RICH LOWRY: Inflation is a dagger aimed at Joe Biden’s presidency.
The experience of the last Democratic president to preside over a significant inflation episode was not a happy one, and if the Biden White House is not haunted by that precedent, it is not paying attention.
Arguably, rampant inflation did more than anything else to undo Jimmy Carter’s presidency.
Of course, we are nowhere near the end of the 1970s, when inflation reached double digits. But the latest figures, with prices rising 6.2 percent, the biggest annual increase in more than 30 years, should be a fiery bell in the night for Democrats.
There have been two crises created or exacerbated by President Joe Biden, on the southern border and in Afghanistan, and the latest figures point to the possibility of a third and even more momentous.
Large-scale forces are at play in rising prices. However, his policy program has tended to make the problem worse rather than better, and the erosion of money will stop there anyway.
For a long time, the White House’s response to inflation concerns was to dismiss them arbitrarily. The White House mocked economist Larry Summers when he warned earlier this year that a fiscal stimulus on the scale of World War II could “unleash inflationary pressures of a kind we have not seen in a generation.”
Against Summers, White House economic adviser Jared Bernstein predicted in April that inflation would rise modestly for several months before returning to a lower level.
Well, here we are, near the end of the year, with inflation at its highest level in a generation.
Bernstein called the price hike “transitory,” a word that has been used so often by inflation doubters that it has become a parody. John Maynard Keynes famously said: “In the long run, we will all be dead,” so, in a similar spirit, it could be that everything is eventually transitory.
Rising prices are being driven by a global mismatch between supply and demand as the economy recovers from the pandemic while production disruptions persist. At the same time, bottlenecks are disrupting the US supply chain.
Inflation in the US has been worse than in other parts of the world, and Biden’s agenda was clearly not designed with an inflationary environment in mind.
With gas and fuel oil prices at 50 percent or more over the past year, it may not be a good time to launch a campaign against fossil fuel producers.
With the country already awash in federal dollars from spending bills that have been going through the door for the past 18 months, adding massive new spending may not be a good idea.
With labor shortages and supply disruptions plaguing the economy, it might not be advantageous to continue fueling demand with various payments and subsidies while supply is discouraged, either by making it easier for people to stay out of the workforce or increasing taxes and tightening regulations.
Biden is now redefining its infrastructure and Build Back Better proposals as anti-inflationary, although no one mentioned this when the notes were conceived or sold last year.
Biden’s best bet is that his jaws and nudges at ports and other points along the supply chain can make a difference, while companies unravel the mess over time. Meanwhile, the global energy crisis could be resolved as supply catches up with demand.
That would presumably lower inflation next year. What is not going to work is trying to dissuade people from the lived reality of higher prices.
It is of no use to workers if the increase in wages does not keep pace with inflation. According to the Bureau of Labor Statistics, real average hourly earnings fell 1.2 percent from October 2020 to October 2021 and 0.5 percent from September to October this year.
If prices continue to beat wages it could be the best metric for the scale of losses in the Democratic Congress next year and the final fate of Biden’s presidency.