At the conclusion of the Federal Reserve’s two-day policy committee meeting on Wednesday, the panel is widely expected to raise interest rates, a move Treasury Secretary Janet Yellen alluded to last week when she predicted that “we’re likely to see another year in which 12-month inflation numbers remain uncomfortably high,” an important admission from a top Biden administration official.
Prices have been climbing at record rates over the past few months. Through February, the consumer price indexby 7.9 percent, the most rapid pace it’s seen in decades.
Economists are divided over how much blame this administration deserves for all this. Part of it is simply because of the Covid-19 pandemic and the relief package Biden signed into law. Some point to the Ukraine crisis and the ramifications of America’s ban on Russian oil as a more recent accelerant for rising inflation rates. The general consensus among economists is that inflation will be high over the next few months and probably through Election Day in November. Some of that is really out of the control of this, or any, administration.
The above is economics. Elected Democrats are worried about politics. And right now party leaders and veteran candidates are wondering how best to address inflation as the 2022 midterms approach.
“Getting the pandemic behind us will get spending to pivot, and it will encourage people to go back to work, and both of those, I believe, will help a lot with inflation,” Wendy Edelberg, the former chief economist at the Congressional Budget Office, told me.
Similarly, Itay Goldstein, a professor of economics and finance at the University of Pennsylvania’s Wharton Business School, told me that it’s “more difficult to believe that [inflation]’s just going to go away very quickly.” Goldstein pointed to rising oil prices and Russia’s invasion of Ukraine as newer contributing factors.
Polling suggests attacking Democrats on inflation is effective. A Wall Street Journal poll this week found that among nonwhite voters—the core of the Democratic Party—inflation is causing severe financial strain. The poll found a majority of all voters (58 percent) disagree that Biden is focused on the issues that are most important to them. The poll also found almost the same number disapprove of how Biden has handled the economy, and 63 percent disapprove of his handling of inflation costs.
Celinda Lake, a Democratic pollster, said inflation has emerged as the top issue for voters, and Democratic candidates are lagging in addressing it. “It’s risen to the number one issue out there,” Lake said. “It’s probably going to get more prominent as the actual repercussions of the war in Ukraine come home and voters are focused less on Covid and the war, etc. They’ll focus more and more on inflation. It is a very tough issue for Democrats and a very tough issue for politicians in general.”
But Democrats can respond in a way that at least doesn’t sound tone deaf, Lake added. “One is to acknowledge that it exists,” she said. “All that language about ‘it’s transitional, it’s temporary,’ that doesn’t work at all because people think, ‘Well, I’m not getting a temporary raise to make up for my temporary inflation.’ And to say that it didn’t really exist, that it wasn’t that bad, that wages were keeping up—it’s just not people’s real-world experience. So [it’s] very, very important to have the kind of language that the president had during the State of the Union, where he said, ‘Families are struggling, inflation is serious. We’re very concerned about it, we’re doing everything we can.’”
Polling that Lake’s firm has done found that the best ways to ease Americans’ worries about inflation is negotiating prescription drug prices, making big corporations pay their fair share in taxes, bringing American jobs back to America, and pushing “buy American,” along with reiterating “that nobody whose income is under $400,000 a year is going to receive a tax increase. Because people are worried that their taxes, as well as their cost of living, [are] going up.”
Democrats have been introducing bills aimed at fighting inflation. Representative Jan Schakowsky introduced a bill to fight price-gouging in relation to Covid-19. Arizona Senator Mark Kelly’s first reelection campaign ad featured him talking about families’ experiences during times of economic hardship. Congressional Democrats have held hearings on supply bottlenecks and corporate profiteering related to inflation. Senator Elizabeth Warren has targeted big corporations and their role in leveraging prices during a high inflationary period to make profits.
In multiple interviews done over the past few days, Democratic strategists repeatedly stressed one core rule for candidates this cycle: not to run from the topic.
“I think it’s important this administration acknowledge that people are feeling this pain, not deny that it’s … a thing, but then talk about the ideas and plans they have to address it,” Democratic strategist Adrienne Elrod said. “And then pivot to the fact that Republicans not only don’t have a plan to address it but are trying to use this as a wedge issue to run on in the midterms. They’re gleeful that American families are feeling the impact of inflation because they feel it’s going to help them at the ballot box.”
That may not be enough to save some of the more vulnerable candidates who are being linked to rising prices for basic consumer goods. There are reports that, internally, top brass at the White House are pivoting to a focus on inflation as they become aware that the problem is more likely to remain than go away.
Not every economist I talked to for this story predicted that inflation would remain high over the next several months. Dean Baker, a co-founder of the liberal Center for Economic Policy Research, predicted that inflation would drop in the next few months. “In terms of how people perceive it in their lives, there’s very good likelihood that it will drop,” Baker said. “If you just look at the inflation rates that we’re seeing in the three months before the election, there’s a very good chance that it’s going to be down quite a bit from where it is today.”
In that scenario, the tables would almost certainly flip on Republicans. Democrats would embrace talking about the economy at every campaign stop in the country and tout the Biden economy as a roaring success, which, aside from inflation, it pretty much is, in terms of job creation and gross domestic product growth, and to a lesser extent wages.
But even Biden himself has indicated that ongoing domestic and international events will contribute to high costs at home. “As I have said from the start, there will be costs at home as we impose crippling sanctions in response to Putin’s unprovoked war, but Americans can know this: The costs we are imposing on Putin and his cronies are far more devastating than the costs we are facing,” Biden said in a statement last week in response to a consumer price index report that showed rising inflation.
In truth, the tools at Biden’s disposal, while expansive, are somewhat limited on inflation at this point. That’s what makes Yellen’s comments and Wednesday’s Fed meeting so important. The Fed will likely raise rates. Whether that will have the desired effect in time for November is another question. The Democrats might be left, as Lake’s polling suggests, with no better option than showing voters they feel their pain.