Government Watch / Politics

The Biden White House Will Pay for Playing Inflation Games

bill

White House Chief of Staff Ron Klain recently endorsed the idea that inflation and supply-chain struggles Americans are struggling with are “high class problems.”

I’m in no position to comment on whether the inflation spike we’re experiencing is “transitory” or not (though, metaphysically speaking, isn’t everything!). Maybe it will be a short-term problem sparked by supply shocks and pent-up post-COVID demand, or maybe inflation will linger for years and become a self-fulfilling prophecy due to expectations. Whatever the case, a president who feels comfortable with taking credit for “creating” millions of jobs after state-compelled shutdowns are likely going to be blamed. You can’t have it both ways.

And while it’s not unreasonable for an economist such as Jason Furman to point out that, in the big picture, most of America’s tribulations are “high class,” it’s quite a different story for the administration to dismiss those concerns. Because in our reality — the one where the president promised to fix everything — the inflation debate is important for a number of reasons.

One, the administration is, as we speak, campaigning to cram through a welfare-state bill that could dump another $5.5 trillion into the economy. What justification is there for unprecedented spending when inflation is accelerating? Democrats have already passed an additional nearly $2 trillion in expenditures in the first six months of the Biden administration, and the economy is still underachieving.

When asked whether he believed that passing another colossal spending bill would exacerbate the problem, the same president who contends that his $5.5 trillion welfare-state expansion bill costs “zero” argues that more spending would “reduce inflation, reduce inflation, reduce inflation.”

Biden has waved away inflation concerns on numerous occasions, once arguing that “no serious economist” was suggesting that “unchecked inflation” was on the way. This was four months ago. We are now in our sixth month of historic spikes. I’m not sure if Biden considers Larry Summers, former Treasury secretary for Bill Clinton and Barack Obama’s National Economic Council director, a serious economist, but Summers seems to believe runaway inflation and bottleneck supply-chain problems pose a serious risk to the economy.

As a political matter, inflation isn’t some abstract philosophical debate but something tangible and historically fraught. The older you are, the most sensitive you likely are to the potential harms of inflation, having either lived through the 1970s or heard about that dreadful decade from your parents. Even as a kid, I can remember the specter of “inflation” hanging over the adult world. The era’s stagnation was fixed only with the institution of high-interest rates and a couple of serious recessions. Inflation conjures up images of gas lines and “crisis of confidence” speeches.

For retirees, inflation means instant wealth destruction. For everyone else, it means immediate hikes in the cost of living. Consumer prices, led by energy and food prices, have increased 5.4% overall since last year, which is the largest increase since 1991. The producer price index is up 8.6% over the past year — in its sixth month of record highs. Social Security benefits will rise nearly 6% for retirees in 2022 because of a cost-of-living adjustment — the biggest surge in decades. So, apparently, the government believes the transitory period will extend at least into the next year.

Gas is up 42% over last year as well — the cost of which is embedded in nearly everything (and counterproductive anti-gouging policies will surely make the situation worse, but that’s another story). This week, the U.S. Energy Information Administration said it expects households to see their heating bills jump as much as 54% compared with last winter.

Even as Klain was retweeting Furman, Politico reported that the White House has been “consulting” the oil industry “to seek a remedy for rising gasoline prices as surging inflation threatens to tarnish the economic recovery.” This comes a few months after Biden asked OPEC to increase output.

This is all quite confusing, as, even now, Democrats are campaigning to pass policies designed to increase the cost of energy by limiting the availability of fossil fuels. Perhaps Biden, unmoored from economic reality, will tell us that higher energy costs are actually good for the economy. But it’s hard to think of anything more unpopular with the electorate than paying a lot for gas or food, high-class problem or not.

David Harsanyi is a senior writer at National Review.

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Fred
1 month ago

A divided house will fall!

PaulE
1 month ago

While both Jason Furman and Ron Klain have always been dependable useful idiots for the left, attempting to add legitimacy to completely unsupportable economic claims concerning socialist policies, the idea that inflation is strictly a “high class problem” is laughable even for them. Tell that fiction to the people of Zimbabwe, Venezuela, Argentina and other socialist paradises, where socialism has led to levels of inflation that have made their nations’ currencies essentially worthless. Where the average citizen has become destitute and starving. Having to constantly forage for scraps of food in garbage dumps or edible plants in the country side outside town and cities doesn’t seem very “high class” to me. Where store shelves remain bare and even when there are a few items occasionally available, which is increasingly rare these days, the average person can no longer afford to buy them. Almost all economic activity has ceased, with most businesses permanently closed. Where hospitals have no medical supplies. Where electricity is only available a few hours a day, if that. Where the population is universally miserable, except for the small number of ruling elite backed by the military. This is the “socialist Utopia” that people like Furman and Klain want here.

That the American people continue to tolerate this open attack on the very nature of our country by people committed to its destruction, in the name of supposed “social and economic justice”, is insane. Yet here we are apparently allowing them to do pretty much as they please day after day. What’s wrong with this picture? No need to answer as I already know the answer.

Max
1 month ago
Reply to  PaulE

Again, you are on target with your comment. Sheeple are asleep.

PaulE
1 month ago
Reply to  Max

Comatose.

Bill on the Hill
1 month ago
Reply to  PaulE

Something has got to give Paul… We as a nation cannot continue on this path to nowhere but economic ruination under the current criminal administration running the show in DC… The WH COS, Ron Klain’s statement of a ” high class problem ” is as non-sensical as everything else coming out of these clueless idiot’s pie holes…The clogged ports on BOTH coasts is primarily the Chinese junk the American people themselves have become utterly & completely reliant on…China is feeling this phenomena too, their exports have DROPPED considerably, because nothing is moving which means NO revenue coming back to them. At this juncture, China is unable to get the empty cargo containers back to their shores in order to feed the unending appetite of the American people…
The viscous cycle of supply & demand where China is concerned is currently DOA.. Ever so slowly American companies are beginning to close shop in China once again in a strange ironic twist & for a different set of reasons in comparison to when Trump was POTUS…
China in real time is suffering a lot of problems in their own nation, i.e. the Evergrande real estate bubble about to burst, with global ramifications, lack of Australian coal with about 80% of their systems designed to run on it, lack of crucial electricity flowing into their vital industries, with mandatory rationing of electricity being felt across the entire nation with winter coming, people need heat & they need electricity to use that heat…The CCP dogma: Who gets the coal, the people so as not to freeze to death or critical industry in order to manufacture products to export in order to generate revenue? Since Chinese exports are ” dead in the water ” I’d say China is in a bit of a pickle & I don’t see them invading Taiwan anytime to soon neither.
China is now experiencing what can happen when ” you bite the hand that feeds you “…
I’ve stated it before & I’ll state it again, imho, China is nothing more than a ” paper tiger. ”
Meanwhile America along with other nations are experiencing very similar problems, thanks in no small part to the Chinese plandemic & the wealthy elite class around the world, exploiting it to maximize their bottom lines, simply look at JRB, his son Hunter, HRC, Anthony Fauci & a long list of others & with that, I rest my case…
Bill on the Hill… :~)

Max
1 month ago

Interesting.

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