President Biden on Wednesday urged Congress to pass his nearly $2 trillion social and environmental spending bill after an official report showed the US going through the worst inflation in more than three decades, which critics attribute in part to massive government spending.
Biden said in a statement that “reversing” inflation is a “top priority” after the Labor Department’s Consumer Price Index jumped 6.2 percent in October from a year earlier, reflecting an increase in the cost of goods and services as well as energy and food — but even some Democrats worry that his proposed fix would worsen the situation.
“[I]t is important that Congress pass my Build Back Better plan, which is fully paid for and does not add to the debt, and will get more Americans working by reducing the cost of child care and elder care, and help directly lower costs for American families by providing more affordable health coverage and prescription drugs — alongside cutting taxes for 50 million Americans including for most families with children,” Biden said.
The president added that “17 Nobel Prize winners in economics have said that my plan will ‘ease inflationary pressures.’ And my plan does this without raising taxes on those making less than $400,000 or adding to the federal debt, by requiring the wealthiest and big corporations to start to pay their fair share in taxes.”
But Biden’s claim that the hulking bill is paid for is hotly debated and centrist Democrats including Sen. Joe Manchin (D-WV) say they’re concerned it could worsen inflation by pumping new cash into the economy, devaluing people’s savings and buying power.
Biden in his statement acknowledged frustration over inflation — driven by a 30 percent spike in the cost of energy, including gasoline used to transport goods.
“Inflation hurts Americans’ pocketbooks, and reversing this trend is a top priority for me,” Biden said, urging passage of the new spending bill on the heels of a $1.2 trillion bipartisan infrastructure bill that passed last week — of which $256 billion isn’t paid for, according to the Congressional Budget Office.
“The largest share of the increase in prices in this report is due to rising energy costs — and in the few days since the data for this report were collected, the price of natural gas has fallen,” Biden added. “I have directed my National Economic Council to pursue means to try to further reduce these costs, and have asked the Federal Trade Commission to strike back at any market manipulation or price gouging in this sector.”
Biden continued, “Other price increases reflect the ongoing struggle to restore smooth operations in the economy in the restart: I am traveling to Baltimore today to highlight how my Infrastructure Bill will bring down these costs, reduce these bottlenecks, and make goods more available and less costly.”
Manchin said last week that Democratic defeats in Virginia’s gubernatorial and legislative elections reflected alarm about inflation and added that he wanted to tap the brakes on new spending. Centrist House Democrats on Friday engaged in a standoff with progressives over a vote on the social spending bill, which hasn’t yet been scored by the Congressional Budget Office.
“When you look at southwestern Virginia and you saw the returns from southwest [Virginia], that’s my entire state — so these are people I talk to all the time,” Manchin said Nov. 3. “And I knew what they were concerned about. They’re concerned about inflation, high costs making it more difficult for them … I think they spoke loud and clear at the voting booth. And I hope everybody listens.”
Democrats cannot afford to lose a single vote in the Senate for the $1.75 trillion bill, which critics say actually would cost much more if its proposed programs, such as subsidized child care, home health care and paid leave, are made permanent. Critics also doubt projections that the bill will be fully paid for though tougher IRS enforcement and new taxes on wealthy people capable of sophisticated tax-avoidance strategies.
Experts attribute the inflation spike in part to a supply-chain bottleneck at major ports, which is constricting the supply of goods at the same time that demand has increased. That demand comes amid generous government subsidies, including this year’s expansion of the child tax credit from $2,000 to $3,000 per child, or $3,600 per kid under age 6, which the Biden social spending bill would extend.
Top Trump White House economist Larry Kudlow blasted Biden’s response to inflation, saying in a Fox News interview Wednesday that Biden’s commitment to moving away from use of fossil fuels is in part to blame.
The White House acknowledged this week that Biden is considering shuttering the Line 5 pipeline in Michigan. Shortly after taking office, he scrapped the proposed Keystone XL pipeline project from Canada, banned drilling in Alaska’s Arctic National Wildlife Refuge preserve and paused new oil and gas leases on federal land.
“They don’t even want to take it seriously,” Kudlow said. “If you have an imbalance of supply and demand … then you increase supply. America is the largest producer of energy in the world if the administration would let America produce, OK? That includes oil, that includes natural gas. Heck, it even includes coal.”
“Stop closing pipelines in Michigan,” Kudlow added. “Stop closing ANWR, stop closing the [Keystone] XL pipeline.”
“We’re 2 million barrels short,” Kudlow went on. “Eighteen months ago, 20 months ago, we were generating 13 million barrels of oil per day. During the pandemic it fell to 11 and it hasn’t recovered yet because of the Biden policies that are suppressing, regulating, taxing and imposing fees.”