Economists Dismiss Dems’ Inflation Gimmicks As Both Political And Pointless

Democrats’ Gimmicks To Combat Inflation Are ‘More Of A Political Crutch Than An Inflation Cure,’ And Economists Say ‘None Of These Ideas So Far Will Help To A Meaningful Degree, And Could Do Some Harm’

“Congressional Democrats’ strategy to address rising costs through a gas-tax holiday and other legislation are shaping up as more of a political crutch than an inflation cure ahead of the midterm elections. The proposals may set up legislative fights positioning Democrats on the side of relief for consumers, but economists are skeptical there’s much Congress can do to tamp down the inflationary pressure pumping up prices.” (“Democrats’ Muscle-Flexing on Inflation Meets Reality and There’s No Easy Fix,” Bloomberg, 2/17/2022)

MARK ZANDI, chief economist of Moody’s Analytics, and Democrats’ favorite economist: “None of these ideas so far will help to a meaningful degree, and could do some harm because they could juice up demand at a time supply is constrained by the pandemic and worsen inflation.” (“Democrats’ Muscle-Flexing on Inflation Meets Reality and There’s No Easy Fix,” Bloomberg, 2/17/2022)

“Michael Feroli, chief U.S. economist for JPMorgan Chase & Co., said the proposals ‘probably wouldn’t affect our inflation outlook,’ which calls for inflation to climb to an 8.2% annual rate in the second quarter before tapering to a 6.7% annual rate in the third quarter, just before the congressional elections.” (“Democrats’ Muscle-Flexing on Inflation Meets Reality and There’s No Easy Fix,” Bloomberg, 2/17/2022)

Democrats’ Primary Proposal For A Federal Gas Tax Holiday Is ‘Shortsighted, Ineffective, Goofy And Gimmicky’

“The federal gas tax holiday that some Democrats are floating wouldn’t save Americans much money at the pump — but it could do serious damage to President Joe Biden’s infrastructure promises. …. But the gas tax also generates big money for the federal trust fund that pays for highway, tunnel and bridge projects across the country — and eliminating it for even part of the year would blow an enormous hole in those budgets. The new infrastructure investments that Congress approved last year rely on $43 billion in gas tax revenues for this year alone, and losing that money could hamstring one of the Biden administration’s signature achievements so far. Based on Congressional Budget Office estimates, the feds could forfeit more than $20 billion in tax receipts, assuming a holiday of about 10 months.” (“The Big Problem With Democrats’ Gas Tax Holiday Dreams,” Politico, 2/17/2022)

• “The tax pause would be a ‘temporary stunt,’ said Ed Mortimer, vice president of transportation infrastructure at the U.S. Chamber of Commerce, which routinely lobbies for greater federal investments in infrastructure. He said it would undermine the new infrastructure law but offer ‘no promise of actually helping lower prices for consumers or improving the economy.’” (“The Big Problem With Democrats’ Gas Tax Holiday Dreams,” Politico, 2/17/2022)

“Lawrence H. Summers, a treasury secretary and top White House economist under previous Democratic administrations, called the idea of a gas tax holiday ‘shortsighted, ineffective, goofy and gimmicky.’” (“White House, Congressional Democrats Eye Pause Of Federal Gas Tax As Prices Remain High, Election Looms,” The Washington Post, 2/15/2022)

Flashback: Then-Sen. Obama ‘We’re Arguing Over A Gimmick That Would Save You Half A Tank Of Gas… So That Everyone In Washington Can Pat Themselves On The Back… This Isn’t An Idea Designed To Get You Through The Summer, It’s Designed To Get Them Through An Election’

THEN-SEN. BARACK OBAMA (D-IL): “We’re arguing over a gimmick that would save you half a tank of gas over the course of the entire summer so that everyone in Washington can pat themselves on the back and say they did something. Well, let me tell you, this isn’t an idea designed to get you through the summer, it’s designed to get them through an election.” (“Obama Dismisses Gas Tax Holiday,” CBS News, 4/29/2008)

Economists Also Reject The White House’s Deflections And Excuses For Accelerating Inflation

Even Economists Within The Biden Administration Reject The Left Wing Spin That Corporations Are Driving Inflation

“Members of the White House Council of Economic Advisers had raised objections to the idea that a spike in prices was due to corporate power, according to two people aware of the matter who spoke on the condition of anonymity due to fears of professional reprisals. … To this point, Biden has mostly limited his remarks on corporate greed and inflation… Part of his hesitance reflects the trepidation among his economic team about whether inflation actually is tied to corporate consolidation. … [CEA] economists do not believe consolidation explains the 7.5 percent surge in prices over the last year.” (“White House Economists Push Back Against Pressure To Blame Corporations For Inflation,” The Washington Post, 2/17/2022)

