The Memo: Biden, Democrats feel new political pain on inflation

President Biden got a fresh jolt of political pain on Thursday with the release of new data showing inflation reaching a 40-year high of 7.9 percent.

The startling figure was a reminder, even amid the international crisis sparked by Russia’s invasion of Ukraine, that the fate of Democrats in this November’s midterm elections will be decided by issues close to home.

If Democrats lose control of Congress, Biden will be tightly constrained for the last two years of his first term.

When it comes to inflation, Republicans blame Biden’s earlier spending measures, including the $1.9 trillion COVID-19 relief package passed a year ago, for overheating the economy.

The steep rise in gas prices that has accompanied the early stages of the war in Ukraine gives new urgency to the issue.

Even though Republicans don’t want to seem gleeful about economic problems, they have no doubt that the soaring cost of living gives them a big advantage in the midterms. 

“Elections come down to kitchen-table issues,” said Matt Gorman, a GOP strategist and former communications director of the National Republican Congressional Committee. 

Alluding to Virginia Gov. Glenn Youngkin’s (R) victory over Democrat Terry McAuliffe last November, Gorman added, “We saw it in Virginia, we are going to see it in the midterms. Democrats can use every trick in the book to try to blame inflation on Vladimir Putin or on corporations. But it’s a problem that falls solely at the feet of Joe Biden.”

Democrats fiercely contest that idea. 

They say that inflation was stoked last year by the once-in-a-lifetime circumstances of a world in the grip of a global pandemic. Supply chains were snarled not because of any policy specific to Biden but because American consumers shifted toward spending more money on goods, and less on services such as restaurant meals or hotel stays.

In recent days, the White House’s message also shifted on gas prices and inflation generally, with Biden blaming “Putin’s price hike.”

There is no question that the war in Ukraine is having an inflationary effect, not just on gas prices but also on staples like bread. Russia is the world’s largest exporter of wheat, for example. Then there are the economic disruptions inherent to the raft of sanctions imposed on Russia.

It is hard to see how Biden could have taken effective action against Putin while avoiding these effects. There has been broad bipartisan support for the sanctions — and for the idea that the West cannot simply let Putin’s actions stand.

But whether that will save the political skin of Biden and the Democrats come November is an entirely different question, especially given that the president’s approval ratings were low before the conflict broke out in Ukraine.

Democrats are fighting the headwinds of history, given that a president’s party almost always loses seats in the first midterms of his tenure.

Add the highest inflation since 1982 on top of that and Democrats are bracing for a tough outcome.

“Look, I realize it is going to be challenging,” said Democratic strategist Julie Roginsky, citing the historical trends and the inflation figures. “It’s not unique to Joe Biden. Ronald Reagan faced the same kind of inflationary pressure in his first midterms and the Republicans did not fare well — no matter how popular he was two years later.”

Republicans lost a net 26 House seats and one Senate seat in the 1982 midterms. This year, Democrats are defending an extremely narrow House majority and a 50-50 Senate.

Biden has sought to persuade voters to look at the bright side of his economic record, which includes extremely robust job creation as the nation edges its way out of COVID-19.

In his Thursday statement on the new inflation numbers, Biden noted: “New unemployment claims remain low, as jobs are created at a record level. The rate of people on unemployment insurance is the lowest since 1970 – more than 50 years. And, private sector job growth is strong, boosted by the steps we took in the American Rescue Plan a year ago this week.”

But, worryingly for the president and his party, the effects of inflation in general and prices at the pump in particular, may trump all that.

A new Economist-YouGov poll this week indicated that 42 percent of Americans view the economy as “poor” in contrast to just 5 percent who describe it as “excellent” and 21 percent who call it “good.”

The same poll found a stark 85 percent of Americans describing inflation as a “very serious” or somewhat serious problem facing the nation. 

Perhaps just as worryingly for Biden, 69 percent expect inflation to either stay the same or be even higher six months from now. Sentiments like that have the capacity to be self-fulfilling, prompting workers to push for wage rises which companies tend to pass on to consumers in higher prices — forcing the inflationary cycle still higher.

“For the average American, the feeling is: What did I do to deserve this, and why is this happening to me?” said Democratic strategist Hank Sheinkopf.

As if all that did not spell enough gloom for Democrats, there is one other, overarching problem with inflation.  

The most effective lever to tame it — raising interest rates — is in the hands of the Federal Reserve and its chairman, Jerome Powell, rather than Biden. Exerting the right amount of pressure on that lever is also enormously hard. Leave interest rates too low for too long and inflation stays around; put rates up too high or too fast, and economic growth can crater.

Biden said in his Tuesday statement that he is “fighting to bring down the everyday prices that are squeezing Americans.”

But the reality is that there is a limited amount he can bring to that fight. That’s bad news for him and his party, with the midterms less than eight months away.

The Memo is a reported column by Niall Stanage.