Biden team sees few options on inflation ahead of November midterms

A gas pump is inserted inside an Audi vehicle at a Mobil gas station on Beverly Boulevard in West Hollywood, California, U.S., March 10, 2022. REUTERS/Bing Guan

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WASHINGTON, May 16 (Reuters) – The Biden administration increasingly feels it has little control over near-term inflation, officials say, and is looking for ways to offset political risk from the rising prices in the months leading up to the November elections.

Last week’s data showed inflation was still at a 40-year high, but slightly off an earlier peak. The economy and Biden’s handling of it are major issues for voters, and lowering the cost of meat, gas and other basics is a key way for Biden and his fellow Democrats to advocate. control of Congress in November’s midterm elections, strategists say.

But the ability of any US president to cut short-term prices in world markets for commodities ranging from oil to grain is limited, White House advisers say. Even further out of reach is leverage over supply chain bottlenecks related to China’s COVID shutdowns and Russia’s invasion of Ukraine, both of which are driving up prices. they say.

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The administration expects inflation to slow further from its recent blistering pace as the year progresses, advisers said, but not to a level that would be considered acceptable.

In response, the White House, which until recently characterized the surge in inflation as transitory, has developed a three-pronged strategy: acting as aggressively as possible on prices it thinks could impact margins, stressing the role of Russian President Vladimir Putin and the pandemic, and attack Republicans, suggesting that their economic policies are worse.

The untested shift in messaging comes after some Democrats told the White House he was too slow to take the political issue of inflation seriously. Democrats say it’s too early to tell whether the new message will sway voters.

“There’s been over-promise and under-delivery,” said Jason Furman, a Harvard University economics professor and former senior adviser to President Barack Obama. “Now the message is more realistic.” But he said it was unclear whether the new message would satisfy voters.

Political strategists say it’s important for President Joe Biden to communicate empathy and action even in the absence of good options as an otherwise divided Republican Party unites to attack the president over the “biddenflation”. “They need to communicate that families are struggling, but here’s what we’re doing today,” said Democratic pollster Celinda Lake, who added that focus group voters identified the issue as a critical issue to be addressed for the Democrats. “Just being relentless in doing something every week, every day on these issues.”

Republicans blame Biden’s $1.9 trillion U.S. bailout and other policies for fueling inflation, though prices started to jump before he took office and the phenomenon has been global.

EXECUTIVE ORDERS, COURIER

For its part, the Biden White House has criticized the companies for making record profits and carrying out stock buybacks while charging high prices. He has also tried to increase competition in industries such as meatpacking, partnered with retailers to unlock supply chains at ports and railroads, and freed up oil from reserves. strategies to try to lower prices.

The White House’s strategy ahead of the Nov. 8 election is to identify and use as many executive actions as possible to relieve Americans struggling with high costs.

Future actions could range from student loan relief to gas tax exemptions and health care subsidies.

But some policies could turn out to be double-edged swords. Cutting student loans helps borrowers but increases inflation for the economy as a whole, Furman said.

Other potential measures, in particular cutting import tariffs, would reduce costs somewhat, but carry their own political risks and may not significantly change the fundamental dynamics of inflation, officials said.

What’s on the menu? Immigration reform. Biden proposed a comprehensive reform package in 2021 that would have allowed more workers to fill national labor shortages that have raised wages and prices, but the legislation failed to pass Congress.

Restrictive immigration policies enacted under the previous administration have been retained by Biden, including COVID-19 restrictions. Policy changes prevented some 3.4 million additional immigrants from entering the United States from 2016 to 2021, according to calculations by the Federal Reserve Bank of Kansas City, contributing to labor shortages. work.

Biden will continue to emphasize the Fed’s role in controlling prices, officials said. He will also underline his support for the central bank’s decision to raise interest rates sharply.

He further plans to highlight the inflationary impact of Russia blocking Ukrainian grain exports and what he sees as the necessary cost of isolating Putin through measures such as restricting the use of Russian oil. , even if they raise prices for Americans.

Meanwhile, Democrats will continue to tell voters that Republicans don’t have serious political plans. Republicans haven’t endorsed any detailed recommendations to tackle inflation, but they support lowering taxes and budget deficits, as well as easing regulations for oil and gas producers.

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Reporting by Trevor Hunnicutt, additional reporting by Howard Schneider; Editing by Heather Timmons, Tim Ahmann and Bradley Perrett

Our standards: The Thomson Reuters Trust Principles.

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