by Gabe Fleisher
Good morning! It’s Monday, December 13, 2021. Election Day 2022 is 330 days away. Election Day 2024 is 1,058 days away.
Why inflation is so disastrous for Biden
President Biden got some bad news on Friday.
That’s when the Labor Department released its monthly Consumer Price Index, which found that consumer prices rose by 6.8% in November, compared to a year ago — the fastest pace of inflation in the U.S. since 1982.
Later on in the newsletter, Wake Up To Politics contributor Davis Giangiulio will analyze the economic consequences of the report. But I want to spend a moment looking at the political impact of inflation — which could be disastrous for Biden and his party.
According to the New York Times, White House officials “have no plans” to shift Biden’s economic messaging after Friday’s report. In recent weeks, Biden has focused on promoting the more positive indicators coming out — including the 4.2% unemployment rate and the drop in jobless claims (which Davis will also cover below) — and promising that inflation will soon stabilize.
“I think it’s the peak of the [inflation] crisis,” Biden told reporters on Friday, something he has repeatedly suggested in recent months. “And I think you’ll see it change sooner and quicker and more rapidly than than most people think. Every other aspect of the economy is racing ahead. It’s doing incredibly well. We’ve never had this kind of growth in 60 years, but inflation is affecting people’s lives.”
Polls show that more upbeat economic messaging is failing to break through. An ABC/Ipsos poll released on Sunday found widespread disapproval of Biden’s economic response. In the poll, 57% of Americans disapproved of the president’s handling of the economy, compared to 41% who disapprove. When it came to inflation specifically, 69% disapproved of his handling and only 28% approved.
That lopsided conclusion on Biden’s handling of price increases come as inflation has eclipsed COVID-19 as the top issue Americans are concerned by, according to a CNBC poll.
Despite these polls, the White House and their allies have insisted the economy is booming — a view that was rebutted by the Times’ David Leonhardt last week. “Why do Americans say the economy is in rough shape?” Leonhardt wrote. “Because it is.”
Leonhardt continued: “Offices remain eerily empty. Airlines have canceled thousands of flights. Subways and buses are running less often. Schools sometimes call off entire days of class. Consumers waste time waiting in store lines. Annual inflation has reached its highest level in three decades.”
“Does that sound like a healthy economy to you?”
Leonhardt was using a more holistic definition of economy than just a listing of key statistics, writing that the economy is “more than a household balance sheet; it is the combined experience of working, shopping and interacting in society.”
On that score, Americans remain dispirited. In an interview on NBC’s “Tonight” show on Friday — after joking with host Jimmy Fallon that he no longer pays attention to his approval rating, now that it’s taken a nosedive — Biden acknowledged the anxiety many still feel. “A lot has happened,” the president said. “Look, people are afraid. People are worried.”
A lot of that anxiety remains tied to Covid-19, as the pandemic enters its second year — with the Omicron variant now mixed in to boot. Biden’s Covid approval ratings have been sinking as well: the CNBC poll found that 48% disapprove of his handling of the pandemic, the first time the president had been underwater in that question in the survey.
The bottom line: Why is all this so worrying for Biden? Because midterm elections are a referendum on the sitting president — and if these attitudes about Covid, inflation, and the economy don’t improve in the next year, Biden and his Democratic Party are headed for big losses in 2022.
There’s also an even more immediate impact: Democrats are hoping to pass the Build Back Better package, their $1.75 trillion social spending package, by Christmas — less than two weeks away.
But to do so, they’ll need (as always) to go through Sen. Joe Manchin (D-WV), who has cited concerns about increased government spending worsening inflation in arguing that the package should be postponed to 2022 (and possibly not even approved at all).
Watch for machinations around Build Back Better to dominate the remainder of the year in Washington. Per Politico, Democrats are confident they have the support of every other senator in their caucus — including Sen. Kyrsten Sinema (D-AZ) — and are just waiting for Manchin’s greenlight. (As time keeps ticking, the threat of the Child Tax Credit lapsing grows.)
Biden told reporters on Friday that he plans to meet with Manchin this week to push him to get to “yes.” Inflation will certainly be at the top of the agenda at the meeting: the White House has claimed that Build Back Better will help curb (not exacerbate) price increases, a view that Manchin has roundly rejected in the past.
What else you should know
→ Abortion. The Supreme Court ruled on Friday that abortion providers could sue certain officials in efforts to challenge Texas’ six-week abortion law, but the strict ban will remain in place in the meantime.
→ Covid-19. The U.S. passed another grim Covid-19 milestone this morning: more than 800,000 Americans have now died from the virus.
