It may have created unrealistic expectations about lowering inflation.
“Democrats Spent $2 Trillion to Save the Economy: They Don’t Want to Talk About It,” groused the New York Times on October 16.
Well, that’s probably because inflation has, very inconveniently, only increased since Democratic lawmakers passed the Inflation Reduction Act.
“When will the Inflation Reduction Act start reducing inflation?” is a question White House Spokesperson Karine Jean-Pierre is getting a lot these days, and not just from the right.
The answer is: Not until at least next year. And that’s if it works at all.
Not everyone was convinced it would work back in August; even fewer are as confident now.
“The U.S. economy is at a dangerous crossroads,” warned a group of concerned economists on August 3, 2022, in a letter sent to House and Senate leadership. “Forty-year high inflation is causing immense strain for households and small businesses, and it is prompting steep interest rate hikes that, while necessary to counter fiscal policy excesses, increase the chance of a deepening recession.”
“As such, taming inflation must be the top short-term economic policy to avoid further economic decline and hardship,” they advised strongly. “Unfortunately, the inaptly named ‘Inflation Reduction Act of 2022’ would do nothing of the sort and instead would perpetuate the same fiscal policy errors that have helped precipitate the current troubling economic climate.”
“Here’s a problem, I think, for you and Democrats: Despite all the good economic news- low unemployment, record job creation, wage increases, Social Security cost of living adjustment to 8.7%, the highest in 40 years,” MSNBC host Jonathan Capehart began gently during an interview with President Joe Biden on Friday.
“And yet, poll after poll shows that the American people trust Republicans on the economy and think that Republicans should control Congress,” Capehart said before asking the President the question on the mind of every Democratic Party strategist in the country: “How do you break through that?”
“I’m not sure about the polls,” began President Biden in response. “Because the way people conduct polls today, it’s hard. 90% of it is you get on the telephone where you have to call seven times to get somebody to answer the phone, number one.”
“Number two,” the President continued: “A lot of what we’ve done and we’ve passed has not kicked in yet. For example, we have all this money to rebuild the highways, bridges, Internet, etc., but it’s going to take time. It’s not all happening overnight. It’s not like we passed a law and all of a sudden the highways and bridges are all functioning. And it’s not like we’re in a position where we’re saying no senior — which we do — is going to have to pay more than $2,000 a year for their drug costs…it hasn’t kicked in yet. It doesn’t kick in until next year.”
According to Democrats, the Inflation Reduction Act will begin reducing inflation very soon and voters should trust them. If these weren’t the same authorities who only yesterday said, “inflation would be transitory,” and, “no one is even talking about a recession”, these optimistic assertions might be more readily believed.
Since inflation was dismissed as transitory, it has continued to rise spectacularly. Bloomberg just predicted the likelihood of a recession in 2023- a mere two months away- at 100%.
“Inaptly named Inflation Reduction Act may come back to hurt Democrats in midterms,” predicted Joe Concha for The Hill on August 10, 2022.
“On cue, many in the media hailed the bill as a huge win for the Democratic Party and President Biden,” wrote Concha. “Bloomberg Editorial Board: ‘New Budget Deal Would Be a Big Win for Congress — and the Country’; NPR: ‘Inflation and climate change tackled in new Senate deal that Biden calls ‘historic’; Associated Press: “Dems seem headed for climate, health win after ups and downs’.”
“So, when Election Day comes, will the Inflation Reduction Act turn the tide for the Blue Team?” asked Concha. “That all depends on whether inflation appears to be coming down and gas prices continue to fall.”
That doesn’t appear to have happened. No one in the press seems much happy about it. Media outlets are vacillating between acting shocked and giving recommendations.
“Why Is High Inflation Proving So Persistent?” complained the New Yorker last week.
“A Memo to Democrats: We will win this election if we convince voters we care about their economic well-being,” concluded The American Prospect succinctly on October 21, 2022.
“The four of us have been around politics a long time,” began Patrick Gaspard, Stanley B. Greenberg, Celinda Lake, and Mike Lux in the article. “We have been a part of some of the Democratic Party’s biggest victories; we have seen some big losses.”
“In the 2022 election, things are as close as we have ever seen them. But we are right on the edge of overcoming historical trends and other factors weighing us down, and winning a decisive victory,” the authors continued on an optimistic note.
“What we have to do, though, is end on a strong economic argument,” they implored. “Democrats need to understand that we have a winning message on the economy and inflation. But rising costs will beat us if we avoid the issue.”
Nor are rising costs likely to cool over the next 20 days.
If anything, the prices struggling American consumers are paying for goods are likely to go up between now and Election Day.
Yes, the U.S. is currently enjoying a temporary dip in gas prices at the pump. At least, today’s prices are down from the ghastly $5-per-gallon highs the nation experienced in June.
But drivers are already nervously eyeing gas prices ticking up in bellwethers like California and Arizona. And consumers have much bigger problems than pain at the pump.
“Joe Biden’s Big Diesel Problem,” as the Intelligencer patiently explained on Thursday, is that diesel fuel still costs twice as much as regular gas. The price of diesel has not dropped much.
Since diesel fuel is used to ship all the goods we buy from cereal to laundry detergent, higher diesel prices translate directly into higher prices- on everything- at the store.
Currently, most ordinary working-class households are in no financial position to afford a $50,000+ new electric car, even if interest rates weren’t being raised at this very moment and the price of new cars hadn’t swollen right along with everything else.
And even if consumers were willing and able to make the switch tomorrow, the majority of electricity in the U.S. is still being generated by burning fossil fuels: Coal, natural gas, and petroleum.
But average working-class households are a million times closer to converting to electric vehicles than the shipping industry. For 18-wheeler big rig trucks, ubiquitous on every highway in America, there is absolutely no electric or sustainably-fueled alternative available in existence.
There just isn’t.
Americans could start manufacturing goods and growing food a little closer to home…if a short-sighted glut of globalization hadn’t spent the past few decades dismantling, off-shoring, and outsourcing the nation’s factories and farms.
Reducing the length of a 10,000 global supply chain dependent on petroleum and vulnerable to conflicts equally far away is closer, perhaps, than an all-electric 18-wheeler.
All told, the Inflation Reduction Act may have been a mistake in branding. It sounded good at the outset, but it may have given voters an unrealistic expectation of what even the most competent government could accomplish in a very short time.
It might be equally difficult for voters to understand how infrastructure projects like roads, bridges and the Internet translate into lower inflation.
Fair or unfair, Democrats are running out of time to make good on their campaign promises.
(contributing writer, Brooke Bell)