Will Inflation and High Prices Fail Biden’s Presidency of the United States?
Recording the highest US inflation rate in 3 decades poses a major challenge to President Joe Biden in his quest to advance another pillar of his economic agenda.
The United States did not know these high rates of inflation during the last three decades, as the inflation rate rose last October by 6.2% compared to the rates of the same month last year, October 2020.
According to a statement by the Labor Data Office, food and energy prices witnessed the largest jump as well, as the inflation rate for other items, including cars, real estate, services, transportation and others, reached 4.6%.
There is no single reason why prices are rising in the United States, but most economists believe that the huge government spending, which exceeds more than 4 trillion dollars so far since the start of the Covid-19 pandemic, is the direct cause of inflation and price increases.
Some experts attribute the reasons for the rise in prices to the rise in local gasoline and natural gas prices amid rising global demand, at a time when the Biden administration decided to reduce US production, which affects the prices of other goods and services.
Republicans accuse Biden of weakening the shale oil industry in the United States, at a time when he is pleading today with OPEC+ oil producers to produce and provide more oil.
The Biden administration has halted all drilling in federally owned lands, and is considering whether to stop the pipeline transporting oil from Canada to the central US states.
Then there is the Federal Reserve, which is still running emergency monetary policy after 19 months of economic recovery. And encouraged Federal Reserve Chairman Jerome Powell for massive government spending packages, he expected the inflation rate to rise to only 2%, but it reached more than 3 times at a time when the Bank has kept interest rates at zero for more than a year and a half.
With commentators blaming President Joe Biden’s economic and financial policies for the spikes, Biden was quick to respond by saying that confronting rising US inflation was his top priority.
Biden instructed the National Economic Council to work on reducing prices, including energy prices, and instructed the Federal Trade Commission to address any price gouging.
Biden indicated that the rise in consumer prices is related to the delay in the global supply chain, which caused a significant shortage of consumables in the markets.
Biden believes that the infrastructure bill recently passed by Congress will help ease transportation bottlenecks, and that the proposed social spending plan would reduce the cost of living for most American families.
On the other hand, the Biden administration is determined to implement a social and climate spending plan estimated to be worth more than $2 trillion. Democrats plan to push the bill without Republican support through a process called “reconciliation” of the budget, which requires only a simple majority in the Senate (+50), instead of the 60 votes normally required. In the event of a tie, Vice President Kamala Harris will vote as Speaker of the Senate.
Effects and forecasts
Republicans say Biden’s plans to increase spending of more than $3 trillion will lead to more price increases, while Democrats say it will help families lower the cost of living.
Many employers have increased their wages in order to attract more workers. But the increased salaries were quickly eroded by the rising cost of gas and groceries.
The Ministry of Energy expects heating bills to be up to 54 percent higher this winter compared to last winter as a result of higher energy prices and somewhat lower temperatures.
The “Washington Post” newspaper pointed to a record increase in the number of Americans who left their jobs, reaching 4.4 million people during the month of September. This is due to the difficulty of finding childcare and better wages elsewhere, as well as the fallout from government generosity in providing financial aid to Americans following the COVID-19 shutdowns.
Inflation and Biden’s plans
The publication of news of high rates of inflation last Wednesday led to fresh criticism from Republicans of the two trillion dollar social and climate spending plan that House Democrats plan to vote on next week, and then send it to the Senate.
The Democrats’ dilemma remains represented by the position of Senator from West Virginia, Joe Manchin, who criticized the Social Spending and Climate Bill; He fears the impact of passing this huge package on the price hike on citizens. Manchin tweeted, criticizing Biden’s policy and the price increase that prompted him.
By all accounts, the threat posed by record inflation to the American people is not “transitory” and is instead getting worse. From the grocery store to the gas pump, Americans know the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day.
— Senator Joe Manchin (@Sen_JoeManchin) November 10, 2021
Winners and Losers
Republicans are looking to seize the news of rising inflation ahead of next year’s midterm elections, with plans to target Democratic candidates by linking inflation to President Biden’s agenda. Many observers believe that voters will hold the Democrats accountable for causing the inflation crisis and high prices due to excessive spending and their inability to manage the supply chain disruption crisis before the seasons of “Black Friday” (Black Friday), Christmas and the New Year.
Republican Senator Kevin Cramer of North Dakota tweeted that “this inflation is real, not temporary. The price hike is significant and the result of the bad economic policies of the Biden administration.”
This inflation is real, it is not transitory. It’s big and it’s because of the Biden Administration’s terrible economic policies. https://t.co/yjKHmYTC4c
– Sen. Kevin Cramer (@SenKevinCramer) November 11, 2021
The results of the Virginia state elections – where the Republicans scored an unexpected big victory – represented a dangerous harbinger for the Democratic Party and the policies of President Joe Biden ahead of the midterm elections for Congress next year.
The increase in prices, which reflects the diminishing purchasing power of Americans, is driving down President Biden’s approval rating. A recent opinion poll conducted by “Monmouth University” showed that 65% of Americans support the infrastructure bill and 62% support the Democrats’ spending plan.
However, the same poll showed that only 42% of Americans approve of Biden’s job performance, while 50% of Americans do not approve of his economic policies.
For their part, Democrats hope that inflation rates will decrease in the coming months, especially with the beginning of the decline in the spread of the Corona virus in the United States.