• “[M]any economists, including those influential with the White House, think these arguments are strained. In particular, they say high corporate profits and high prices are both the function of the same underlying cause of elevated consumer demand. Higher demand leads companies to raise prices, causing inflation, which in turn leads to higher profits. Even many liberal economists, such as Baker and Claudia Sahm of the Jain Family Institute, have dismissed the argument that consolidation accounts for a major part of inflation.” (“White House Economists Push Back Against Pressure To Blame Corporations For Inflation,” The Washington Post, 2/17/2022)

• “Former Democratic treasury secretary Larry Summers and Jason Furman, a top economist in the Obama administration, have also been openly critical of the attempts to blame corporations for inflation. ‘Business bashing is terrible economics and not very good politics in my view,’ Summers said in an interview.” (“White House Economists Push Back Against Pressure To Blame Corporations For Inflation,” The Washington Post, 2/17/2022)

ANONYMOUS BIDEN ADMINISTRATION SOURCE: “It’s been the war of the ‘track changes’ inside the administration over how much the White House can lean in on the extent to which competition and greed are driving inflation.” (“White House Economists Push Back Against Pressure To Blame Corporations For Inflation,” The Washington Post, 2/17/2022)

STEVE RATTNER, former Obama Administration Counselor to the Secretary of the Treasury: “For its part, the White House needs to be more honest as it rolls out initiatives. It has promised robust antitrust enforcement… it will have no discernible impact on competition or prices for years. And the high prices of meat and hearing aids, both of which Mr. Biden has vowed to address, are not at the heart of the current problem.” (Steve Rattner, Op-Ed, “Biden Keeps Blaming the Supply Chain for Inflation. That’s Dishonest.,” The New York Times, 2/17/2022)

And A Former Obama Administration Economist Says President Biden Blaming The Supply Chain For Inflation Is ‘Dishonest’ And ‘Misleading’ Because ‘The Bulk Of Our Supply Problems Are The Product Of An Overstimulated Economy’

“A former Treasury Department official who served in the Obama administration on Thursday shot back at President Biden's stated reasons for the extreme rise in inflation in an op-ed published in The New York Times. Steven Rattner, who served as counselor to the Treasury secretary, wrote in an op-ed for the Times that Biden was mischaracterizing the cause of the extreme inflation the U.S. is currently experiencing. When interviewing Biden last week, NBC News anchor Lester Holt pressed the president on the ongoing rise in inflation, noting that he had said last year that the heightened inflation would be temporary. This line of questioning appeared to vex Biden somewhat as he responded by calling Holt a ‘wise guy.’” (“Former Obama Official: Biden Dishonest To Blame Supply Chain For Inflation,” The Hill, 2/17/2022)

• PRESIDENT BIDEN: “The reason for the inflation is the supply chains were cut off, meaning that the products, for example, automobiles — the lack of computer chips to be able to build those automobiles so they could function; they need those computer chips. They were not available.” (“Former Obama Official: Biden Dishonest To Blame Supply Chain For Inflation,” The Hill, 2/17/2022)

STEVE RATTNER: “In an interview with Lester Holt of NBC last week, President Biden hewed closely to his talking points on inflation, which over the past 12 months has risen at its fastest rate in 40 years. ‘The reason for the inflation is the supply chains were cut off,’ he insisted, as he has done several times before. Well, no. That’s both simplistic and misleading. For starters, the supply chains have not been ‘cut off,’ just stretched. And supply issues are by no means the root cause of our inflation. Blaming inflation on supply lines is like complaining about your sweater keeping you too warm after you’ve added several logs to the fireplace.” (Steve Rattner, Op-Ed, “Biden Keeps Blaming the Supply Chain for Inflation. That’s Dishonest.,” The New York Times, 2/17/2022)

• “The bulk of our supply problems are the product of an overstimulated economy, not the cause of it. … All that consumption has resulted from vast amounts of government rescue aid (including three rounds of stimulus checks) and substantial underspending by consumers during the lockdown phase of the Covid crisis.” (Steve Rattner, Op-Ed, “Biden Keeps Blaming the Supply Chain for Inflation. That’s Dishonest.,” The New York Times, 2/17/2022)

Reminder: Economists Warned That The Reckless Taxing-And-Spending Spree Democrats Spent Much Of Last Year Trying To Pile On Top Of Their Stimulus Spending Blowout Risks ‘Fueling More Inflation When It Has Reached Record Highs Outweighs The Potential Benefits Of Passing A Big Spending Bill’

