Biden’s “Inflation Is Transitory” Came One Year Ago: He Was Dead Wrong

A few minutes before midnight Saturday, President Biden walked back to the White House through the humid summer heat, stopping briefly to respond to shouted questions over the din of Marine One’s whirling helicopter blades and still distant thunderstorms. A reporter asked, will inflation go down?

“I’m hoping,” Biden replied. And so is everyone else at the White House.

Outside economists warned last July that high prices were a sign of high inflation. “But that’s not our view,” the president said a year ago today. He consulted with his economists, reviewed their charts, and Biden waved away the alarm bells.

“Our experts believe, and the data shows,” Biden said, “that most of the price increases we’ve seen were expected and expected to be temporary.”

The numbers the president was reading when he offered that optimistic forecast showed an annualized inflation rate of 5.4%. The latest numbers, figures from June of 2022, show an inflation rate of 9.1% – the fastest pace in four decades and the defining challenge of an increasingly beleaguered presidency.

From the president to his press secretary, the White House insisted that long-term inflation was unlikely. And the word they started using last summer to describe the phenomenon they hoped would be temporary was “transitory.” Inflation has instead stayed high for 13 back-to-back months. In that time, the administration blamed a number of causes, from the lingering pandemic to a land war in Europe.

Jen Psaki, the former White House press secretary, told reporters last November that coronavirus, and its challenges, were “the root cause of inflation.” The next month, when inflation climbed to 6.8%, Biden predicted that the country had finally reached “the peak of the crisis.” When Russian tanks started rolling across Ukraine in March of 2022, the president described rising food and gas prices as “Putin’s price hike.”

Whatever the cause, or more than likely the multiple causes, the administration stopped calling inflation temporary. Since last spring, the president has said that tackling rising costs would be his “top priority.”

And Jared Bernstein saw some good news on that front. The president’s economic adviser brought a chart of gas prices to the briefing room on Monday and told reporters that he expects the price-per-gallon will drop below $4 in some parts of the country. The national average had dropped 50 cents over the past month, thanks in part to historical releases from the Strategic Petroleum Reserve. Bernstein reported that for the average American driver, that would amount to a savings of “about $25 per month” compared to the June peak.

Those savings haven’t yet changed the attitudes of American consumers. A new CNBC survey found that 75% of middle-class households, those making between $30,000 and $100,000, believe their earnings are falling behind the cost of living. Another 77% in that income bracket expect the country will be in a recession by the end of the year. And they aren’t alone. Jamie Dimon, the CEO of JPMorgan Chase and an ally of this administration, has been warning since last month that investors “better brace” for an economic catastrophe.

Not Bernstein, though. Back in the briefing room, the president’s economist pointed to low unemployment numbers and strong consumer spending as “anything but recessionary.” And as far as the old transitory talking point was concerned, he said that was an error in language.

“I think the lack of specificity about the cadence that was implied by that word, the temporal cadence implied by that word, led to a level of ambiguity that wasn’t serving the debate very well,” he explained.

To conservatives like Rep. Jim Banks of Indiana, the real problem was that “Democrats are too disconnected from working Americans to treat inflation as an urgent political issue.” The chairman of the Republican Study Committee, the largest conservative caucus on Capitol Hill, told RealClearPolitics that the issue transcended the midterms or even the next presidential election. “Inflation,” Banks predicted, “will stain their entire party for decades.”

The most stinging criticism doesn’t come from the right, though. Larry Summers warned for months that trillions in COVID relief spending risked overheating the economy and driving up inflation. Still, the White House didn’t listen to former President Obama’s longtime economic advisor. They aren’t listening now either, as Summers, the economist who got inflation right, is warning a recession is on the horizon.

The administration is not without introspection, however. In May, Treasury Secretary Janet Yellen admitted that she had underestimated and downplayed the possibility of increased inflation. One of the most prominent voices insisting inflation would be temporary, Yellen later said on CNN that she was “wrong then about the path inflation would take.” Of course, some things were yet unknown when she offered that view, namely how war would disrupt global markets. The Treasury secretary said there were subsequent “unanticipated and large shocks to the economy.”

What was expected, at least among Republicans, was that massive spending, trillions in COVID stimulus and then in an infrastructure package, would increase the money supply to an unsustainable amount. “In June 2021, Biden said, ‘if it turns out that what I’ve done so far – what we’ve done so far – is a mistake, it’s going to show,’” Sen. Marsha Blackburn said, rewinding the tape and reading from the president’s past remarks. “Americans are seeing firsthand,” the Tennessee Republican told RCP, “just how big of a mistake Joe Biden’s presidency has been for our country.”

During those same remarks last June, the president predicted that inflation numbers would “pop up a little bit and then go back down.” Given that the administration had previously misjudged the threat of inflation, how confident should the public be in their future economic assessments?

“Let me ask you to focus on what we’re trying to talk about today, which is something that is happening in the here and now,” Bernstein told RCP, pointing to the chart of dropping gas prices behind him.

