The inflation crisis, which has caused significant stress for Americans, has been a political gift for Republicans. It has been a major contributor to President Biden’s awful approval ratings, it has boosted GOP prospects of retaking power, and it’s provided them a ready way to deflect any questions about Donald Trump or January 6. It has also relieved the pressure for them to come up with any sort of governing agenda.
But all Republicans should be asking themselves: What is Plan B if inflation cools? What is their message? What tangible policies would they like to see implemented were they to regain control of Washington?
To be clear, I am not joining the media chorus in declaring the inflation crisis prematurely over. It would be irresponsible to attribute too much to one report showing inflation flat month over month. The fact that inflation was flat in July still means that prices are higher than they were in May, and 8.5 percent higher than they were last summer.
Also, a deeper look at the numbers shows that food inflation was up 1.1 percent in July after going up 1 percent in June. That means not only did food costs go up again, but the rate of increase was faster. The big driver of the flat month-over-month report was that oil prices started coming back down, and the broader energy category actually declined 4.6 percent. Another way of looking at this is that it means that it took nearly a 5 percent decline in energy over the course of a month just to keep inflation flat, with overall prices still at elevated levels relative to even a few months ago. There’s a question of what the floor is for the current decline in oil prices. As soon as oil hits one, more and more goods will have to start to fall to tame inflation. Furthermore, even if inflation were to settle at around 4 or 5 percent annually, it would still be much higher than we’ve been used to in recent history, and especially bad if accompanied by a Fed-induced recession. So, there are plenty of reasons to believe that we are not out of the woods.
That having been said, we’re about two years out from the 2024 political conventions. That’s a long time, and there is of course the possibility of the optimistic case of inflation easing as the effects of Covid start to cycle out, and of the economy having a relatively soft landing.
If that is the case, it’s a challenge to really see anything resembling a Republican agenda — on taxes, health care, entitlements — or much of anything else. There is an overall zeitgeist among conservatives surrounding various cultural issues, woke capitalism, Big Tech, the “deep state,” and so on. But that has not yet been translated into clear policy goals, and certainly not any policies that would resemble any sort of consensus among Republicans.
On health care, an issue I have focused on more than any other, we saw the damage that this sort of policy vacuum could create. Republicans spent seven years being clever about scoring daily messaging victories against Obamacare, used its problems to regain control of Washington, but never did the hard work of agreeing on what they wanted to do on health care instead. And so, once they were in a position to do something about Obamacare, they ended up with nothing. And now Democrats have retaken power and expanded Obamacare.
Simply put, Republicans need a Plan B.