“[M]any researchers, including a forecasting firm that Mr. Biden often cites to support the economic benefits of his proposals, say the bill is structured in a way that could add to inflation next year, before prices have had time to cool off. Some economists and lawmakers worry about the timing, arguing that the risk of fueling more inflation when it has reached record highs outweighs the potential benefits of passing a big spending bill that could help to keep prices in check while addressing other social goals. Prices have picked up by 6.2 percent over the past year, the fastest pace in 31 years and far above the Federal Reserve’s inflation target.” (“The White House Says Its Plans Will Slow Inflation. The Big Question Is: When?,” The New York Times, 11/11/2021)

• “Many economists say it could create a short-term stimulus because the plan is structured to raise money gradually by taxing wealthier Americans, who are less likely to spend each additional dollar they have, and redistribute it quickly to people who earn less and are more likely to spend newfound cash. Because of the difference in timing between when the government spends money and when it starts to bring in more revenue, the bill is expected to pump money into the economy in its early years.” (“The White House Says Its Plans Will Slow Inflation. The Big Question Is: When?,” The New York Times, 11/11/2021)

• “Bank of America’s economics team said that core consumer prices would still rise at a 3.2 percent rate at the end of next year, incorporating the assumption that Mr. Biden’s plan passes. Adding a few tenths of a percent to already high inflation might feel more meaningful, moving price gains farther from the Fed’s 2 percent goal.” (“The White House Says Its Plans Will Slow Inflation. The Big Question Is: When?,” The New York Times, 11/11/2021)

• “The roughly $2 trillion tax and spending bill being championed by President Joe Biden will act to push up inflation next year if passed by Congress. That’s according to three senior economists -- Mark Zandi at Moody’s Analytics, Douglas Holtz-Eakin of the American Action Forum and Harvard University professor Doug Elmendorf -- who appeared on a virtual panel sponsored by the National Association for Business Economics on Wednesday.” (“Top Economists See Biden’s Spending Plan Adding to Inflation,” Bloomberg, 11/17/2021)

STEVEN RATTNER, Former Obama Administration Counselor to the Treasury Secretary: “[I]nflation worries are top of voters’ minds. So the [Biden] administration should come clean with voters about the impact of its spending plans on inflation. Build Back Better can be deemed ‘paid for’ only if one embraces budget gimmicks, like assuming that some of the most important initiatives will be allowed to expire in just a few years. The result: a package that front-loads spending while tax revenues arrive only over a decade. The Committee for a Responsible Federal Budget estimates that the plan would likely add $800 billion or more to the deficit over the next five years, exacerbating inflationary pressures.” (Steven Rattner, Op-Ed, “I Warned the Democrats About Inflation,” The New York Times, 11/16/2021)

• RATTNER: “The Biden administration needs to shift its approach. In particular, with the economy steaming along, it should make deficit reduction as important as its other initiatives. (Smaller deficits reduce net spending by government, thus helping offset demand by consumers.) But here again, Mr. Biden has been disingenuous. His Build Back Better plan claims to be deficit neutral, but that assertion is made credible only by using the fuzziest math. Over the first five years, the plan would add about $750 billion to the deficit, according to an analysis of the Congressional Budget Office’s estimates. With this year’s fiscal gap estimated at $1.3 trillion, any new version of the plan should reduce the deficit substantially in its early years using honest math.” (Steve Rattner, Op-Ed, “Biden Keeps Blaming the Supply Chain for Inflation. That’s Dishonest.,” The New York Times, 2/17/2021)

Even an analysis by Mark Zandi, chief economist of Moody’s Analytics found the implementation of Democrats’ multitrillion dollar taxing and spending bill would increase inflation annual growth from 3.8 to 4.0 in 2022. (“Macroeconomic Consequences of the Infrastructure Investment and Jobs Act & Build Back Better Framework,” Moody’s Analytics, 11/04/2021)

• “Moody’s Analytics — the firm that the White House typically cites when arguing in favor of its legislation — estimates that the government will spend $163 billion more on the package than it takes in next year. And the redistribution could make the money more potent as economic stimulus.” (“The White House Says Its Plans Will Slow Inflation. The Big Question Is: When?,” The New York Times, 11/11/2021)

JASON FURMAN, Former Obama Administration Council of Economic Advisors Chairman and Harvard Economist: “It’s more likely a small positive for inflation in 2022…” (“The White House Says Its Plans Will Slow Inflation. The Big Question Is: When?,” The New York Times, 11/11/2021)

DOUG ELMENDORF, Former Director of the Congressional Budget Office and Harvard Economist: “That will tend to push up GDP and employment and inflation -- which is not the policy impulse we need right now.” (“Top Economists See Biden’s Spending Plan Adding to Inflation,” Bloomberg, 11/17/2021)

ETHAN HARRIS, Head of Global Economics Research at Bank of America: “It will make the labor market even hotter and create even more price pressure.” (“The Rethinking of Bidenomics,” Bloomberg, 10/22/2021)