Inflation skyrocketed 7.9% over the past year, according to the February report from the Bureau of Labor Statistics — the fastest rate of inflation since January 1982. On Tuesday, the Labor Department reported that its producer price index, which tracks wholesale prices, was up by 10% from a year ago. Economists note that because these numbers are averages, and inflation was much lower a year ago, current inflation rates undoubtedly are now well over 10%.
In response, President Joe Biden tried out his newest excuse, saying that, “Today’s inflation report is a reminder that Americans’ budgets are being stretched by price increases, and families are starting to feel the impacts of Putin’s price hike.”
But Republican politicians know a winning economic election issue when they see one, and were quick to remind the voters of how often the Biden administration has changed its inflation narrative over the past six months. GOP Congressman Vern Buchanan was quick to tweet, “Inflation just rose to another 40-year high! First [the White House] said it was ‘transitory,’ then they blamed supply chain issues, then they claimed inflation ‘is actually a good sign.’ And now it’s Putin’s fault. When will the White House admit they are to blame for Bidenflation?”
Biden’s mishandling of the inflation problem has clearly put him and his fellow Democrats in dangerous political territory heading into November’s midterm elections. But Biden now seems to believe he can pin blame for both the spiking price of gas and rising inflation on Russian President Vladimir Putin. Yet that tactic is unlikely to work, especially with voters who recall that the cost of gas and just about everything else began rising long before Putin invaded Ukraine.
It will also be hard for Biden to convince working-class Americans that cutting off imports of imported Russian vodka and diamonds, and the less than 2% of all the oil this country uses, can be also responsible for soaring prices of the basics including everything from food to rent to electricity. Most Americans are also instinctively aware that, under normal conditions, the US economy’s reliance on Russian imports is marginal at best. For Democrats to ignore that fact and pretend that Putin controls our cost of living is to insult our basic intelligence.
Given the fact that Russia is the world’s third largest exporter of oil, Biden’s claim that Putin is responsible for the 40% rise in the cost of gasoline since Russia invaded Ukraine is more credible, but it still does not explain why the cost of gas at the pump had previously risen by a similar amount during the previous 13 months since Biden took office.
YOUNGER AMERICAN CONSUMERS UNFAMILIAR WITH INFLATION
Historically, high gas prices are a political problem for the party that happens to be in power in Washington, but most consumers are aware that gas prices are volatile, and can rise and fall drastically according to developments in the global oil market. However, it has been 40 years since the last time that Americans had to deal with double digit inflation, and when that happened, it was a major factor in Ronald Reagan’s landslide defeat of Jimmy Carter in the 1980 presidential election. That is also why the effects of today’s runaway inflation have come as such a shock to voters under the age of 45.
Even if the current gas price spike does soon level off, the inflation and shortages already embedded in the American economy are highly unlikely to abate before the midterm election.
Working- and middle-class voters, regardless of their party affiliations, are already painfully aware of the inflation problem, and most are already holding Biden and the Democrats responsible for it.
According to the most recent survey conducted by Democrat pollsters Douglas Schoen and Carly Cooperman, 58% of voters disapprove of Biden’s handline of the economy, compared to 38% who approve. That 21-point spread had grown by a whopping 17 points since their last poll in December, and is likely to keep growing if the rate of inflation continues to accelerate due to the impact of the war in Ukraine, as now seems likely.
Even Biden’s Treasury Secretary Janet Yellen, who encouraged Biden to “go big” in crafting his $1.9 trillion Covid relief spending package which helped fuel the initial surge in prices, now admits that Americans are likely to see anoth er year of “very uncomfortably high” inflation.
BIDEN TRIES TO REASSURE WORRIED HOUSE DEMOCRATS
Over the weekend, addressing an audience of apprehensive House Democrats at their annual issues conference in Philadelphia, Biden offered them a variety of arguments, each one of them less convincing than the last, to exonerate his policies for the nation’s current inflation problems.
First, he said that “Democrats didn’t cause this problem. Vladimir Putin did.”
Then Biden said it was due to the “oil companies and executives. They don’t want to pump more oil, although they have every capacity to do so… Why? Rather than spend the profits on the increased price of gasoline, they would rather take those profits and buy back their own stock, rather than take that money and invest it in pumping new oil.”
