Staff Reports
President Joe Biden recently took a victory lap, proudly proclaiming that inflation has dipped to an astounding 2.9 percent in July, a significant leap from the staggering heights seen just a year ago. However, taking a closer look at the timeline reveals more than just a benign reduction in stats. This little inflation celebration conveniently sidesteps a monumental detail: the inflation rate was a mere 1.4 percent when Donald Trump left office. It seems Biden was so eager to toot his own horn that he momentarily forgot about the massive policies he pushed through that exacerbated the economic situation.
Recall when the Democrats unleashed their $1.9 trillion American Rescue Plan in early 2021? Economists recognized early on that flooding the economy with such a considerable sum of borrowed and printed money would only escalate inflation, especially considering that the economy was already bouncing back from COVID-related shutdowns. Fast forward to the month after the plan’s passage, and consumers found themselves facing a quick jump in inflation to 4.2 percent. Now, the administration wants to take a bow for a slight decline, yet many ignore the havoc that the initial policies wreaked on the economy, which led to inflation peaking at an eye-watering 9.1 percent in June 2022.
President Biden statement on July Inflation Report
"Prices are still too high."
What Biden overlooked from inside July CPI report as he continues to claim the Biden-Harris administration is "making progress fighting inflation"
Eggs soared ▲5.7% in July after dropping ▼0.8%… pic.twitter.com/FYZQDOqueR
— Mona Salama (@ByMonaSalama) August 14, 2024
There was significant fuss made over inflation in the wake of the American Rescue Plan, with former economic wizards sounding alarm bells. Larry Summers, a former Treasury Secretary under Clinton, went as far as warning that this kind of spending would unleash inflationary pressures not seen in a generation. It didn’t take long for him to label the policies as the “least responsible macroeconomic policy” of the past 40 years. He’s not alone—with voices from within the ranks of the Obama administration citing the original sin of inflation as the very stimulus package that Biden touts with pride.
Larry Kudlow, a seasoned economic adviser, has also weighed in. He laments the disastrous effects of Biden’s spending spree, explaining that true economic recovery requires balancing both supply and demand. Bumping up demand without a corresponding increase in supply means that prices are nominally destined to rise. The consequences of overspending are encapsulated in the soaring pricing floor that Biden’s policies have instituted, leaving consumers with costs approximately 20 percent higher than they were at the onset of his administration.
Biden doesn’t deserve accolades for the reduction in inflation, as the landscape shows that much of the credit lies with resisting further disastrous spending plans, largely thanks to Democrats like Joe Manchin and Kyrsten Sinema who successfully blocked additional inflationary disasters like the sprawling $1.75 trillion Build Back Better proposal. Additionally, Republican control of the House in 2022 severely curtailed the administration’s ability to further inflate prices with unchecked spending.
If the Democrats were to reclaim the reins—particularly if Kamala Harris were to step up as the candidate of choice—those once-dim inflationary flames would likely be ignited anew with a fresh round of spending sprees. Simply put, while Biden finds solace in a slight reduction in inflation, the average American must grapple with the enduring reality of an economy shaped by policies that were anything but prudent.
