillion American Rescue Plan, which was on top of the $4 trillion already spent by Congress on the pandemic. This huge infusion of cash – and the actions taken by the Fed to finance that debt – have directly contributed to the inflation we’re experiencing.
Stimulating even more spending (and consequently demand) through such a broad student loan giveaway would only deepen problems and exacerbate supply chain and production issues.
It’s great that Biden is finally turning his attention to inflation, but the best thing for the government to do at this point is to back off and stop meddling in the economy.