To back up his claim, Biden cited the fact that the American energy industry now has only “172 gas and oil rigs running [when] there were 519 in operation before this [pandemic] began.” But Biden failed to explain the real reason why the rig count is so low. His administration’s anti-fossil fuel policies, as well as the collapse of oil prices during the first months of the pandemic, scared off many of the investors who used to put up the money to finance the exploration of new oil fields.
Biden even tried to use the corporate greed argument as a justification for continuing his war on the fossil fuels industry.
“You know, there’s an impediment to production in the United States, and it’s called ‘the bankers on Wall Street.’ And this crisis is another indication of why we need to get off dependency on fossil fuels. So don’t tell me gas prices rose because I’ve slowed down the American energy production…”
“So I’m sick of this stuff,” Biden told his Democrat audience. “We have to talk about it because the American people think the reason for inflation is the government is spending more money. Simply not true… And don’t tell me gas prices rose because of the [$1.9 trillion] American Rescue Plan [although that is now the consensus view of most economists].”
BLAMING AMERICAN CONSUMERS
Biden’s next scapegoat for inflation and the supply chain issues was none other than American consumers, because they did not react to the pandemic as he had expected. “So here you had an unusual situation that, during a pandemic, people had money to spend,” the president said. But they didn’t do that, because “they didn’t want to go to restaurants. They didn’t want to go out and go on vacations. They didn’t spend money on leisure activities. So they wanted to spend it on other things, on hard goods, home improvements, televisions, additions to their homes, the very products [whose manufacture was] slowed down by disruptions in the supply chain, because there weren’t people cutting two-by-fours. Because of Covid, they were shut down.”
But Biden did not explain why he failed to modify his liberal big spending policies after it became clear that they were slowing down the economy while driving up the rate of inflation. Instead, Biden had recommended another $3.5 trillion government spending program, which, fortunately for the country, was killed by Democrat Senator Joe Manchin.
Biden vehemently denied that his own policies were responsible for the sharp rise in energy prices prior to the Ukraine crisis. He cited a cherry-picked economic estimate by the San Francisco Federal Reserve which claimed that last year’s Covid rescue package contributed only 0.3% to the rate of inflation.
DISMISSING THE KEYSTONE PIPELINE
President Biden argued that, “the Republicans are saying it’s ‘Biden’s gas pipeline,’ ‘Biden said he’s going to stop the Keystone Pipeline…’ — and I did — ‘…and that’s the reason prices went up.’ Folks, let’s get something straight here: The Keystone Pipeline was two years away. It had been [only] 2% finished. Give me a break!”
Biden also argued on behalf of his failed Build Back Better plan, citing a letter that he received from 17 Nobel laureates in economics “saying this will help ease inflationary pressure over time, not increase it. Ease. And we can do this without raising one single penny in taxes on anybody making less than $400,000 a year.”
With somewhat more justification, Biden referred to pandemic-related supply chain disruptions and raw material shortages as contributing causes of inflation. He cited, for example, the reasons behind the lack of cars for sale last year.
“One third of all the inflation in America last year was because of the price of automobiles,” Biden noted. “People had the money to buy automobiles, finally. But because the companies couldn’t get semiconductors, they couldn’t make the automobiles. The result: The price of automobiles skyrocketed. And the reason used car [prices] went up is because when Covid hit and the leisure industry shut down, the rental cars sold all their stock. So people [who needed cars] were in real trouble.”
At least Biden’s arguments in defense of his policies were semi-coherent, even though most of them were wrong.
VICE PRESIDENT HARRIS FAILS AGAIN
Vice President Kamala Harris, whom the White House sent to Europe last week to show the flag as part of the NATO effort to support Ukraine, failed completely when asked by a reporter at a press conference in Bucharest, Romania, “How long should Americans expect this historic inflation and some unprecedented gas prices?”
She pretended not to understand the question, and started talking about her discussions with Romania’s president about the potential Russian threat in the Black Sea. “We are fully aware and apprised because we are in constant communication with the president, with his administration here, about the concerns that they have about the entire region and frankly the vulnerability. All you have to do is look at the map.”
The rest of the reporters present got the message, and didn’t ask the vice president any more questions about the US economy.
