Biden Wants Credit for Economy Worse Than the One He Inherited
Prices are coming down but they're way higher than they were.
WaPo (“Biden seeks political boost from slowing inflation“):
President Biden on Tuesday sought to capitalize on positive economic news that inflation numbers are cooling, arguing that his policies are helping stabilize an economy battered by a global pandemic and a war in Ukraine, after months of facing political derision for rising prices.
“Inflation is coming down in America,” Biden said, declaring it a reason for optimism ahead of the holiday season and the year ahead.
His remarks came after more than a year of Republicans charging that Biden’s free-spending policies helped generate the conditions for near-record-high inflation, and that he then downplayed the effect on Americans by calling the problem “transitory.”
Rising gas prices and food costs, combined with warnings of a recession on the horizon, created a noxious political picture for Democrats ahead of the midterm elections. But the party emerged stronger than expected, and Biden is now seeking to reframe the economic narrative ahead of announcing his own reelection plans early next year.
“Look, I know it’s been a rough few years for hard-working Americans and for small business as well — and for a lot of folks things are still pretty rough,” he said in remarks from the Roosevelt Room at the White House, flanked by top economic advisers. “But there are bright spots all across America. We’re beginning to see the impact of our economic strategy. And we’re just getting started.”
Biden seized on new metrics as he began shaping what could be a message for his 2024 campaign if he runs, as expected, or for his legacy if he steps aside.
Biden spoke a little over an hour after new figures were released by the Bureau of Labor Statistics showing that prices in November rose 7.1 percent compared with 2021, the smallest year-over-year increase in many months. A number of other figures — including “core inflation,” which removes volatile categories such as food and energy prices — also showed smaller increases.
There is still cause for concern. The figures often ebb and flow, and economists prefer to see several months’ worth of numbers before drawing conclusions. Biden, perhaps aware of a potential backlash if he appears to be celebrating prematurely, stressed that he was not declaring mission accomplished.
“As we make the transition to a more stable growth, we could see setbacks along the way as well,” he said. “We shouldn’t take anything for granted.” He added that there is “a lot more work to do.”
Republicans were quick to note that even if prices are rising more slowly, they are still high by historical standards.
The whole thing is rather silly but it’s a game we’ve been playing as long as I can remember—which is quite a long time now: Presidents taking credit for good economic news while insisting the bad economic news isn’t their fault. In most cases, their impact is minimal.
Gas prices are way down, no thanks to Biden. But, then, they went up for reasons mostly not having to do with Biden. (He banned the import of Russian oil, liquefied natural gas, and coal to the United States in response to their illegal invasion of Ukraine, which contributed at the margins. I supported the move.) And, of course, they’re considerably higher now than when he took office. So, it’s hard to give him credit here.
His “free-spending policies” likely contributed to inflation but, again, only at the margins. But prices are up globally as the economy settles down into a new normal after the COVID pandemic shakeup.
Nor is it clear exactly what policies he has enacted that are supposed to have helped bring prices down. The Fed is seemingly trying to force us into recession with massive hikes in interest rates that have already crashed the housing market. But that’s out of his hands.
In Biden’s first two years, he steered several major bills through Congress, starting with a $1.9 trillion economic rescue package and a $1.2 trillion bipartisan infrastructure law. Congress in August also approved a $280 billion measure to expand veterans health care and a $280 billion law to counter China’s economic rise.
One of his signature pieces of legislation this year was labeled the Inflation Reduction Act, even though it had more to do with funding efforts to combat climate change, raising taxes on large corporations and lowering health-care costs.
Conservatives argued that all this spending was paving the way for runaway inflation, even as Biden said it was crucial to provide relief to suffering Americans. And some prominent Democrats, including former treasury secretary Larry Summers, agreed with the conservatives.
On Tuesday, Summers applauded the latest numbers, saying, “The figures are encouraging.” He said he still believes that inflation has its roots in the overstimulation of the economy during 2021, when the Biden administration injected large amounts of spending.
