Commentary by Philip Wegmann originally published by RealClearPolitics.com
For Brian Deese, star power was only incidental. And fleeting. “I get to go home and tell my kids that BTS opened for me,” he joked after the internationally famous boy band exited and the White House briefing room, unusually packed for a Tuesday, started emptying out to normal capacity.
BTS, the South Korean Beatles, were there to discuss anti-Asian discrimination with President Biden. Deese, Biden’s top economic advisor, was there to brief reporters on enduring inflation, and so, the policy wonk made another joke: “You are as excited about that as you are for them.”
The president and his team want to discuss the economy. Not $5-per-gallon gasoline, mind you. No, they want to talk about the strong U.S. job market and the slightly shrinking federal deficit, for instance. The administration plans to spend the next month pitching their economic accomplishments to the American people, an effort Biden kicked off the day before with an op-ed in the Wall Street Journal.
Biden continues to promise that tackling inflation will remain his top priority as surging grocery, fuel, and mortgage prices eat into Americans’ family finances and eat away his approval ratings in the polls. Deese, last year, said it wouldn’t be this way.
The president’s in-house economist was responsible, in part, for the exact bet the White House placed so publicly: that inflation wouldn’t last long and that increased federal spending wouldn’t add to inflationary pressure. America was going through a cold start, after all, revving from 0-60 post-pandemic. There were always going to be speed bumps along the way back to normal, and Deese and others reasoned last year that while it might cost more to pay rent each month and fill up a tank of gas every week and put food on the table every day, the pain would only be “transitory.”
Then inflation jumped month after month, hitting a 40-year high in March, and the Washington Post asked Deese Tuesday if the “transitory inflation” line had been responsible for giving Americans a false sense of hope that rising prices would recede.
“Look, I think that this has been an uncertain and unexpected recovery period,” he replied before adding that it was also “historic in many ways.”
Deese said that it was a strong economy, one that has been bolstered by trillions in federal relief spending that had helped Americans get back on their feet. He added also “that inflation is a global challenge,” one made harder by unforeseen complications, like the Russian invasion of Ukraine, that rattled markets and kinked supply chains. “Our focus right now,” he explained, was to find the right policy “to bring prices down without sacrificing all of the economic gains that we have made.”
Down the hall from the briefing room, in the Oval Office just hours earlier, Biden met with Federal Reserve Chairman Jerome Powell. The administration is currently drawing up a flight plan to achieve the soft landing that Deese described, one where the Fed increases interest rates and brings down inflation but doesn’t shock the system and risk causing a recession.
In all of this though, Biden has vowed not to “meddle with the Fed.” This was a key point of emphasis in the first part of his three-pronged approach to tackle inflation, laid out in the Wall Street Journal. He appointed economists from both parties to helm that institution, and he wrote that he agrees with their assessment that inflation “is our top economic challenge right now.”
The second prong of Biden’s plan was urging Congress to “help right away by passing clean energy tax credits and investments” and to sign off on new spending on public housing, prescription drug benefits, and childcare. The third prong, “reducing the federal deficit” through “common-sense reforms to the tax code,” in turn would “help ease price pressures.”
The White House, meanwhile, is also reportedly weighing a plan to cancel as much as $10,000 in student debt for households making less than $300,000. Analysis by the Committee for a Responsible Federal Budget pegs the cost of that proposed plan for taxpayers at around $250 billion, but Deese told RealClearPolitics that “the president hasn’t made any decision on that policy.”
Asked if the administration was confident that student debt forgiveness, whatever shape that policy takes in the end, would not contribute to higher inflation as borrowers spend money on goods and services rather than on loan payments, Deese replied that the economic impact would be spread out over decades. “And so,” he said, “the impact on inflation in the near term is likely to be quite small.”
Republicans were unimpressed with Biden’s inflation blueprint. Their argument is not merely that Biden has been inattentive to inflation, but rather that his policies are responsible for it. Retiring Ohio Sen. Rob Portman summed up that sentiment, writing on Twitter that inflation was “due to the Biden admin’s excessive spending” and chided the White House for not listening sooner to Democratic economists like Larry Summers who warned that increased spending “would overheat the economy.”
As they look to November, the GOP insists that the larger story is that Biden is out of touch with working Americans. Not so, said Deese. The president feels their pain and is approaching the inflation issue from a “kitchen table” perspective: “He understands that right now the top issue on people’s minds is prices – prices at the gas station, prices at the grocery store. And he’s made very clear, and he’s communicating very clearly, that that’s his top economic priority, and that we can address this from a position of strength.”
Those new plans are still haunted by old optimism. Deese wasn’t the only one to face the ghost of the “transitory inflation” rhetoric. Wolf Blitzer asked Janet Yellen on CNN if it had been a mistake to downplay the risk of inflation last year. The Treasury secretary said she had made a mistake.
“I think I was wrong then about the path that inflation would take,” Yellen told Blitzer.
“There have been unanticipated and large shocks to the economy,” she added, “that have affected our economy badly that at the time I didn’t fully understand.” Inflation was “still too high” and there was more work to be done, she concluded, “but in recent reports, we’ve seen it move down.”
Philip Wegmann, RealClearPolitics