Will rising prices sink Biden’s midterm hopes for Democrats?
In the days leading up to the release of the US labor department’s latest inflation report, the White House tried to deflate expectations. White House officials said they expected the March inflation rate to be “extraordinarily elevated” because of rising gas prices, driven largely by war in Ukraine.
Unfortunately for Joe Biden and his fellow Democrats, they were proven right. The inflation report, released on Tuesday, showed US prices increased by 8.5% between March 2021 and March 2022 – the highest level of US inflation since 1981.
The White House tried to downplay concerns last year by arguing price increases were caused by the coronavirus pandemic and would prove “transitory”. Now, more than a year after vaccines became widely available, Democrats are grappling with how to help families struggling under the weight of inflation. Centrists and progressives alike warn that unless Democrats come up with an effective plan, Republicans could be on the way to a historic victory this November.
Democrats’ prospects in the midterm elections were already considered lackluster at best. The president’s party usually loses seats, particularly the House, in midterm years. Democrats have very little margin for error, given slim majorities. Biden’s approval rating, in the low 40s for months, is not helping matters.
Republicans are clearly aware of the opportunity they have. On Tuesday, hours after the inflation report was released, the Senate minority leader, Mitch McConnell, said the “atmosphere for Republicans is better than it was in 1994” – when the party flipped eight Senate seats and gained a net of 54 House seats.
“From an atmospheric point of view, it’s a perfect storm of problems for Democrats because it’s an entirely Democratic government,” McConnell said.
Voters’ concerns over inflation are certainly contributing to Democrats’ electoral woes. A CNBC poll this month showed 48% of Americans chose inflation as the number one or two issue facing the country, making it the most common answer among respondents.
“This issue is top-of-mind for voters,” said Kelly Dietrich, chief executive of the National Democratic Training Committee, which trains candidates. “I think it’s going to stay top of
mind because it directly affects them every day. And successful candidates need to address it directly.”
The White House has tried to deflect criticism over inflation by blaming high gas prices on Vladimir Putin and the war in Ukraine. Speaking in Menlo, Iowa, on Tuesday, Biden noted that more than half of the March inflation was caused by the rise in gas prices.
“Even as we work with Congress, I’m not going to wait to take action to help American families,” Biden said. “I’m doing everything within my power, by executive orders, to bring down the prices and address the Putin price hike.”
Biden has indeed taken steps to curb gas prices. He announced on Tuesday that his administration would approve an emergency waiver to expand use of biofuels, and he has pledged to release a million barrels a day from the US Strategic Petroleum Reserve, for the next six months.
But the price increases the country has seen extend well beyond gasoline, and economists warn that inflation will probably remain elevated in the coming months.
Austan Goolsbee, an economics professor at the University of Chicago who chaired the Council of Economic Advisers under Barack Obama, said: “There are two questions. One is, is this peak inflation? But even if it is peak inflation and the numbers are coming down, what are they going to come down to?”
Goolsbee noted that so-called “core inflation”, which excludes the more volatile prices of gas and food, rose by just 0.3% last month. That increase was less than most economists expected, providing some hope of inflation cooling off in the near future.
“That was a welcome surprise, but I don’t think anybody should kid themselves,” Goolsbee said. “There’s a long way to go before prices, inflation would be anywhere considered back to normal.”
For Democrats, that likelihood means their approach has had to change. Instead of claiming price increases will prove temporary, Democrats are acknowledging the reality of tightened budgets and trying to make a case for how they can help.
“The good news is the entire Democratic party is very focused on inflation,” said Gabe Horwitz, senior vicepresident of the economic program at Third Way, a center-left thinktank. “We are well past this time last year, when there was a question over whether it was going to be transitory or not. It’s here, it’s real, it looks like it’s going to stay at least for a little while.”
As Democrats look ahead to November, strategists are urging candidates to pitch an economic vision that will both improve working Americans’ finances and mobilize voters.
“First and foremost, American families need help,” Dietrich said. “Secondly, to get them more help Democrats need more wins to improve our standing to continue these policies.”
But enacting those policies has proven difficult. The Build Back Better Act, a $1.9tn package that included provisions to lower healthcare and childcare costs, stalled in the Senate due to opposition from Joe Manchin, a centrist Democrat.
The West Virginia senator has been outspoken about his frustrations over high inflation, criticizing fellow Democrats who call for more spending as prices rise.
“Here is the truth: we cannot spend our way to a balanced, healthy economy and continue adding to our $30tn national debt,” Manchin said on Tuesday, in response to the latest inflation report.
Manchin’s stance has outraged progressives, who insist high inflation underscores the urgent need to pass Build Back Better and provide assistance to families.
“Americans are being price-gouged. Inflation is hitting their bottom line, and the number one job of any politician is to raise the standard of living of their constituents,” said Joseph Geevarghese, executive director of the progressive group Our Revolution.
Looking ahead to the midterms, Geevarghese added: “It’s already going to be very difficult to win, I think. And then you’ve got the obstructionists who are making it harder for the president and our party to prevail.”
Horwitz said he remained optimistic that Democrats will be able to pass some version of Build Back Better that will lower costs for families. Manchin has indicated he would be open to a proposal if it did not add to the federal deficit. That would require Democrats to further trim spending but could give them a victory to sell to voters.
“You can do both,” Horvitz said. “You can have a plan that raises a significant amount of money by changing the tax code, and you can use some of that money to pay down debt and deficits. And you can use some of that money for programs that alleviate inflation and help consumers.
“It is not a slam dunk, but it is something that could happen. We’re going to know more in the next two months about how likely that is.”