But Biden’s decision to release more oil from the Strategic Petroleum Reserve has helped reduce gas prices, Summers said, and some of the coming investments in semiconductors and infrastructure could spur further economic growth. He also attributed the improving economic outlook to moves by the Federal Reserve to combat inflation, and to the White House policy of not meddling in those decisions.
“These data are encouraging, even as the president recognizes we have a long way to go,” Summers said. “But for the administration’s support for the independence of the Fed as it adjusted policies — and the aggressive use of the Strategic Petroleum Reserve — we could well have been in a much more difficult place today.”
Again, this all presumes much more of a government role in the economy than actually exists in a country with a $23 trillion GDP. It’s easier for a President to screw things up than to fix them.
I like some of Biden’s moves vis-a-vis China from a national security standpoint, regardless of their economic impact. But, as Dan Drezner notes, he’s also repeating many of the ill-considered mistakes of his predecessor. Indeed, “the primary difference between the Trump administration’s foreign economic policy and the Biden administration’s foreign economic policy is that the Biden team is way better at implementing protectionist policies.”
It’s one thing if the Biden team wants to rationalize a strategic decoupling from China: I get that. I even kinda sorta get the principle of defending the national security exemption in Article XXI. Applied properly and judiciously, it’s important that there be such an exception.
Defending the steel and aluminum tariffs, which represented Trump’s crudest, dumbest attempt at issue linkage, is something altogether different. I believe the young people today — the ones most hurt by the higher consumer prices created by this kind of dumb protectionism — would call it “extra.” The claim of a national security threat was always ginned up, particularly since the 2018 action had no effect on imports of Chinese goods — they were already facing steep tariffs.
The Biden administration simultaneously wants to claim that “America is back” from the bad old days of the Trump administration while implementing an awful lot of trade restrictions that target U.S. allies. The inherent tension between these two aims is not going to go away — which means that, from time to time, I will have to remind readers about the logical hole at the center of Biden’s grand strategy. Or as Brad DeLong recently explained to the Financial Times, “The U.S. is now an anti-globalization outlier.’“
He’s doing this for the same reason Trump did: it appeals to certain elements of the voter base. But, while they give the appearance of “being tough” and “doing something” about American jobs being lost to cheap foreign goods, it’s certainly inflationary.
Thank you for highlighting Biden’s bizarre refusal to end Trump’s failed China trade war, needlessly undermining Democrats’ fantasic moves on tech manufacturing competitiveness. Those tarrifs have got to go.
But this headline is, to me, just as bizarre:
“Biden Wants Credit for Economy Worse Than the One He Inherited”
Lol wut? The economy of mass unemployment, mass small business failure, record deficits, record farm bankruptcies, and mass COVID death inherited from Trump is…*checks notes*…worse than today’s economy?
Maybe if you’re one of the billionaires who got richer during the pandemic Trump worsened with his lies and incompetence. Or one of the already-rich welfare queen celebrities, pro athletes, congresscritters, megachurches, or corporations who got
free moneyforgivable loans from the PPP slush fund. (Because the 1% deserves millions in loan forgiveness, while struggling youth looking for a $10,000 student loan writeoff are lazy and entitled or something.)I prefer the economy where businesses are open, Americans are employed and traveling and spending, inflation is lower than in Europe, and bodies aren’t being stacked in freezer trucks.
P.S. Much of our inflation, and price gouging, signals an economy humming with growth activity — in danger of overheating and crashing. It’s not necessarily symptomatic of a bad economy itself. Of course the corporate media doesn’t bother to educate and inform on this. Easier to help the right brainlessly scaremonger on inflation inflation inflation crime crime crime woke woke woke.
Given the fact that inflation does not appear to have dissipated at all in other developed countries, some marginal credit is likely due. Especially since conservatives–despite all evidence to the contrary–blamed GLOBAL inflation on Biden.
