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President Biden seemed optimistic when he visited the Iowa biofuel plant in April to talk about lowering gas prices in front of a large tractor, declaring that “biofuels play a role right now” and announcing a plan to expand ethanol use. during the summer.
But in private, Biden dismissed the policy as ineffective and questioned the value of the trip, according to two people familiar with the talks. When he returned to the White House, he withdrew his senior staff, including Chief of Staff Ron Klein, to the Oval Office, asking them questions about the purpose of the event.
Biden had been worried before the announcement that it was exaggerating Ethanol’s ability to lower gas prices and could harm its climate goals, people said, speaking on condition of anonymity to discuss private conversations. But Agriculture Secretary Tom Wilsac and other officials called for Biden to leave, saying it would at least help the Midwest – and the White House was desperately looking for ways to cut gas prices.
The episode illustrates the White House’s months-long challenge to reduce rising prices and the president’s growing frustration with his administration’s inability to do so. The problem has grown over the past year, engulfing the president’s top aides and threatening his party’s domestic agenda, international priorities and political prospects.
“Inflation is the curse of our existence,” Biden said last week on Jimmy Kimmel’s show.
Klein and other senior officials have instructed agency leaders to look for any steps they could take to reduce costs for Americans. Biden is increasingly expressing his anger inwardly. And some Democrats, inside and outside the White House, want to focus on the greed of oil and gas companies as the centerpiece of their fall message.
In a speech in the port of Los Angeles on Friday, Biden resumed an attack on large corporations for allegedly keeping prices high to boost profits, saying it angered him so much that he wanted to “pull” someone out. “Exxon made more money than God last year,” Biden said. “Exxon – start investing and start paying your taxes.” Oil companies deny that their policies keep prices artificially high.
But there is little evidence that all this works. And some economists say the unusual nature of this inflationary period makes him particularly stubborn.
“I think we are in a really difficult position because we have no successful precedents to have such a hot economy in terms of low unemployment and high inflation and no recession,” said former Treasury Secretary Larry Summers. “It will be very, very difficult to achieve a soft landing.”
If nothing else, the problem seems to be accelerating. Prices rose 8.6 percent in May, the highest level in 40 years, according to the latest consumer price index released on Friday. Moreover, prices rose faster last month than in April, prompting optimism in the White House that the country has already reached its inflationary peak.
Five graphs that explain current inflation
Gas prices, the most visible sign of price spikes, have risen, with the national average for a gallon of gas reaching $ 4.99, according to the AAA. Russia’s invasion of Ukraine has overturned global energy markets, further disrupting supply chains that are already in disarray due to the pandemic. Western sanctions against Moscow as punishment for the war have also drastically increased spending.
But Americans are feeling the rise in prices everywhere: the cost of food, shelter, plane tickets, medical care and clothing has risen. And as prices continue to rise, economic winds are overshadowing and shifting the president’s agenda on all fronts.
Senator Joe Manchin III (DW.Va.) torpedoed the president’s large-scale economic plan in part because of fears of inflation. The president has changed his approach to Saudi Arabia, a major oil producer, after promising to treat the country as a “pariah” as a candidate.
A new study by The Washington Post and the Schar School of Politics and Management at George Mason University found that most Americans expect prices to continue to rise next year and, as a result, change their spending habits. Republicans continue to take advantage of the issue as evidence of the Democrats’ failure to run the economy, with congressional elections now less than five months away.
As government officials increasingly conclude that there is little they can do to influence prices, they are at least trying to change their messages – for example, by highlighting positive indicators in the economy, mostly almost record lows. unemployment rate. But as Americans struggle with rising spending on everyday items, the argument doesn’t seem to resonate.
The White House gave a new impetus last month to show that Biden and his team are working hard to curb inflation. The president met with Federal Reserve Chairman Jerome Powell in the Oval Office and wrote an article in the Wall Street Journal as the White House sent cable officers to outline the actions the administration is taking.
Biden and his aides also began attacking Republicans more vigorously, focusing in particular on a proposal published by Republican Sen. Rick Scott (R-Fla.) That Democrats say will make matters worse by raising taxes on many Americans.
But pressing messages did not lead to new direct cost-cutting measures.
Jason Ferman, a Harvard University professor and former chief economic adviser to President Barack Obama, has long criticized the size of the coronavirus stimulus package Democrats adopted at the beginning of Biden’s term, claiming it contributed to inflation.
But he said the administration has done much to reduce costs since then, although it has questioned the long-running moratorium on student debt and customs tariffs in China. Restarting student loan payments and eliminating some tariffs, Furman said, could help alleviate the problem.
Furman also said there was a mismatch between public anger over inflation and how much Biden could do for it. “There is nothing that Americans are crazier about than gas prices,” he said. “This is one of the things the White House has very little power over. It’s a global price and it’s driven by global events. “
The administration also finds it difficult to explain how long Americans should expect to see prices rise, giving the inaccurate feeling that a rapid rise in prices will decline relatively quickly. When prices first began to rise sharply last year, Biden and others speculated that this was the result of a rapid economic recovery after the pandemic and would fade as the economy stabilized.
The rise in prices is “expected to be temporary,” Biden said in July 2021, a forecast repeated by senior aides who promised that inflation would be “transitional.” In recent months, these officials have changed their tune, and late last month, Biden began saying that inflation was his “top economic priority.”
Furman said the early analysis of the administration’s problem was followed by most assessments, including the Federal Reserve. They were all just wrong.
“They were not ahead. You can’t look back and say, “Wow, that was impressive,” he said. “But you can’t look back and say they’ve been doing a strong political rotation operation.”
The renewed commitment to Saudi Arabia is one of the most striking political consequences of rising prices, as it marks a marked departure from Biden’s campaign rhetoric and a promise to put human rights at the heart of its foreign policy.
For months, senior White House and State Department officials have been debating whether the president should travel to the country, given his sharp criticism of Saudi Arabia for its human rights, especially the assassination of Washington Post journalist Jamal Hashoghi.
However, following Russia’s invasion of Ukraine and months of diplomatic work by Biden, the president is due to visit Saudi Arabia later this summer and meet with Mohammed bin Salman, the heir to the throne and de facto leader of the kingdom.
Officials hope the visit will help increase oil production and facilitate peace agreements in the Middle East, thereby lowering gas prices.
At the port of Los Angeles on Friday, Biden presented inflation as a large-scale global problem driven by the continuing pandemic and ongoing Russian invasion, and he highlighted his administration’s efforts to improve supply chains.
“Every country in the world gets a big bite and some of that inflation – worse than us in the vast majority of countries around the world,” he said. “But make no mistake: I understand that inflation is a real challenge for American families.
But in a statement before the speech, Biden summed up his immediate and pressing problem: “We need to do more – and quickly – to lower prices here in the United States.
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