It feels like everything is more expensive.
That is, in part, because it is. The annual rate of inflation rose to 8.5 percent in March, the highest it’s been in more than 40 years. As a result, the Federal Reserve has raised interest rates twice so far in 2022 and is expected to do so several more times.
Public opinion polls show that across demographic groups, voters in the U.S. care more about the economy than any other issue. This reality does not bode well for President Joe Biden and his political ambitions to maintain his slim Democratic majorities in the House of Representatives and the U.S. Senate.
Biden himself has struggled to gain political ground in the face of soaring inflation. According to Real Clear Politics, his approval rating hovers around 42 percent, with more than half of Americans disapproving of the job he is doing as president.
Now, the president has a plan to turn the political tide.
On Tuesday, Biden announced a series of steps he plans to take to lower inflation and relieve pressure on the American middle class, long a perceived ally of the president who has styled himself as ‘Middle Class Joe’ for much of his career.
“We’ve built a strong economy with a strong job market,” Biden said. “The number one threat in that strength that we’ve built is inflation.”
In his announcement of the plan, which the president outlined in remarks on Tuesday, the White House was quick to emphasize this as an extension of work the president has been doing rather than an entirely new policy.
The president also blasted congressional Republicans who, he says, have not released a sustainable plan to address inflation.
“Americans have a choice right now between two paths reflecting two very different sets of values,” Biden said. “My plan attacks inflation and grows the economy by lowering costs for working families, giving workers well-deserved raises, reducing the deficit by historic levels, and making big corporations and the very wealthiest Americans pay their fair share.”
An undated photo provided by the Department of Energy shows crude oil pipes at the Bryan Mound site near Freeport, Texas. The White House announced Thursday, March 31, 2022, that Biden ordered the release of 1 million barrels of oil per day from the strategic petroleum reserve for the next six months.(Department of Energy via AP)
He contrasted his plan with suggestions from Republicans in Congress.
“The other path is the ultra-MAGA plan put forward by congressional Republicans,” he countered, “To raise taxes on working families, lower the income of American workers, threaten sacred programs Americans count on like Social Security, Medicare, and Medicaid, and give break after break to big corporations and billionaires.”
The president’s plan focuses on three major areas: lowering energy costs; lowering other everyday costs for families; and reducing the federal deficit.
When it comes to energy, the president plans to continue to release one million barrels of oil per day from the Strategic Petroleum Reserve to blunt costs of what Biden calls “Putin’s price hike”.
The Biden Administration is also focused on lowering energy bills for Americans. Energy costs have been heavily affected by inflation; prices for heating oil in particular have nearly doubled since last year, according to the Department of Energy.
When it comes to bringing down everyday costs for families, the president is looking at the problem with a wide-angle lens. The White House announced plans to reduce prescription drug prices, health care bills, child care costs, the cost for food, and housing costs, among others.
While the goals are ambitious, the president’s plan relies heavily on congressional action, which would be unlikely to take place before the 2022 midterm elections. Plus, with razor slim majorities in both chambers, the president does not have the votes to stop a Senate filibuster that would prevent single-party legislation from moving forward.
In response to criticism of congressional Republicans, Sen. Rick Scott (R-Fla.) released a statement challenging Biden to a debate on inflation in Scott’s home state.
“I’d welcome President Biden to Florida to debate inflation, the supply chain, and Biden’s economy that’s hurting hard-working families,” Scott said. “I’m sure one of the many small businesses in Florida that’s struggling to keep its doors open with prices rising and supply shortages caused by the Democrats’ economic policies would be happy to host.”
Light shines from the U.S. Capitol dome after sunset, Tuesday, Jan. 25, 2022, in Washington. (AP Photo/Patrick Semansky)
“Joe Biden can blame me all he wants,” Scott continued. “Here’s the truth: he’s the President of the United States, Democrats control the House of Representatives and the Senate.”
In a separate statement Scott, who is also chair of the Republican senatorial campaign arm, questioned Biden’s cognitive ability, echoing a conservative conspiracy that argues the president is unfit. Scott said Biden should resign.
In real time, Biden responded: “I think the man has a problem.”
Amid the tit-for-tat commentary though, there’s a real economic challenge for lawmakers and the president. There’s the added question of how to pay for any congressional programs that carry a price tag. Pumping more money into the economy will have the opposite effect intended; more free cash flow will make inflation worse.
The Biden Administration hopes to cool inflation further by implementing tax increases on corporations and wealthy individuals. This is not a new proposal from the president but it is the first time it is being highlighted in a specific plan to fight inflation.
"My plan is to lower everyday costs for hardworking Americans and lower the deficit by asking large corporations and the wealthiest Americans to not engage in price gouging and to pay their fair share in taxes,” Biden explained.
While inflation is not the responsibility of a single president or a single economic policy, especially in this case given the perfect storm of the COVID-19 pandemic and its global economic disruption, Biden will face the consequences if things continue to cost so much more at the point of sale.
Updated on May 10, 2022, at 3:34 p.m. ET, with Biden's speech, new details.