Until Americans better understand international economics and how interdependent we are, this will happen.
*shrugs*
@DK: None of this was a defense of Trump, who I voted against twice. I was quite critical of his handling of COVID, in particular. But the economy had mostly rebounded from the pandemic by the end of his term. The only measure that was worse then than now was unemployment—but even that was on a steady downward arc that simply continued before flattening. I do think Biden handled COVID vaccine delivery far, far better than Trump would have. But we were already administering the vaccines by December 2020.
@Jen: Again, I’m mostly bemused by the whole thing. Biden got blamed for things that weren’t his fault so, naturally, he’s going to try to take credit for things that largely aren’t his doing. It’s a longstanding game that I’ve been chuckling over for longer than I’m been writing this blog.
@James Joyner: Everyone knows your disdain for Trump, that needs no disclaimer. The question is defense of the Trump economy (compared to now), not the man himself. I’m not so sure that unemployment is “only” metric better now than in Jan 2021. Supply constraints, consumer spending, bankruptcies, startups, shortages, wage growth, construction, and child poverty are just a few other measures that are better now than then, as far as I know.
I recall the amount of despair and shuttered storefronts still plaguing the landscape in Jan 2021. Don’t see that as having been indicative of a mostly-recovered economy, certainly not better than the growth and activity of Dec 2022. Heck, intercontinental travel didn’t restart in earnest till summer 2021. Indoor concerts, sporting events…were those billion-dollar industries buzzing in Jan 2021?
Yikes, James. Just yikes.
DK brings some of the fact, so I won’t repeat that.
What I find striking is a single throwaway line on the pandemic that has killed millions around the world and caused its largest nation to institute severe lockdowns that have lasted until now. The pandemic that is still killing 500 Americans a day.
The overwhelming tendency on the part of the media and a great many people is to pretend it never happened. That’s sorta emotionally satisfying until you get sick or a loved one dies. But I find it utterly societally baffling. Of course strange things have happened in the economy. I would add education as another place where denial of the pandemic is hurting people.
And yes, none of the pandemic and its economic effects are Biden’s fault. He and his Congress did, however, pass some legislation that helped to deal with those effects. So maybe a teenytiny credit for that?
I see another throwaway line about that little, um, war that Russia inflicted on Ukraine. That might have had a small effect too.
@Cheryl Rofer: Excellent points about the pandemic.
I’ve been wondering about the economic impacts of long covid. I know of at least three people whose health has been so negatively affected that one still isn’t back to full-time work after 8+ months (he was fully vaccinated when he caught covid) and two are no longer working at all. All three were fully employed, high-earners.
@James Joyner:
Depends, I suppose, on which “then” and “now” we are comparing, but another metric that has improved is GDP growth, yes?
I couldn’t find this line in any of the excerpts, so I’m assuming you wrote it.
And I call bullshit.
The “economy” consists of many more metrics than just inflation.
If you substitute “inflation” for ‘economy” in your subhead you would be accurate.
But Biden inherited a dumpster fire of an economy, and it’s gotten rapidly better.
Frankly, you should know better.
GDP in 2020 was -1.5.
In 2021 it was +1.2.
December 2020 jobs – 199,000 and still short over 3M jobs from the start of Trumps botched pandemic response.
Every single month since has been stronger.
The trend was in the right direction, but it was still shit-show.
Today’s economy is better than December of 2020.
https://tradingeconomics.com/united-states/gdp-growth-annual
@daryl and his brother darryl:
Which is why the constant GOP drumbeat about inflation didn’t work in the midterms. People don’t vote on BEA numbers, they vote on how they feel. And they felt fairly comfortable.
I will reinforce a major point from the post: the blame/credit thing for presidents and the economy is silly and is a great illustration of how people, in general, simplify politics.