“We’re talking about what has happened in the past 34 days to prices at the pump. They’ve fallen 50 cents, and you heard me go through some of the numbers regarding the relief for American drivers. At the same time, we are not stopping there. Okay? This is nothing close to a victory lap because we have much more to do to achieve the president’s agenda,” he added before calling on Congress to pass new spending measures to decrease the cost of prescription drugs and boost investment in the domestic production of microprocessors.

According to the president’s economist, those reforms are part of the long game. “To be clear, that’s not a near-term intervention that’s going to show up in the next couple of months,” Bernstein told RCP, “but longer-term absolutely.”

Certainly, the temporal cadence of those potential reforms, implied or otherwise, is yet to be determined. Meanwhile, Biden and everyone else in his administration hopes inflation will come down already.

Biden Commits To Declaring A Climate Emergency In Coming Days

President Biden made it clear he intends to declare a Climate Emergency in the days ahead. What might that look like?

A formal declaration would open up new possibilities for unilateral action by the executive branch to combat climate change, including halting U.S. crude oil exports and offshore drilling. Biden could even redirect military funding to the construction of renewable energy projects — much as former President Donald Trump diverted more than $18 billion in Pentagon funding to build a wall on the U.S. border with Mexico — and impose trade penalties on countries that permit deforestation, such as the destruction of the Amazon rainforest in Brazil.

But such creative use of the relevant federal law would also undoubtedly trigger lawsuits from fossil fuel companies and Republicans.

On Monday evening, Sens. Jeff Merkley (D-OR) and Sheldon Whitehouse (D-RI) held a press conference to ask Biden to explore a range of actions to reduce climate pollution. Many of these, such as using the Defense Production Act to build up domestic clean energy manufacturing capacity, are extensions and expansions of moves Biden has already begun to make.

“There is probably nothing more important for our nation and our world than for the United States to drive a bold, energetic transition in its energy economy from fossil fuels to renewable energy,” Merkley said.

“My state is in crisis,” he said. “We have massive droughts that are destroying our farmers. It’s affecting our forests. We have the red zone pine beetles killing the pine trees. We have the forest fires … all have made a huge impact on our fishing, both in our streams and offshore.”

One thing is clear to all: the left in Congress is pushing this president as far as possible regarding Climate Change. If a national declaration is declared, it will certainly (and immediately) create a spike in inflation — which is already high and growing daily — that dwarfs any in U.S. history.

The fossil fuel industry will almost certainly implode with such a declaration. There’s no need to tell you how that will impact your wallets, refrigerators and pantries, and even your employment. If we thought gasoline at $5.00 was bad, with a Climate National Emergency and Biden doing his thing regarding fossil fuel, we will almost certainly see gas at $10 per gallon.

One thing is absolute if Biden goes down that path: Our so-called “transitory” inflation will blow through ALL previous inflationary periods experienced in the United States and will cripple our people, institutions, businesses, and every segment of our lives. “Bidenflation” will be forever emblazoned on U.S. history as the “worst” period of the economic history of our country.

Summary

In short, the United States does not “need” a Climate Emergency Declaration. The U.S. cannot afford such a declaration. And it will destroy American jobs and companies. How can this president lead every economic speech he gives with his plans for the economy will “create new American jobs?” NOTHING he has done during his eighteen months in the White House has created jobs. The job numbers that were climbing for a while were NOT new jobs, just COVID-pandemic workers going BACK to work. Those are NOT new jobs.

I know that the GOP is pushing hard to regain control of Congress. For conservative Americans — and many who have lived on the “left” but are headed across the aisle — snatching control of the House and Senate is a must.

If that happens, prepare for a Biden impeachment process to quickly materialize in the House. But, even with a successful impeachment and removal of Biden from the presidency, don’t expect quick positive responses in our economy. Biden and his egregious and authoritarian rule have pushed the U.S. to the brink.

Speaking of “authoritarian rule,” here’s a thought: why don’t you compare all of the unilateral actions taken by former President Trump, the details of each such action he took, and compare those to the actions of Joe Biden since he was inaugurated. Then liken all that to the “typical” definition of what comprises an “authoritarian” in government leadership. Here, I’ll help you. The definition of “authoritarian” is “of, relating to, or favoring blind submission to authority; of, relating to, or favoring a concentration of power in a leader or an elite not constitutionally responsible to the people.”

There’s no doubt Donald Trump issued numerous executive orders while in office. But, not a single one had anything to do with unilaterally spending ANY money, let alone hundreds of billions of dollars. Compare that to the executive actions taken by President Biden in his first eighteen months in office.

By ANY previous or current definition of “authoritarian,” NONE apply in any way to Donald Trump. EVERY ONE of those definitions apply to Joe Biden.

“When a President thumbs his nose at the U.S. Congress and simply does whatever he wants — that Congress REFUSED to pass — that IS the action of an authoritarian. That’s Joe Biden.