Biden has learned nothing during his time in office.
P resident Biden began his Wall Street Journal op-ed on inflation by writing, “The global economy faces serious challenges.” He’s right about that and not much else.
The very next sentence is misleading, as it alludes to the “Putin’s price hike” canard that holds the Russian dictator responsible for price increases that started months before his armies invaded Ukraine. Russia’s war in Ukraine may have put further pressure on the prices of some things, but it’s not the root cause of our inflation problems. As we wrote in April, Biden is deluding himself and his party if he sincerely believes he can get away with blaming inflation on Putin.
He should spend more time looking around here at home. It starts with the Federal Reserve, which hasn’t been aggressive enough in its fight against inflation so far. It stayed in emergency mode for too long after the financial emergency associated with the pandemic was over. It is finally turning off the money spigot, but now it must clean up its own mess — correcting its own mistakes being a common theme throughout the central bank’s history.
To Biden’s credit, he sticks up for the Fed’s independence in his editorial, promising not to attempt to use the bully pulpit of the presidency to influence its decisions (as President Nixon did). As international evidence suggests, central-bank independence is vital to controlling inflation. If elected politicians had control of the money supply, they’d try to engineer an economic boom every election year, which would lead to higher inflation and a politically determined business cycle.
But there’s one major chink in the armor of the Fed’s independence: the ability of chairmen to be renominated. Chairmen have an incentive to be in the president’s good graces when their term is about to expire, and Jerome Powell’s term was up in February. Biden waited until November of last year to announce that he was renominating Powell. As the delay dragged on, members of Biden’s party called Powell a “dangerous man” (Senator Elizabeth Warren) and said they wanted a new chairman who would be “focused on eliminating climate risk and advancing racial and economic justice” (Congressional Progressive Caucus members).
Fortunately, Biden did not oblige them, but the Fed’s former vice chair for supervision, Randal Quarles, said that President Biden’s delay contributed to the Fed’s delay in tightening monetary policy. Letting the radicals vent before ultimately doing the right thing may have been good intraparty strategy for Biden, but it may have put the Fed even further behind the curve.
Moving on from the Fed, Biden writes in his op-ed that “we need to take every practical step to make things more affordable for families,” even though his administration is not doing things already in its power toward that goal. It leaves in place a litany of tariffs and retaliatory trade measures that reduce GDP, wages, and jobs in the U.S. while increasing prices. One of those tariffs, on the trailers that trucks use to move shipping containers, contributes to making many goods more expensive by adding stress to already-stressed supply chains.
There’s any number of other measures Biden could champion that would help the supply side of things. He could talk about removing barriers to domestic energy production, calling off federal antitrust regulators who disregard consumer welfare, removing the tax code’s biases against capital investment, repealing the Jones Act, and withdrawing proposed regulations on climate-related financial disclosure and on transportation that would increase costs.
Instead, Biden writes about the need for green-energy tax credits to “accelerate our transition from energy produced by autocrats.” That gives a false picture of where the U.S. gets its energy. Over half of all crude-oil and petroleum-product imports came from Canada in 2021. All of OPEC combined only accounted for 11 percent, and non-OPEC Russia accounted for only 8 percent. We have our disagreements with Prime Minister Trudeau, but he’s no autocrat, and it was President Biden who canceled the Keystone XL pipeline that would have helped strengthen our energy ties with Canada even further. And it was only last year that Biden’s administration was urging OPEC, with its largely autocratic membership, to increase oil production.
Biden says that “we need to keep reducing the federal deficit, which will help ease price pressures.” Not injecting more government spending into the economy would indeed help, but what’s on Biden’s plate? Student-debt forgiveness, which has been repeatedly touted by proponents as economic stimulus. And where was Biden’s commitment to fiscal responsibility last year when he signed the $1.9 trillion American Rescue Plan into law? That was all new debt, and the spending from that law is likely contributing to inflation today.
Biden tries to take credit for the already-falling deficit, noting that “about half the reduction is driven by an increase in revenue,” which he attributes to his economic policies. But one of the top reasons for the increase in revenue is the exact problem Biden claims he’s trying to solve. It’s largely because of inflation that tax revenues are up, and despite the president’s rhetoric about greedy companies not paying their fair share, it was a surge in corporate-tax revenue that did most of the lifting last year.
For how he plans to reduce the deficit in the future, Biden shares his same old shtick about giving the IRS more money to spend on enforcement, a proposal that the Congressional Budget Office has repeatedly said would not raise nearly as much money as Biden wants. He also mentions taxing billionaires, who, despite their tremendous wealth, simply don’t have enough money to satiate the vast appetite of the federal government for any extended period of time.
Biden concludes his op-ed by saying, “I will work with anyone — Democrat, Republican, or independent — willing to have an open and honest discussion that delivers real solutions for the American people.” But in the paragraph that immediately precedes that line, he attacks congressional Republicans. Biden still thinks people are buying his appeal to unity that was a theme of his inauguration ceremonies, but we’ve seen how he has actually governed. It’s all progressive priorities on policy, and the president shouldn’t be surprised to find that the people he said were trying to carry out racially motivated voter suppression aren’t rushing to work with him.
If Biden was trying to establish a new stance on inflation with his op-ed, he failed. Here’s what we learned from it: As a matter of policy and of politics, Biden’s out of ideas.