@Steven L. Taylor: And yet, as we have since WWII, we continue to generally see better economic performance, GDP and unemployment, with a D in the WH and every R prez has presided over the start of a recession. I’ve seen various columnists comment on this. No one seems to know why, but they acknowledge it’s true, and fall back on coincidence. Dr. K, IIRC, did a column and also failed to come up with an explanation. But he was looking for macroeconomic reasons. My guess is that it’s a combination of small ball in the agencies and a lesser tendency to do really stupid non-economic things like, say, invade Afghanistan. We’ve done a series of supply side tax cuts. The only one that worked was Kennedy’s. James quotes Dan Drezner as saying
Why? Because they’re doing it for economic and foreign policy reasons, not to pander to the base and cut their donors taxes.
@Steven L. Taylor:
Which is true.
The sub-head to the post is not…today’s economy is better than December, 2020.
Of course, one reason the ban on import of Russian fossil fuels was so impactful on the average citizen in the US is because of Biden’s day 1 attack on US oil and gas production, shutting down the Keystone thus restricting the availability of Canadian oil on the world market….
But give Biden his respite because come the New Year, it’ll be a full blown depression (in the feelz of journalists). At least in the news media who are facing heavy layoffs at both old and social media. Meta has already announce 11,000 being “laid off”, Amazon another 10k. And those are those companies not waiting until after the holiday for the bad news. Many companies are expected to finally give up the ghost in 2024.
To paraphrase Biden, it’s going to be a winter of death for employment, and hopefully with more impact “Woke” rather than material economy workers.
Even a devout Marxists is starting to see clearly
@JKB: Poor little JKB. It must hurt to see the world prove wrong every stupid thing you believe. Now you’re reduced to fantasizing about a depression just weeks away, apparently because Mark Zuckerberg has thrown away so much money chasing an unworkable new business model that he has to lay off employees.
I’m surprised you’re not citing Musk’s losing billions of dollars as proof of some coming economic calamity.
@JKB:
We produce more oil today than we did when Biden took office.
Keystone was not shut down, and in fact just spilled 500,000 galloons of oil, last week, in Kansas. The Keystone XL was stopped. And rightfully so, considering the recent spillage.
Availability of Canadian oil has not been diminished…it just has to get where it is going via different means. Rail tankers, for instance.
Any other right wing talking points you want swatted away, this afternoon?
What a maroon.
@JKB:
Who in the fuq is Malcom Kyeyune?
I love a party claiming to be by and for the regular people being led by a guy that lives at his own golf course and shits on a golden toilet.
You should be embarrassed by how easily you are conned.
@JKB:
Keystone oil would years to hit the international market. The spike in American gas prices between Spring 2021 and Fall 2022 nothing to do with Keystone, anymore than the current sharp decline in gas prices. Hence why right wing lies blaming gas prices on Biden didn’t work as well as promised, and Republicans lost anyway.
As sound a prediction as that full blown Red Wave y’all insisted was coming.
What will be depressed is the feelz of MAGA Republicans, as sane America continues to recoil from the right’s extremism, lack of patriotism, amorality, indecency, antigay hate, nonstop patholgical lying, climate change denial, trickle down economics, Hunter Biden conspiracy nonsense, and calls for armed political violence.
Keep digging.
@JKB:
That’s 2.5% of Amazon’s corporate workforce. Amazon also has a stack ranking policy, with a goal of removing the lower 6-8% of employees from corporate each year. (Warehouses have such high turnover that they are their own separate issue, and we have heard of no layoffs there because the workforce will automatically downsize)
There is one difference this year — some teams have everyone being given the opportunity to opt-in to the layoff, which is pushing people who were thinking about leaving anyway into getting in on the action. The voluntary attrition rate at Amazon corporate is usually well above 2.5%, and since so many are compensated in part with stock, they have taken a pay cut and may be more likely to jump ship.
