Biden follows Warren’s lead on inflation

Biden follows Warren’s lead on inflation

During the last presidential cycle, Massachusetts senator Elizabeth Warren was feted by the prestige media as the evidence-driven technocrat with a plan to fix American capitalism. Despite the glowing coverage (and New York Times endorsement), her campaign demonstrated little electoral appeal outside the “Democratic Hill Staffer” demographic and promptly bombed.

Warren has always occupied space on the left of the Democratic Party, but since her 2020 defeat, she has slid further from the center and traded her technocratic “I’ve got a plan for that” style for a more explicitly populist message. She is presumably positioning herself to be the progressive standard-bearer as eighty-year-old Bernie Sanders fades from view. (Meanwhile, California’s Ro Khanna is reportedly Team Sanders’s preferred successor.)

In some cases, Warren’s leftwards drift has left her out of sync with the Biden administration. On the Senate Banking Committee, she has found herself at odds with the Biden administration over the Federal Reserve. Yesterday, she voted against a second term for Fed Chair Jerome Powell, who Biden reappointed earlier this year. She was the only committee member from either party to do so.

But elsewhere, Warren’s unvarnished progressivism is aligned with the White House to an alarming degree. On inflation, the number one economic concern in the country, Warren has been a vocal proponent of the idea that price rises are, first and foremost, a result of nothing more than avarice. The culprit, according to Warren, is “plain-old corporate greed” and the solution is a more assertive anti-trust policy. This is not a view taken especially seriously by economists. As Brian Albrecht and Alexander William Salter memorably put it, “blaming inflation on anti-competitive behavior (or greed) is like blaming plane crashes on gravity.” And yet, this was the argument pushed by the White House after it decided to dismiss inflation as a “transitory” problem.

With sky-high gas prices, the inflation debate has shifted focus. And the Biden administration has been emboldened in its buckpassing. The new line is that forty-year price highs are “Putin’s inflation.” When Biden isn’t blaming Putin, he’s dismissing the idea that government spending and inflation have anything to do with one another. “I’m sick of this stuff,” he told House Democrats. That inflation is government’s fault is “simply not true,” he added. (An AP fact check said of the claim: “Biden sidesteps reality. Government spending has been a clear factor behind rising consumer prices, though it’s not the only one.”)

When these arguments don’t work, the White House turns to Warren’s kooky reasoning, blaming greedy energy companies for higher prices. And Warren wants to go further. She thinks that the answer to higher gas prices is higher taxes on oil companies. This, she argues, would hold the firms in question “accountable.” Accountable for what though? “Putin’s” price hike? Absent from Warren’s plan, as with so much of the rhetoric and spin from Biden and his Democratic colleagues on inflation: suggestions of practicable ways to help ease the pressure of price increases.

These aren’t just bad arguments, damaging policies and shameless spin. They’re a dangerous distraction at a perilous moment for economic policymaking. Yesterday, the Fed raised interest rates for the first time since 2018. It will be the first of many this year. Amid the weirdness of the post-Covid economy and against a fraught geopolitical backdrop, Powell faces a death-defying tightrope walk in the coming months. Get it wrong, warns the prophetic gadfly Larry Summers, and the consequences will be severe: “The Fed’s current policy trajectory is likely to lead to stagflation,” he wrote in the Washington Post, “with average unemployment and inflation both averaging over 5 percent over the next few years — and ultimately to a major recession.” At which point Biden will presumably deliver a reassuring message to an anxious nation: this recession is the fault of Vladimir Putin and greedy oil executives.

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Zients steps down

In perhaps the clearest sign yet that the Biden administration is turning the page on what it saw to be the emergency phase of the pandemic, White House Covid czar Jeff Zients has announced that he will be stepping down next month. Zients will be replaced by Dr. Ashish Jha, the dean of Brown University’s School of Public Health.

The departure is perhaps the highest level personnel change since the start of the Biden presidency. It will also mean Zients spends less time botching the federal response to the pandemic and more time overseeing his burgeoning Washington bagel empire. A rare win-win for DC.

Return of the Luv Guv?

Andrew Cuomo’s hints at a political comeback get less subtle by the week. Cockburn brings news of unnamed sources claiming that the Luv Guv “has been fielding calls from supporters about a possible run against his former lieutenant governor” and that “his aides have been conducting their own internal polling on a potential matchup.” Cockburn notes that, “The Cuomo story surfaced at the same time as a report from the New York State comptroller which found that the governor’s health department had ‘failed to publicly account for the deaths of about 4,100 nursing home residents in New York during the pandemic.’”

What you should be reading today

Michael Warren Davis: The right’s illiberal moment is over
Peter W. Wood: The strange ideology that could be driving Putin
Teresa Mull: The Trump stalwart taking on Dr. Oz
Charles C.W. Cooke, National Review: No to Trump in 2024
Jack Shafer, Politico magazine: Why Putin’s restaurant of lies isn’t finding many customers in America
Yaroslav Trofimov, Wall Street Journal: Ukrainian town deals Russia one of the war’s most decisive routs

Poll watch

President Biden Job Approval
Approve: 42.1 percent
Disapprove: 52.9 percent
Net approval: -10.8 (RCP Average)

Americans’ favorability ratings of foreign countries
Canada: 87 percent
Great Britain: 86 percent
France: 84 percent
Israel: 71 percent
China: 20 percent
Russia: 15 percent
Iran: 13 percent (Gallup)

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