GINGRICH ACCUSES BIDEN OF FAVORING DICTATORS OVER AMERICANS
Meanwhile, former GOP House Speaker Newt Gingrich challenged the Biden administration’s morality, calling it “profoundly wrong” to make “appeals to Iran, Venezuela, and Saudi Arabia for oil,” but reject American and Canadian oil and gas production.
“Why does Joe Biden think dictators are better than Americans?” Gingrich asked. “Why send money to Iran instead of Oklahoma, or to Venezuela instead of Texas? If he wants to send money outside the United States, why not send money to Canada rather than Saudi Arabia? Biden’s opposition to American oil and gas is killing jobs, weakening our national security, endangering our allies and restricting the United States’ foreign trade.”
In an opinion column published in Newsweek, Gingrich noted that, “The price of oil has jumped from $53 a barrel when Donald Trump left office to $123 a barrel as I write this column. The correct American response would be to maximize the production of American oil and gas, so we can drive down the price of energy.
“By emphasizing American production, we would create jobs in the oil patch (which for natural gas includes Pennsylvania, West Virginia, Ohio, and more traditional producing states). This could even include New York, if the liberal politicians there did not ban fracking and thereby reduce the income of New York farmers and landowners.
“Furthermore, the right strategy would include a massive increase in liquid natural gas production, so American gas could replace Russian gas in Western Europe. This would be good for European independence from Russian pressure and create American jobs. A decision to return to American energy independence would lower the price of gasoline, make the Ukraine war far more expensive for Russia, and bring relief to many millions of Americans.
“The Biden team insists that its boycott of Russian oil is the only reason for the high cost of gasoline and heating oil. They expect us to ignore the degree to which they have crippled American energy production. The fact is the nuttier arm of Biden’s team would like to eliminate all oil and gas production…
“The suggestion that working and retired Americans who are struggling to pay $4.50 a gallon (and even more in some places) should shell out tens of thousands of dollars for an electric car shows just how out of touch with reality the Biden team is…”
Making an analogy to the French Revolution, Gingrich noted that, “Marie Antoinette said of hungry Parisians, ‘let them eat cake.’ Now, the Biden administration says of cash-poor Americans, ‘let them buy an electric car’… Unfortunately, for most Americans, the world Biden is creating is expensive and does not work.”
Gingrich then told his readers, “Every time you go to the gas station, remember it is Biden’s policies, and not bad luck or Putin’s aggression, which is costing you so much to fill up your car. Then ask your representatives in the House and Senate to override Biden’s insanity on energy and return us to an American energy policy.”
HOW BIDEN IS TRYING TO DESTROY THE US FOSSIL FUEL INDUSTRY
Daniel J. Flynn, a senior editor of the American Spectator, describes the Biden administration as “a public relations outfit disguised as a presidency.”
He notes that “Long before Joe Biden announced an embargo on Russian oil, he promised one on American oil. ‘Would you close down the oil industry?’ Donald Trump asked at the second 2020 presidential debate. ‘I would transition from the oil industry,’ Joe Biden responded. ‘Yes.’”
At least, Flynn notes, Biden was true to his word. “Joe Biden issued an executive order on his first day in office placing a moratorium on Arctic National Wildlife Reserve drilling and blocked offshore drilling for parts of the Arctic Ocean and Bering Sea. That same executive order ‘determined that approving the proposed Keystone XL pipeline would not serve the US national interest’ because ‘the United States must prioritize the development of a clean energy economy’ and ‘that approval of the proposed pipeline would undermine US climate leadership by undercutting the credibility and influence of the United States in urging other countries to take ambitious climate action.’
“A week later, Biden compounded the problem by issuing executive order 14008 [which] instructed the secretary of the Interior to ‘pause new oil and natural gas leases on public lands or in offshore waters’ to ‘consider whether to adjust royalties associated with coal, oil, and gas resources extracted from public lands and offshore waters, or take other appropriate action, to account for corresponding climate costs.’ The order also ordered several cabinet secretaries to ‘identify steps through which the United States can promote ending international financing of carbon-intensive fossil fuel-based energy while simultaneously advancing sustainable development and a green recovery.’”
