If you want to know what Democrats are praying for, read the front-page headlines in The Washington Post, e.g.: “Inflation eased slightly in April, with timing for rate cuts still uncertain.”
It isn’t just the timing that is uncertain.
With inflation persistently elevated, it isn’t clear that rate cuts are coming at all for the foreseeable future.
For months, Democrats have been telling themselves a very reassuring bedtime story that plays out in six parts: 1.) Inflation finally will be whipped, at which point 2.) the Fed is going to step in with some well-timed interest-rate cuts, 3.) putting upward pressure on real wages and 4.) lowering rates on mortgages and car loans, at which point 5.) the American people will offer three grateful cheers for Bidenomics and 6.) re-elect the president.
Several of those six developments are not going to happen.
Donald Trump may yet get Joe Biden re-elected, but Fed chairman Jerome Powell isn’t going to save the president from a decades-overdue retirement.
In Wednesday’s monthly inflation report, overall inflation was at 3.4% while “core” inflation — which excludes some volatile commodities such as groceries and gas — was at 3.6% — just under twice the Fed’s preferred rate of 2%.
The usual story that inflation-wary politicians tell to voters is that things are better than they seem because “core” inflation is lower than overall inflation — “You’re in great shape, as long as you don’t have to drive or eat or consume anything that moves on a truck!” — but for Biden the story is reversed: Overall inflation has been partly eased by relatively large declines in food and fuel prices, but inflation for most things people buy is worse than it is at the grocery store or gas station.
According to the Bureau of Labor Statistics, prices today are about 20% higher than they were when Biden was inaugurated in January of 2021.
A basket of goods that cost you $1,000 in January 2021 would cost you about $1,200 today.
An inflation rate of 3.6% is not great at any time, but an inflation rate of 3.6% on a consumer-price baseline that is 20% higher after years of persistently high inflation is even worse.
Think of it this way: An extra 3.6% on a $1,000 purchase in 2021 would have cost you $36; the same 3.6 percent extra for the same goods at today’s more expensive prices adds $43.
Which is to say, the problem for US consumers — and for Joe Biden — isn’t the inflation-rate snapshot for April.
The problem is the years of persistently high inflation that preceded it.
We overestimate the scope and the immediacy of presidents’ influence on the economy.
Most big policy changes (such as changes in federal tax rates) still come from Congress, not the president, and many of the administrative actions that are within the president’s unilateral power (and there are far too many of these) either have a small effect on the overall economy or take a long time to produce results.
The economy does not rise or fall on whether the president is good, smart, or cares about people like you — thank goodness!
That being said, President Biden has done a lot to make inflation worse.
In the COVID era and immediately thereafter, there was a great deal of inflation caused by supply-chain disruptions and similar COVID-related factors.
But inflation today is being exacerbated by excessively high levels of debt-enabled government spending.
Ultimately, that borrowing and spending is Congress’ doing, but early in his presidency, Biden expended a fair bit of political capital successfully fighting for big spending bills.
And he continues to press for excessive spending and for irresponsible giveaways such as his student-loan scheme.
The original idea was that a big gusher of government spending would prevent a deep or long post-COVID recession — and there was no deep or long post-COVID recession.
What we got instead was anemic growth (and GDP contraction in the first two quarters of 2022) and the worst inflation we’ve endured since Jimmy Carter put on that cardigan back in the Age of Disco.
The COVID economic crisis is long over.
What Biden and the Democrats are doing today is attempting to bribe the American people with their own money.
It is a strategy that has, unfortunately, worked many times before.
But it doesn’t work very well when car-insurance rates are rising at 20% a year or when mortgage bankers and pawn shops are charging approximately the same interest rates.
There isn’t going to be some last-minute economic miracle to save Joe Biden’s presidency.
That poor bastard is going to have to run on his record.
Kevin D. Williamson is national correspondent for The Dispatch and a writer in residence at the Competitive Enterprise Institute.