→ January 6. The House committee investigating the January 6 attack has obtained a PowerPoint outlining extreme plans to overturn the 2020 election that circulated among Trump officials.
→ Media. Chris Wallace announced on Sunday that he is leaving Fox News and moving to CNN’s new streaming platform, another prominent departure from Fox’s news side as the network’s opinion hosts gain increased sway.
→ Congress. House Speaker Nancy Pelosi (D-CA) is reportedly planning to stay in Congress at least through the 2022 midterm elections — and possibly after, despite her promise to step down next year.
Policy Roundup: Economics
On Mondays, Wake Up To Politics contributor Davis Giangiulio offers an overview of the week’s top economic news:
Where has the inflation surge hit the hardest? Friday’s report showed transportation services and apparel both experienced larger price jumps in November than they did in October, with prices rising 0.7 and 1.3 percent respectively. Gas continued its climb higher up 6.1 percent last month. Meanwhile, gas is now up 58.4 percent compared to last year.
Food is also 6.1 percent more expensive now than in November last year, and utilities are up 25.1 percent. Compared to November’s annual wage growth of average hourly earnings of 4.8 percent, the inflation figures mean workers have 2 percent less purchasing power than they did a year ago.
All eyes are now on the Fed and if they will raise interest rates to combat inflation. Addressing Congress last month, Fed Chair Jay Powell said while he believed inflation could be traced back to supply problems due to the reopening of the economy post-Covid, “it’s also the case that price increases have spread much more broadly in the recent months… I think the risk of higher inflation has increased.”
Real short-term interest rates are actually negative at the moment due to inflation, which only heats up the economy further. However, bets on future Fed rate hikes fell after the CPI news, since it matched expectations. The Fed is expected to discuss expediting the timeline to end its bond-buying program at its meeting this week.
Weekly jobless claims fell last week to the lowest level in 52 years. After surging to records above six million last year, only 184,000 Americans filed initial unemployment claims for the week ending December 4. That’s a strong figure, and certainly an improvement from where we were even at the beginning of this year when at one point 900,000 people per week were filing unemployment claims, still above the pre-Covid record.
But this job figure also represents something else: the reluctance to turn away workers at a time when employers desperately need them. While the new figures are a strong sign of recovery in the labor market, it also reflects the new problems in the economy revolving around the perceived labor shortage and “great resignation.”
All times Eastern.
→ President Joe Biden will receive his daily intelligence briefing at 10 a.m. Then, at 11 a.m., he will receive a briefing from Secretary of Homeland Security Alejandro Mayorkas, FEMA Administrator Deanne Criswell, and White House homeland security adviser Liz Sherwood-Randall on the federal response to the recent tornadoes in six U.S. states.
At 1:15 p.m., Biden will sign an executive order on “delivering the government services and experience the American people expect and deserve.”
→ Vice President Kamala Harris will travel to the Brandywine Maintenance Facility in Prince George’s County, Maryland, this morning. While there, she will receive a briefing at 10:20 a.m. on electric vehicle investments in the bipartisan infrastructure bill and the Build Back Better Act, and then deliver remarks at 11 a.m. on the same topic. Energy Secretary Jennifer Granholm and White House national climate adviser Gina McCarthy will speak as well.
Finally, at 3:30 p.m., she will meet with a group of CEOs at her ceremonial office to discuss private sector investment in Central America.
→ Transportation Secretary Pete Buttigieg will visit New Hampshire for a series of events promoting the bipartisan infrastructure law. Buttigieg will be joined by all four Democrats on New Hampshire’s congressional delegation: Sens. Jeanne Shaheen and Maggie Hassan, and Reps. Ann Kuster and Chris Pappas.
Buttigieg’s visit to the first-in-the-nation presidential primary state comes amid growing speculation about the ex-mayor seeking the White House in 2024 or 2028.
→ White House Press Secretary Jen Psaki will hold her daily press briefing at 12:30 p.m.
→ The Senate will convene at 3 p.m. and resume debate over the nomination of Samantha Elliott to be a U.S. District Judge for the District of New Hampshire.
At 5:30 p.m., the chamber will vote on confirmation of Lucy Koh to be a U.S. Circuit Judge for the Ninth Circuit.
→ The House will briefly convene at 12:30 p.m. for a pro forma session.
→ The House Select Committee to Investigate the January 6th Attack will meet at 7 p.m. to vote on whether to recommend former White House chief of staff Mark Meadows for contempt of Congress. Meadows, who was serving as former President Donald Trump’s top aide at the time of the Capitol riot, has refused to comply with the committee’s subpoena seeking his deposition.
→ The Supreme Court will release orders at 9:30 a.m.