Since January 2021, everything the Democrats have done or tried to do has been inflationary. Joe Manchin should keep trying to jam the gears.
Joe Manchin should keep doing what he can to jam the gears.
S enator Joe Manchin of West Virginia has said that each morning he receives a text message bearing the latest inflation numbers. One can only assume that today’s update provoked him into a loud and unyielding shriek.
One must further hope that, once he had finished yelling, the news prompted Manchin to send a text message of his own to Senator Chuck Schumer. The content: “No.”
In April, Manchin explained that “inflation is a tax and today’s historic inflation data tells another chilling story about how these taxes on Americans are completely out of control.” Indeed. And do you know what would make this problem worse? Everything in the Democrats’ agenda.
Since January 2021, everything the Democrats have done, have tried to do, or intended to do has been inflationary. The $2 trillion behemoth that the party passed in March last year has been an unmitigated disaster. In a recent report, Morgan Stanley explained bluntly that the inflation that Joe Biden insisted was impossible was primarily “due to excessive fiscal stimulus provided during the pandemic, particularly the last $1.9T package at the end of March 2021 just as the economy was already emerging from the lockdowns,” which the outfit judged “was what turbocharged consumption and drove inflation to 40-year highs.” The Democrats’ follow-up bill, the $6 trillion disaster called “Build Back Better,” would have, if it had passed, considerably worsened that mistake. And they’re still going!
If the Democrats wish to use fiscal policy to reduce inflation, they will have to cut or freeze spending while raising taxes on Americans who have disposable income and some elasticity in their demand. Naturally, it would be destructive to increase taxes on the poor, who are bearing the brunt of inflation, and it would be futile to raise taxes on the rich, because doing so would not materially affect their behavior. But, if this is the road the party has chosen, taxing the middle and upper middle classes could plausibly help reduce demand.
So, of course, the Democrats are hellbent on the opposite course. Inexplicably, President Biden is still hoping to increase the discretionary income of middle- and upper-middle-class Americans by writing at least $10,000 off the student-loan debt they owe taxpayers. That is an inflationary policy. At the same time, Senate Democrats have rekindled reconciliation talks, and seem currently to be seeking a deal that combines one inflationary policy with another. Most of the Democratic caucus still want a trillion dollars or more in new spending. That would be inflationary. Senator Joe Manchin is not as interested in this as his colleagues, but he has signaled a willingness to go along with it if he can couple the spending with an increase in the corporate tax rate that would, by definition, lead to an increase in consumer prices. That, too, would be inflationary. Even now, the Democrats have not got the message.
President Biden has, at long last, recognized that he is obliged to look as if he cares about this problem. Granted, it has taken the better part of a year and a half but, finally, the man has grasped that flitting between “it’s not going to happen,” “it’s not happening,” and “it’s happening but it won’t last long” is not a sustainable strategy. But there are two parts to showing that you care about an issue. The first involves telling people that you care. The second involves refusing to make it worse. Cowed as he is by the greediest members of his party, Biden seems flatly unable to achieve the second step. A savvy politician — a Bill Clinton, say — would have realized a year ago that events had intruded upon his presidency, and changed course as a result. Joe Biden is not a savvy politician. Indeed, at this point, he is barely a politician at all. He is a cipher, for dreamers, dead-enders, and monomaniacs. The house is on fire and, ignoring all the buckets marked “water,” he can only think to pour more kerosene onto the blaze. (Which, at these prices . . .) One can easily comprehend why a president with Biden’s basement-level approval rating would be reluctant to take the unpopular, proactive steps that might help to diminish the problem. One cannot comprehend why he is finding it so hard to avoid making matters worse.
In all likelihood, it will fall to others to prevent Biden from shooting himself — and the country — in the foot once again. By scaling back and then blocking “Build Back Better,” Senators Joe Manchin and Kyrsten Sinema saved Biden once before. If reports about renewed negotiations are to be believed, they will soon be called upon to repeat the endeavor. Likewise, with Biden’s illegal plans for student loans. If the institutional Democratic Party knows what’s good for it, it will assemble a sizeable coalition of representatives and senators and task it with explaining to the president that he must not even think about taking such a step. Already, Americans believe that the Democrats’ reckless spending is the cause of our 40-year-high inflation rates. To add to this perception by engaging in one of the most divisive, reckless, and unnecessary policy mistakes in a generation would be astounding. It is bad enough that Americans’ grocery bills and gas purchases are pushing their budgets into the red without their suspecting that a cause of their anguish is that the federal government sent $10,000 of their money to the wealthy college graduates with whom they have no relationship whatsoever.
The news on Senator Joe Manchin’s phone can still get much, much worse.