So, we aren’t really talking about anything out of the normal range of Amazon’s practices. I’m not saying that they are fiddling with the timing to jack up the stock price because Wall Street loves nothing more than a layoff, but… we haven’t seen anything that indicates it is not that either.
(Also, why didn’t you include Twitter in those recent layoff numbers?)
@JKB: Keystone XL wasn’t even built yet. Stopping construction had zero impact on the availability of dirty tar sands oil to the world market.
@JKB:
Meta has spend $1B on a virtual reality experience that is nowhere near as good as what furries regularly use. Seriously, there are furries who have exercise classes in VR where the skins not only have legs, but also have tails with realistic physics and lag as the person/animal moves about.
(The Metaverse likely scales better than the various furryverses)
Yes, Meta is chopping that down to size. It’s surprising that they hadn’t done so already. It’s not a broader economy issue.
@daryl and his brother darryl:
Note that today, JKB has lined his/her/its pocket with a self-described Marxist! Red Letter Day!!!
Thanks to the Power of Grayskull(tm) and our friends at Giggle and Wokepedia:
https://en.wikipedia.org/wiki/Malcom_Kyeyune
@Gustopher: VRchat was a wonderful experience for years. Watching a vtuber using VRchat to do gymnastics was mind blowing the first time I saw it. The developer has been making poor decisions of late so I’m curious if you’re referring to a different app?
The metaverse thing was a bad joke from day one…
@Flat Earth Luddite: I did a search for the name and saw that it was an artist from Sweden. I stopped there because I couldn’t stop laughing about how JKB is quoting a dude who lives in a “marxist hellhole” and likes it.
Trump once tweeted that he had presided over the largest month-to-month gain in employment in the entire history in the US ever.
He negleclected to say that a month prior was the largest month-to-month job loss ever recorded.
We’d lost 22 million jobs the month prior, the biggest job loss month over month in history. Next month was 5 million plus. Also, the biggest in history. Let’s do the math….
Trump decided to tweet about 5M+ and ignore the previous month. He is that shallow and stupid.
This is why you want a professional communications team in between an idiot President and the “post comment” button.
Better bet is to not elect a prideful idiot as President at all.
One thing to keep in the forefront of our minds is that global supply chains are extraordinarily fragile. One single ship going awry and getting stuck sideways in the Sinai Canal can screw up markets and “normal” distribution of tangible goods for half a year – impact supply and prices in a wave or ripple effect. One war in Ukraine can fuck up the world’s economy. We should know this and fund compensatory counter measures. If we were rational.
The second is that the US is recovering from global inflation much faster and much more solidly robustly than most of the world. Western Europe is suffering far more than we are. Energy costs in Europe are insane because of Russia. There is basically small marginal alternate sourcing for them. They’d bought into Nordstream and are dependent. That was not well thought through. You cannot build a LNG port in a day.
If you think inflation in the US is bad, look at Germany. We took a minor short ding and are recovering. Energy prices there are not sustainable.
The “just in time” system is the most short-sighted and naive basis on which which to base an economy on. Have a back-up. Seriously! One disruption and you are totally fucked. The Malacca Straits, Panama Canal, Suez Canal – if you disrupt those the world economy is crippled soon, fast, hard.
When I was young I expected that systems would harden and become more bullet-proof over time. I was young and naive.
Instead, things became much more interconnected. Interconnectedness is not bad – in fact, an overall good – but it is very vulnerable to disruption.
That is not necessarily bad, but it does mean that political instability effects can ripple madly without a clear means of checking it, macroeconomically. Your quiver might be entirely stymied.
When I was born there was a distinct threat of imminent global thermonuclear war. I participated in duck and cover drills in early elementary school. We mostly giggled at the absurdity. It was a new and fun diversion from the lesson plan. A new experience.
Today, I mostly fret about the fragility of global supply chains. You do not have to launch nuclear tipped missles to fuck up the world, we can disrupt the market of tungsten with a few hundred thousand dollars well placed.