(C) Evan Vucci
President Biden met with Federal Reserve Chair Jerome Powell on Tuesday.
WASHINGTON — With his approval ratings worrisomely low and gas prices at record highs, President Biden launched a new monthlong effort Tuesday to tell Americans that the economy is stronger than they think and that he has a strategy to tackle its most glaring problem: inflation.
Biden rolled out a three-part plan to bring down rising prices, met with Federal Reserve Chairman Jerome Powell to discuss the economy, and dispatched his top officials to make TV appearances — 20 on Tuesday alone — and argue that the administration’s policies are not driving high inflation and have strengthened the US economy enough to weather it.
“Americans are anxious. I know that feeling. I grew up in a family where it mattered when the price of gas or groceries rose,” Biden wrote in an opinion article in the Wall Street Journal Monday. “But the American people should have confidence that our economy faces these challenges from a position of strength.”
Democrats are anxious about the political implications as soaring prices for gas, groceries, and other products have pulled down Biden’s approval rating less than six months before congressional midterm elections. Republicans have been hammering Democrats for annual inflation that is running near a four-decade high, and some Democratic lawmakers and strategists have pushed the White House to do a better job explaining the economic progress the country has made since Biden took office.
Even as Biden reiterated that tackling inflation is his top economic priority, he stressed the positives in the economy. He noted in his op-ed that the United States has added 8.3 million new jobs since he took office and the unemployment rate has fallen dramatically, to 3.6 percent in April, while other economic indicators are similarly positive.
But as the Fed has begun aggressively hiking its benchmark interest rate to tamp down inflation, Biden and administration officials sought to prepare the country for slower economic growth after a boom last year fueled in part by Democrats’ $1.9 trillion American Rescue Plan. Republicans blame the spending for igniting inflation.
“Our economic growth should look different than it has in the historic recovery phase,” Brian Deese, director of the White House’s National Economic Council, told reporters Tuesday. “We’ve run this first leg of the race in a very rapid clip . . . but this is America and we have to move and shift to stable, resilient growth.”
Biden said the most important factor in making a successful transition is to bring inflation down, which he proposes to do with three steps.
First, Biden promised he would not try to influence the independent Fed on policy moves to fight inflation as some previous presidents have done, even though the central bank’s actions could trigger a recession. President Richard Nixon pressured the Fed behind the scenes in the early 1970s to stop raising interest rates. And President Donald Trump publicly criticized Powell for doing the same thing in 2018, at one point declaring the Fed was “going loco.”
The second prong of his plan calls for initiatives to make prices more affordable. Biden pointed to the large release of oil from strategic petroleum reserves in the United States and elsewhere that he coordinated this spring to try to bring down gas prices. Near-term oil futures prices dropped about 7 percent after the announcement of the releases. Biden also said Congress could help by passing administration proposals, such as clean energy tax credits and allowing Medicare to negotiate for lower prescription drug prices. But those measures have been stalled in Congress.
And finally, Biden said reducing the federal budget deficit by making tax changes, including increasing the rates paid by billionaires, would reduce inflationary pressures. Last week, the Congressional Budget Office projected the deficit would decline this fiscal year to about $1 trillion from $2.7 trillion last year as spending on pandemic assistance subsides.
“Our focus right now is what is the right policy to bring prices down without sacrificing all the economic gains we’ve made,” Deese said. Inflation is a problem around the world, he added, pointing out that the annual rate hit 8.1 percent in the eurozone, the highest level since the European Union adopted the joint currency in the late 1990s. In the United States, the consumer price index rose at an annualized rate of 8.3 percent in April over the previous 12 months.
“There is no question that the global economy right now faces a range of significant challenges,” Deese said. “Inflation is the first among them.”
The Fed is the government’s primary inflation fighter and Biden invited Powell to the Oval Office on Tuesday for a meeting that included Deese and Treasury Secretary Janet Yellen. In brief public remarks before the meeting, Biden said Powell and other Fed officials have “a laser focus on addressing inflation,” just like he does.
But Biden said his job was to nominate highly qualified people to the Fed and then “give them the space they need to do their job.”
“I’m not going to interfere with their critically important work,” Biden said. He nominated Powell for another four-year term as chairman and the Senate recently confirmed him, along with three other Biden picks for the Fed’s seven-member board.
Powell has said the Fed is determined to bring inflation down. He’s acknowledged “there could be some pain involved,” but said he believes it can be done without causing a recession, in what he termed a “soft or softish” landing.
Many economists aren’t so sure, warning that the risk of a recession in the next year is getting uncomfortably high. And consumers aren’t feeling confident about the direction of the economy. Gallup said Tuesday that its Economic Confidence Index declined in May to its lowest level of the pandemic. Only 14 percent of adults said economic conditions were “excellent” or “good,” while 46 percent described them as poor and 39 percent said they were “only fair.”
Republicans said Biden’s policies have caused high inflation even though prices are soaring globally, particularly after Russia’s invasion of Ukraine.
“Under Biden, inflation and gas prices have only gone up and families are struggling to afford basic needs as a result,” Ronna McDaniel, chair of the Republican National Committee, said in a statement Tuesday. “Despite what Biden and the Democrats say, the economy is declining steadily on their watch as families can’t afford everything from gas to groceries.”
The Biden administration disagrees and will send out Yellen, Deese, and other officials to make the case this month. But at the White House on Tuesday, the challenges the administration has faced to break through with its economic message were on display amid another day of competing news events.
Biden met with New Zealand Prime Minister Jacinda Ardern and the two talked about how to deal with mass shootings and climate change. Then the White House hosted K-pop sensation BTS to discuss Asian inclusion and address anti-Asian hate crimes and discrimination.
Before the singers met privately with Biden, they attended the White House press briefing, drawing a standing-room-only crowd before Deese took to the lectern.
“So I get to go home and tell my kids that BTS opened for me,” Deese said.