Hello: Higher inflation could be a deliberate Biden strategy to reduce debt ratio
The trick — not working so far — is not to let it gallop out of control
During the first year of Joe Biden’s presidency, as inflation has spiked to its highest year-over-year increases in 30 years, the administration has assured the nation that the price increases are temporary.
During the first months of the year, the administration contended that pandemic stimulus spending was the major driver and that inflation would abate as the spending subsided. That hasn’t happened — prices soared 6.2 percent in October compared with the previous October, the largest rise since 1990 — and business leaders have warned the price hikes are in for a stubborn stay.
On the political front, the administration’s contention of a short-run uptick was being challenged from inside Biden’s own party, by Democratic Sen. Joe Manchin of West Virginia:
By all accounts, the threat posed by record inflation to the American people is not ‘transitory’ and is instead getting worse,” Manchin tweeted on November 10. “From the grocery store to the gas pump, Americans know the inflation tax is real and D.C. can no longer ignore the economic pain Americans feel every day.
On the heels of such criticism and in the wake of the October Consumer Price Index numbers, Biden pivoted in November, acknowledging that “[m]any people remain unsettled about the economy” because of higher prices, but also saying that the best way ahead was to embrace his agenda of even more government spending.
The Democrats say such Biden spending plans as universal pre-school, affordable elder and child care, and affordable housing will coax people back into the economy to work, which will increase productivity and reduce price pressures.
The truth is, though, massive spending during the pandemic had the opposite effect, incentivizing more people to stay home in an already depressed labor market. More generous social benefits and housing credits will just keep people out of the labor force even longer.
And while Democrats say the whole package will be paid for by higher taxes on corporations and the wealthy, that likely will lead to counter-effects as well, with companies passing on much of the new tax burden to consumers in the form of higher prices, while higher taxes will result in fewer investments in the economy and thus fewer jobs.
All that notwithstanding, a curveball came out of the progressive left in the past several weeks that seemed to suggest the left doesn’t actually care about inflation, or the pain it is causing average Americans, and it led some to wonder if the administration was secretly seeking to raise the inflation rate goal from its current 2 percent level.
That thread of thinking was articulated most brazenly by liberal-left NBC anchor Stephanie Ruhle, who argued to NBC host Willie Geist that, while prices are higher, Americans can afford them and should put higher prices “in perspective.”
“The dirty little secret here, Willie, while nobody likes to pay more, on average, we have the money to do so,” Ruhle said. “Household savings hit a record high over the pandemic, we didn’t really have anywhere to go out and spend.”
The internet had a field day, immediately dubbing her Stephanie Antoinette, but of course many speculated the administration feels the same way, especially after Biden’s energy secretary, Jennifer Granholm, laughed when asked what her plan was to ramp up domestic energy production to counter higher gas prices.
“That is hilarious,” she said. “Would that I had the magic wand on this.”
The U.S. doesn’t control oil production, Granholm added, saying the OPEC cartel did.
A few tone-deaf progressive comments about inflation certainly does not a strategy make, and the administration can’t be enjoying this much inflation, knowing its political consequences, but the question remains: Might the administration actually favor some higher inflation, so long as prices rise only gradually and not too much overall?
The answer is yes.