Rising cost of groceries, gasoline and rent could put Democrats’ legislative agenda at risk; Republican Party sees ‘gold mine’
WASHINGTON—Stubbornly high inflation is putting the Democratic Party’s legislative agenda and political fortunes at risk, pressuring the White House and prompting it to stress its efforts to fight rising costs.
As a key inflation benchmark hit a three-decade high last week—consumer prices jumped 6.2% in October, the fifth-straight month of increases of 5% or more—President Biden began peppering talking points with measures his administration is taking to combat higher prices on groceries, cars, gasoline, rent and medical care.
The president and his team maintain inflation is transitory and will ease sometime next year. But the expanded messaging over the past week underscores the risk that disruptions from surging demand and supply-chain constraints could become kitchen-table issues for voters.
“Consumer prices remain too high,” Mr. Biden said during an event in Baltimore on the day of the CPI release. “Everything from a gallon of gas to a loaf of bread costs more. And it’s worrisome, even though wages are going up.”
Much is riding on the rising fears of inflation. It has emboldened Republican Party opposition just as Democrats are gearing up to follow the recent passage of a $1 trillion bipartisan infrastructure bill with $2 trillion social-spending and climate legislation, but with only the support of the Democratic Party’s thin majorities in both chambers of Congress. These bills come after Democrats pushed through a $1.9 trillion Covid-19 aid package earlier this year over GOP opposition.
The White House has long said that it sees inflation as tied to a number of short-term problems with supply-chain bottlenecks. It is touting recent steps to ease shortages that it says are tied to the pandemic. Administration officials, meanwhile, have highlighted other positive economic indicators, like strong wages and job growth, and pointed to sectors where prices had fallen to indicate the problems are limited.
Asked if prices would be down by next fall, Treasury Secretary Janet Yellen said in an interview aired Sunday on CBS’s “Face the Nation” that “it really depends on the pandemic. The pandemic has been calling the shots for the economy and for inflation. And if we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do.”
She added that if issues around labor supply and demand normalize—and “I would expect that if we’re successful with the pandemic to be sometime in the second half of next year—I would expect prices to go back to normal.”
Corporate executives have begun citing inflation worries in their quarterly calls with investors. “Inflation is now a top-tier concern for the U.S. business community,” said Neil Bradley, chief policy officer at the U.S. Chamber of Commerce. “The administration needs to start evaluating all of its policies in terms of the near-term inflationary impact.”
Further pressure is coming from financial markets, which have grown skittish. An emerging consensus among investors now expects the Federal Reserve to raise interest rates in 2022, rather than 2023 as originally anticipated.
“You can see what’s going to happen next. We’re going to continue to have inflation, and then interest rates will go up,” said Sen. Rick Scott (R., Fla.), who heads the GOP’s Senate-campaign arm and has for months sought to call attention to inflation.
“This is a gold mine for us,” Mr. Scott said.
Republicans argue the Democrats’ social-spending bill would aggravate inflation by injecting trillions of dollars into an overheated economy. They say they see these issues as powerful political arguments heading into next year’s midterm elections, when Mr. Biden’s party is at risk of losing legislative power.
Democrats currently have a narrow majority in the House and control the evenly split Senate because Vice President Kamala Harris holds the tiebreaking vote. And yet even some within the president’s own party are sounding the alarm over the dangers price increases pose to the economy.
Sen. Joe Manchin, (D., W.Va.), tweeted this past week that “the threat posed by record inflation to the American people is not ‘transitory’ and is instead getting worse.” Mr. Biden needs Mr. Manchin’s vote for the social-spending and climate bill, and can’t afford to lose any Democratic votes because of the party’s narrow control of the Senate.
White House officials say their legislative plans won’t add to the inflation problem because the proposal to pump funding into education, healthcare and the environment is a long-term investment, meant to be spent slowly over the next decade and mostly paid for through tax increases. They say the proposed legislation, which Republicans are expected to unanimously oppose, will ultimately lower prices and increase productivity.
“We continue to bet that as the economy recovers, as the pandemic abates, as a lot of the work that we’re doing to unclog supply chains and make them higher velocity and more fluid, as those things happen these pressures are going to abate,” said Mike Pyle, chief economic adviser to the vice president.
Public approval of Mr. Biden’s management of the economy has declined. An October NBC News poll showed that 57% of Americans disapproved of Mr. Biden’s handling of the economy, compared with 40% who approved. An April NBC News poll found 52% approved of his handling of the economy and 43% disapproved.
White House press secretary Jen Psaki on Friday argued that inflation has become a “political cudgel,” adding that inflation was expected to “substantially decelerate next year.”
Democratic pollster Jeff Horwitt said that frustration with the economy is contributing to Mr. Biden’s declining poll numbers. “As the economy goes, so goes Joe Biden and right now people are not happy with how things are going economically and I think we see that in his job rating.”
Mr. Horwitt said it was important for Mr. Biden to show that he is trying to address economic anxieties by passing his legislative agenda and notching “victories that are tangible and meaningful to voters.”
According to AP VoteCast, a survey of 2,655 registered voters in Virginia, more than a third of the state’s voters said the economy and jobs were the most important issues in the gubernatorial election there earlier this month.
Former Democratic Gov. Terry McAuliffe lost a bid to retake his old job to political newcomer Glenn Youngkin, a Republican. In a state where Mr. Biden beat Mr. Trump by 10 percentage points in 2020, a majority of voters disapproved of the current president’s performance.
Chris Taylor, a spokesman for the House Democrats’ campaign arm, said Mr. Biden’s efforts to ease supply-chain hurdles “will help reduce costs for working families” and argued that the infrastructure and social-spending bills represented “anti-inflationary investments in America’s future.”
Write to Catherine Lucey at [email protected] and Alex Leary at [email protected]