Inflation Is A Big Political Test For President Biden's Economic Agenda

Maureen Nicholas says she had no ideal presidential candidate in the last election.

"I voted for Biden, but I didn't want to," the former Republican said as she walked across a Walmart parking lot in Easton, Pa.

Nicholas said that she personally feels lucky, but that the overall economy feels pretty bad these days.

"Price increases — astronomical," she said. "Health care — it just seems like it's out of control."

She doesn't blame President Biden. She says that the economy has been on a downhill trajectory for a while and that the pandemic didn't help. Yet in her view, the president she voted for has not substantially improved the situation.

"I do feel as though he's not addressing what people are spending most of their money on, which is health care," she said. "It used to be a tiny little percentage; now it's a big fat piece of that pie chart."

In more than a dozen recent interviews with voters across Northampton County, a key swing county Biden narrowly won in 2020, people — regardless of their personal politics — were in agreement that the economy is struggling and prices have been going up. Their outlook poses a political test for the president and Democrats.

As the U.S. economy continues to recover from the pandemic, prices have also been rising — on everything from groceries to used cars to airline tickets. In July, the Labor Department said that consumer prices saw the largest one-month increase since 2008.

Rising prices, Democrats say, are a consequence of the quick economic rebound.

But any disconnect between macroeconomic facts and individual financial reality creates a complex economic environment for the Biden administration to navigate.

And national polls and focus groups find that many Americans are worried about inflation and rising costs.

The White House has begun to pivot how it's pitching the president's multitrillion-dollar spending plans for programs like universal pre-kindergarten, free community college, better transit and more high-speed internet, arguing that in the long run, these investments will lead to lower prices.

"These steps will enhance our productivity — raising wages without raising prices," the president said in a speech at the White House last month. "That won't increase inflation. It will take the pressure off of inflation, give a boost to our workforce, which leads to lower prices in the years ahead. So, if your primary concern right now is inflation, you should be even more enthusiastic about this plan."

But Republicans are already trying to seize on rising prices by warning people that the country is on the verge of 1970s-style inflation — still a long way off — and are using this fear as a fresh attack on "big government" — something they think has particular political saliency when people are frustrated by their larger grocery bills.

Who wins that messaging battle may determine the fate of Biden's ambitious economic agenda.

Democrats are aware of the political weapon

Already, Democrats and Republicans are angling at how they can use the economy as a political win ahead of next year's midterms.

About a month ago, Democratic pollster Celinda Lake, who has been advising the White House, said she began to notice more voters were concerned about rising costs.

"It hasn't really impacted anyone yet — Democrats or Republicans — but voters want everybody to be aware of it and on top of it," Lake said.

As of now, she doesn't see a clear indication that voters are assigning blame to any party or person, but that doesn't mean they won't.

"Democrats need to be aggressive on it, for sure," she said.

White House officials are aware that inflation is a political weapon Republicans are eager to use against them. But they've also been insisting that inflation is "transitory" — a result, they say, of pent-up demand during the pandemic and supply chain kinks.

The White House's initial inclination was to brush aside criticism, even from Larry Summers, a former director of the National Economic Council under President Barack Obama.

"I don't think [inflation] will go away of its own accord," Summers told NPR. "The risks that we will have excessive inflation, that we will have a downturn, or that we will find ourselves in a stagflation situation, I think, are very substantial."

Economic advisers inside the current White House disagree with Summers' assessment of the economy.

"There are people who are facing real challenges out there, and we are very much aware of that," said Jared Bernstein, a member of the White House Council of Economic Advisers. "But we also — and I think this is equally important — have to remind folks that we are in the midst of a strong and robust recovery that clearly would not have occurred with this speed had we not helped get shots in arms and checks in pockets."

Bernstein feels the best way to counter GOP messaging on inflation is to remind voters of the facts, which show solid economic growth.

But, he conceded, "How to map these facts onto messaging is a challenge, especially in a period when these temporary price pressures are hitting people in ways that they recognize."

Partisanship shapes views of the economy

Pennsylvania's Northampton County is a place where Republicans are hoping to unseat Democratic Rep. Susan Wild next year. It's a rare so-called "boomerang" county that voted for Obama, then for Donald Trump, and then for Biden.

Voters there — much like voters nationally, as polls show — are concerned about the economy and rising prices. Some blame the president. Others blame the pandemic. And still others pointed to the natural ebbs and flows of the economic cycle.

"What bothers me the most right now is gas. When you're retired and you're on a fixed income, it affects you a little bit more than somebody that's working," said Elmo Frey Jr., a retired judge, who was sipping coffee at the Nazareth Diner.

Frey says he drives a lot, and lately, he's spending more money filling up his car.

"It was $1.89 when Trump left. Now, I just got gas yesterday, it was $3.29," he said.

Presidents have little control over global oil prices, but some research indicates that gas prices tend to correlate with consumer confidence. Many Republicans insist they began noticing price increases across the economy as soon as Biden took office. However, the Consumer Price Index barely shifted between December 2020 and January 2021. Inflation really began accelerating in April.

This perception of when exactly inflation began is linked to partisanship. Polls show political identity shapes people's views of the economy. And a survey from AP-NORC finds that Republicans' and Democrats' views of the economy flipped immediately once Biden became president.

That means Republicans, who were already skeptical of Biden's economic agenda, are convinced inflation is going to get worse if his big spending plans get passed.

"We're going to be absorbing all the costs for everything he wants to do," said GOP voter Lori LaPenna, as she filled her trunk with groceries that she says cost her far more these days.

Democrats too feel like they're paying more for groceries. But they also feel like additional social safety programs and more stimulus money are exactly what the country needs in this moment.

"[Biden's] been helping out way more than Donald Trump," Nazirah Lewis said.

Even working full time as a nurse throughout the pandemic, Lewis is still struggling to pay bills as a single mom with three kids. "It's just the point of working and still playing catch-up," she said. "It's been rough." She says her insurance bills, her grocery bills and her rent have all increased.

But the problem isn't just prices, she adds; it's wages. That's a common argument among Democrats.

"Wages in this area haven't changed in 10 years," said Sarah Scully, an unemployed farmworker. "Because I have a lot of experience in various fields, it's not that I can't get a job. It's that there's too many people and not enough non-minimum wage jobs."

Both Scully and Lewis say they appreciate the economic aid the Biden administration is offering, such as the temporary expanded child tax credit.

But Scully and Lewis do not need to persuaded; they're Democrats. The real test for the White House is whether it can convince the small number of persuadable voters, like those who reluctantly voted for Biden, that more spending will lead to lower prices.

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