A Morning Consult poll in late October showed 62 percent of registered voters believe Biden’s policies are to blame for rising prices on everything from turkeys to gasoline to apartment rents.
Guess what? They should.
Biden’s fingerprints are all over the latest Consumer Price Index report, which showed prices in October rising 0.9 percent compared to a 0.2 percent increase in September. That was way worse than the consensus estimate of 0.6 percent.
If we annualize that October price increase, inflation is now running at almost 12 percent.
The Washington Post pointedly announced the dismal news from the Bureau of Labor Statistics: “Inflation climbs 6.2% in October, the largest increase in 30 years, amid supply chain backlogs.”
Get it? It’s all about supply chain problems. A complex pile-up of circumstances that Biden thinks most Americans are too dim to understand and over which the White House can exert zero control.
Liberals are hoping that Americans will buy that narrative; after all, not even Transportation Secretary Pete Buttigieg can be expected to disperse those ships stacked up off the Long Beach port or single-handedly find scarce lumber when it’s gone missing.
Those supply chain problems persist, for sure. But when the main culprits driving inflation are energy (up 30 percent from last year), accelerating rents and ongoing worker shortages, sourcing difficulties are not the whole story.
Policy blunders perpetrated by the Biden White House have made a bad problem worse.
For instance, oil prices are higher for two reasons. First, U.S. production has declined by about two million barrels per day since 2019, even as demand has recovered from the COVID-19-induced downturn. Oil markets are global, so the fall-off in output would not necessarily jack prices up, but our declining output needs to be offset by an increase elsewhere.
Enter OPEC, which has not restored output to the level necessary to bring down prices, despite repeated pleas from Biden.
Meanwhile, Biden has done a lot to discourage a resurgence in U.S. drilling and production. He has cancelled pipelines, threatened oil and gas producers with higher taxes, taken promising acreage out of play, such as the Arctic Natural Wildlife Refuge, slow-walked leasing and new drilling permits and, most recently, imposed new methane-curbing rules that make drilling more expensive.
What sensible person would invest in the oilfield in the face of such unrelenting hostility? Drilling activity is up, but nowhere near where it should be at $82 per barrel oil.
Another boost to inflation came from housing. With “shelter” accounting for some 40 percent of the CPI, economists have warned that fast-rising home prices would eventually seep into higher inflation readings. In October, we saw this occur, with the increase in the cost of shelter accelerating to 0.5 percent from September, an annualized rise of 6 percent.
One reason home prices have been increasing at nearly 20 percent per year is that the Federal Reserve has continued to buy up $15 billion worth of mortgage-backed bonds each month, keeping mortgage rates artificially low. The result has been a booming market, driving home prices, and now rents, higher.
At long last, the Federal Reserve has announced it will begin to throttle back its bond-buying program, including the purchases of mortgage-backed bonds. Critics think the Fed is behind the curve, having seriously underestimated price pressures.
Biden does not control the Fed, but he has made no secret of his preference for the easy money policies that have helped prop up the economy, and the stock market. Fed Chair Jerome Powell’s term ends in February; Biden has recently interviewed not only Powell but also Fed Governor Lael Brainard, a known dove and Obama appointee, for the position.
That these are the only two candidates he seems to be considering sends a clear signal. He will choose growth over stability, even if it means that inflation continues to accelerate. Unhappily, Powell is listening.
Finally, Biden has not only encouraged monetary excess, but has also endorsed big-spending packages that have put money in consumers’ pockets but also kept workers on the sidelines. The biggest shortage we have in this country today is labor. The labor participation rate is mired at 61.6 percent, 1.7 percentage points below the level in February 2020.
Studies have shown that the slew of benefits contained in the Cares Act and subsequent relief bills, including incremental unemployment benefits, expanded child tax credits and rent moratoriums, have offered Americans up to $100,000 per year while not working. These payments may have been necessary early in our recovery from the pandemic, but no longer are needed.
A recent analysis of Biden’s proposed Build Back Better bill shows the legislation could create even more disincentives to work, sidelining millions of Americans. This would drive the cost of everything even higher.
Ultimately, inflation is the result of too much money pursuing too few goods. That’s what is happening now. Joe Biden is to blame for much of the problem; voters know it.
Published on The Hill