Inflation Is The New Line Of Battle As Republicans And Biden Spar End

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WASHINGTON — Republicans made Americans’ concerns about rising prices the primary line of attack on President Biden’s economic agenda and sought to derail trillions of dollars in spending programs and tax cuts in the 1970s, warning they would produce skyrocketing inflation.

they took over rising costs of gasoline, used cars, and other goods and services accusing the president of fueling “Bidenflation” $1.9 trillion stimulus bill He signed it in March, and now with a $3.5 trillion economic bill that Democrats are starting to draft in the Senate.

Given the whims of restarting an economy affected by the pandemic, there is an unusually large amount of uncertainty over the course of inflation in the coming months. Still, even many economists who worry that high prices will stay put for longer than analysts expect say there’s little reason to believe that the problem will get worse if Mr. Biden’s attempts to support childcare, education, paid leave, low-emission energy and more are successful. .

“There’s been a lot of fear-mongering about inflation,” Joseph E. Stiglitz, a liberal economist at Columbia University, said on a conference call Tuesday in support of Mr. Biden’s economic plans. But he said the president’s spending recommendations were “almost fully paid off.”

“If accepted as proposed,” he added, “there is no plausible way for them to have a significant impact on inflation.”

Moody’s Analytics economist Mark Zandi, who modeled Mr. Biden’s plans, said the debate over the implications of the proposals “has nothing to do with the current concern over inflation”.

Still, rising inflation fears forced the president and his vice-presidents to shift economic selling steps to voters. Officials have highlighted the potential of efforts to lower healthcare, housing, college and child-rearing costs, even as they insist the current inflation crisis is a temporary artifact of the pandemic recession.

The administration’s defense has at times confused rapid price increases with efforts to curb inflation, which could take years to bear fruit. Authorities admit that the president recently exaggerated his case on a national stage by falsely claiming that Mr. Zandi’s policies would “lower inflation”.

The economics of inflation are mixed: the United States has little precedent for the convoluted supply chains and crammed consumer savings that emerged from and after the recession, where much of the economy was temporarily shut down or temporarily retracted. has sent $5 trillion to people, businesses and local governments to weather the storm. The economy is missing seven million jobs from its pre-pandemic total, but employers are struggling to attract workers with the wages they’re used to paying.

But the political danger for Mr. Biden and the opportunity for the Republicans he has. tried to derail his plans, clean.

NS price index The amount of data the Federal Reserve uses to monitor inflation increased nearly 4 percent in May from the previous year, the fastest increase since 2008. Republicans say it’s obvious that more spending will exacerbate these increases—a new justification for a long-standing conservative offensive about the enormous expansion of government programs Mr. Biden has proposed.

Nine out of 10 respondents to a question New national survey for The New York Times by online research firm MomentiveFormerly known as SurveyMonkey, they say they’ve noticed a spike in prices lately. 7 out of 10 people worry that these increases will continue “for a long time”. Half of those surveyed say they will cut back on household spending to compensate if the increases continue.

Management officials acknowledge that inflation concerns have softened consumer confidence. University of Michigan research Even as the economy recovers from recession with the strongest annual growth rate in decades, consumer sentiment remains

This issue delivered Mr Biden’s clearest and most coherent messages to his opponents to attack an agenda that continues to be popular in opinion polls.

“There is no doubt that we have serious inflation right now,” Senator Patrick J. Toomey, a Republican from Pennsylvania, told CNN’s State of the Union on Sunday. “There is a question about how long it takes. And I’m worried that this risks staying with us for a while. And the Fed has put itself in a position to fall behind the curve. You combine that with overspending, and that’s a recipe for serious problems.”

Some Republicans say some of Mr. Biden’s spending plans won’t raise prices—notably the bipartisan agreement that senators negotiated to invest nearly $600 billion in roads, water pipes, broadband, and other physical infrastructure. But the party was united in criticizing the rest of the president’s proposals in a way that many economists said he ignored how it would actually affect the economy.

Some of the proposals would distribute the money directly and quickly to American consumers and workers, for example, by increasing the wages of home health care workers and maintaining an expanded tax credit that effectively functions as a monthly salary to all but the highest-earning parents. But they would also raise taxes on high-income earners, and most spending would create programs that would take time to enter the economy, such as paid leave, universal kindergarten, and free community college.

Some conservative economists worry that the relatively small emergency payments risk heating up an already hot economy and driving prices higher. Michael R. Strain said that direct payments in the bids would “increase pre-existing inflationary pressures, create additional pressure for the Fed to withdraw monetary policy support earlier than planned, and risk the longevity of the recovery.” economist at the conservative American Enterprise Institute.

Other economists inside and outside the administration say these effects will be stifled by the potential of spending programs such as paid leave to reduce inflationary pressure.

“The economics of these investments lie vehemently to Republican criticism because they will lead to faster productivity growth, more labor supply, expansion of the supply side of the economy – investments that very clearly reduce inflationary pressures, not exacerbate them,” said Jared Bernstein. Biden’s Council of Economic Advisers, said in an interview.

Management officials changed the sales pitch on the president’s agenda last week to highlight the potential of their plans to cut prices.

Mike Donilon, a senior adviser to the White House, told reporters that Mr. Biden’s agenda is “to cut costs for families in all areas.” He said officials believed they were in a “strong position” to counter the Republicans’ attacks on inflation, citing, in part, Mr Zandi’s latest analysis. The president also cited this analysis during a CNN town hall event in Ohio last week, saying he found his proposals would “lower inflation.”

Moody’s analysis did not say this; instead, he found that some of Mr. Biden’s spending plans could help ease price pressures a few years from now. The report specifically cited proposals to build additional affordable housing units across the country that could help lower rents and housing prices and lower the cost of prescription drugs.

White House officials admit that Mr. Biden exaggerated the analysis, but pointed to more measured statements when he said in a speech this month that his plans would “increase our efficiency – raise wages without raising prices.”

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