Former President Obama’s economic advisor Larry Summers wrote in the Washington Post during the debate over Joe Biden’s first $1.9 trillion pandemic stimulus bill:
“[W]hile there are enormous uncertainties, there is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability. This will be manageable if monetary and fiscal policy can be rapidly adjusted to address the problem. But given the commitments the Fed has made, administration officials’ dismissal of even the possibility of inflation, and the difficulties in mobilizing congressional support for tax increases or spending cuts, there is the risk of inflation expectations rising sharply. Stimulus measures of the magnitude contemplated are steps into the unknown.”
Summers got a lot of heat from the White House and other Democrats for that scary rhetoric. So where does Summers go for his apology?
Indeed, everything Summers warned against is coming true or could easily materialize. Summers even predicted White House denial that inflation was even a possibility. In fact, it’s been a hallmark of this administration to downplay the possibility of rising prices and attack those who suggest it.
There is a lesson here about the insularity of this White House: Summers was correct about inflation, but Biden’s economists dismissed him and some attacked him personally. It took months for them to fully come around — and it only happened after Biden’s approval rating suffered from voters’ perception that he wasn’t attentive to their concerns, a shellacking in the off-year elections in which inflation was a top concern and blindingly obvious data like that released today.
Insularity? Or arrogance? The fact is, these people in the White House are not the brightest bulbs in the room — something that’s easily discernible by their failure to heed sound advice and personally attack those who disagree with them.
Related: Not ‘Transitory’: Team Biden Was Wrong All Year on Inflation
But it appears that Sen. Joe Manchin (D.-W.V.) isn’t the only objector to the Build Back Better bill. The recent inflation numbers have caused a minor panic among national Democrats when they look at data like this:
Where Americans are seeing the most inflation (year over year): gasoline prices are up 49.6% … fuel oil up 59.1% … utility natural gas up 28.1% … used cars and trucks up 26.4% … beef prices are up 20.1% … pork up 14.1% … bacon up 15.4% … chicken up 8.8% … eggs up 11.6% … milk up 4.3% … apples up 6.7% … coffee up 4.7% … peanut butter up 6% … baby food up 7.9% … prices for furniture and bedding costs had their biggest jump since 1951 … prices for new cars and trucks had their biggest jump ever…
Manchin, who has been saying all along that he wouldn’t support any stimulus bill that would make inflation worse, let his critics in the Democratic Party have it.
“By all accounts, the threat posed by record inflation to the American people is not ‘transitory’ and is instead getting worse,” Manchin said in a statement Wednesday.“From the grocery store to the gas pump, Americans know the inflation tax is real and D.C. can no longer ignore the economic pain Americans feel every day.” Manchin was making a cutting reference to earlier claims by the White House that rising prices were a transitory side effect of the economy’s emergence from the pandemic.
It gets worse for the president. There are several moderate House members who want to see the CBO score of the bill before committing to it, as does Manchin. That “score” is likely to show a radically increased deficit and a massive amount of debt added to the nation’s bill.
Manchin would rather delay the vote until at least next year when inflation is supposed to be tamed.
The data released Wednesday set the president and White House staff scrambling. Slowing down work on the massive tax-and-spending plan is against the fervent desire of the administration and House progressives.
With a limited number of legislative days left in the year, Manchin is content to focus on the issues that need to be addressed, Axios is told.
They include funding the government, raising the debt ceiling and passing the National Defense Authorization Act.
Needless to say, any delay will kill the Build Back Better bill as the 2022 congressional races force a lot of rethinking by all Democrats except the most radical.
It’s not just Joe Manchin who will put a hold on the Build Back Better bill. It will be any politician who doesn’t want to be swamped by a red tide if angry voters pushing back against Democratic overreach.
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