Rising prices are crushing Americans at the pump and in the grocery aisle, and they could end up crushing Democrats at the polls in November, too. That was clearly on President Biden’s mind today as he attempted to soothe concerns about rising prices during a speech from the White House.
“Families all across America are hurting from inflation,” Biden said. “I want every American to know that I’m taking inflation very seriously and it’s my top domestic priority.”
Biden also noted that Americans “are frustrated,” and that “I don’t blame them,” as he used the stage to draw distinctions between his administration’s plans to curb inflation, and proposals from congressional Republicans. Specifically, Biden took aim at both Vladimir Putin, whose invasion of Ukraine has caused further global economic problems, and congressional Republicans, who have stymied much of his agenda. Politics aside, inflation numbers have been downright ugly, and it’s put many Americans in a very tight squeeze.
And his speech comes on a day when gas prices hit a new all-time high of $4.37 per gallon.
In March, the Consumer Price Index (CPI) was up 8.5% year-over-year, the highest in almost 40 years. Rising prices on everything from gasoline to houses have consumers with a lot of questions as to what, exactly, the government is going to do about it. The latest CPI numbers are due out Wednesday morning at 8:30 a.m. ET.
The Fed, which aims for 2% annual inflation, started raising interest rates in March, and last week, increased rates by 50 basis points. Fed Chairman Jerome Powell, at a press conference following the Fed’s meeting last week, said that the central bank is “moving expeditiously to bring [inflation] down,” and that consumers should expect more rate hikes in the coming months in an effort to cool the economy and lower prices.
Theoretically, higher interest rates should lower consumer demand for big-ticket items (homes, cars, etc.), as it increases the cost to borrow money. But the issue in some sectors, such as housing, is that the supply-demand dynamic is so far out of whack that a moderate increase in interest rates isn’t likely to have much of an effect on prices.
With that in mind, here are a few key takeaways from Biden’s speech:
1. Blame Putin and the pandemic
Biden pointed to two main issues causing prices to rise: The ongoing logistical problems due to the pandemic, which has led to huge supply-chain problems, and the war in Ukraine. Prices for oil, corn, wheat, and metals have all risen since the onset of the war, according to data from the International Monetary Fund. Republicans will likely use inflation as a bludgeon during the midterm elections this fall, painting Democrats’ stimulus measures as the main driver, but the truth is more complicated—rising prices can be, at least in part, blamed on a patchwork of budget-butchering issues, including the aforementioned war in Ukraine, supply chain troubles, further lockdowns in China, and more.
2. It’s the economy again, stupid
The 2022 midterm elections will be held on November 8, and you can expect inflation and other economic issues to be the focal point. That, again, appears clear to Biden, who took the time to hammer Republicans’ plans for containing costs.
“They don’t want to solve inflation by lowering costs. They want to solve it by raising your taxes and lowering your income,” Biden said, at several points, taking aim at the “Plan to Rescue America” from Republican Senator Rick Scott of Florida. That plan would, among other things, impose income taxes on many households that currently don’t pay any, and also sunset all federal laws after five years.
3. The Biden administration does have a plan
Aside from hammering Republicans’ proposals, Biden also touted his administration’s plan to lower prices for consumers by releasing more oil from the Strategic Petroleum Reserve and cultivating more competition in the marketplace. It may possibly include lowering tariffs against China, put in place by President Trump.
Skepticism is warranted, of course, as the administration has been slow to react to rising prices—Biden previously said that he thought inflation had peaked in December, and the Fed spent much of last year saying that rising prices were transitory.
Republicans responded to Biden, keen to keep the pressure on Democrats—something they’ll likely keep up throughout the summer and into the fall.
“Biden might be living in an alternate reality, but voters are not, which is why they solely blame Biden and Democrats for the rising prices they see for everyday goods, gas, and groceries,” said Ronna McDaniel, chairwoman of the Republican National Committee, in a statement. “The economy is on the ballot in November, and voters know Biden and Democrats are only making it worse.”