Biden also rejoined the Paris climate agreement, which commits America to cutting greenhouse gas emissions, but not China’s. His Environmental Protection Agency reinstated Obama-era rules making it more expensive to produce oil and gas, issued new rules to make gasoline-powered cars more expensive, and gave liberal Californian state officials the authority to dictate what kind of cars Americans can drive. Biden also empowered the Federal Energy Regulatory Commission to block all new oil and gas pipelines exclusively on the basis of climate concerns, making it much more expensive to bring oil and natural gas from newly developed fields to the markets that need them.
BIDEN ASKS FOR MORE US OIL, BUT DOES HE MEAN IT?
Meanwhile, Biden’s Transportation Secretary Pete Buttigieg and Energy Secretary Jennifer Granholm are touting electric cars (average price $56,000) as the solution to rising gas prices.
Granholm also declared last week that in the face of the current energy crisis, the administration is ready to work with “everyone and anyone who is willing to take a lead into the future by diversifying your energy portfolios to add clean fuels and technologies.” In a visit last week to a fossil fuel industry conference, she reminded the executives, “We are in an emergency, and we have to responsibly increase short-term supply where we can right now to stabilize the market and minimize harm to American families.
“I hope your investors are saying these words to you as well: In this moment of crisis, we need more supply … right now, we need oil and gas production to rise to meet current demand,” she said. However, she added that the Biden White House still has no intention of reducing its longer-term clean energy goals.
This proves that Secretary Granholm’s attitude has not changed since last November, when she laughed off a question during a Bloomberg interview about “the Granholm plan to increase oil production in America.” Granholm had answered, “that is hilarious. Would that I had the magic wand on this.” She then claimed that global oil production and prices are totally controlled by the OPEC cartel, ignoring the fact that before the pandemic, an energy independent US was the world’s swing oil producer.
Senate Democrats are just as out of touch with the realities of the current energy crisis as the Biden administration. Repeating the false claim that high gas prices are the result of profiteering by Big Oil companies rather than onerous government regulatory policies restricting domestic oil production, Elizabeth Warren, Michael Bennet, and 10 other Democrat senators are now calling for a new windfall profits tax that would effectively penalize American companies for producing or importing more than 300,000 barrels of oil a day.
The proposal proves that, despite their crocodile tears about the punitive effect of high gas prices on working families, Democrats really don’t want US companies to bring those prices down by producing more oil. They really do want higher gas prices to pressure reluctant consumers into buying more electric vehicles, but they don’t dare say so publicly during an election year for fear of the fierce backlash from the working-class voters they still claim to represent.
Flynn explains that in the face of high gas prices, Biden prefers “a superficial approach” in order “to placate the environmentalists.” That is why he has gone in search for fossil fuels to replace Russian oil from other autocratic countries, including Venezuela, Saudi Arabia, and Iran, rather than lift his restrictions on American fossil fuel companies.
CAN BIDEN CHANGE DIRECTION?
Flynn notes that previous presidents, when facing times of crisis, rose to the occasion by changing course.
President Nixon sought to divide the communist world by visiting China. President Clinton responded to a conservative Republican landslide in the 1994 midterm election by declaring that the era of big government was over, and the same Ronald Reagan who condemned the Soviet Union as the “evil empire” negotiated a nuclear arms control agreement with Mikhail Gorbachev that ultimately led to the bloodless collapse of the Soviet empire, ending the Cold War.
Similarly, Flynn explains, “Current events, and long-standing anemic poll numbers, suggest that Joe Biden needs a fossil fuels reversal almost as much as America does. Just don’t count on it. The office that makes some men big keeps others small. Biden, a rigid servant to interest groups rather than the whole country, lacks the political imagination of a Nixon or a Reagan or a Clinton.”
In the face of the current worldwide energy crisis, Flynn concludes, when bold action is needed, instead, “[Biden] postures [and] we pay.”
ASSIGNING RESPONSIBILITY FOR INFLATION
Gerard Baker, an editor-at-large at the Wall Street Journal, observes that “the attempt by President Biden last week to assign blame for the acceleration of prices that began just over a year ago to a war that began just under three weeks ago is remarkable for its cynicism, its dishonesty, and its desperation.”
Baker notes that the initial “surge in inflation, which began in November 2020 when the year-over-year increase in the consumer-price index was 1.2%, obviously isn’t all Mr. Biden’s fault. As the economy began to open up after the initial shock of the pandemic, a wave of pent-up demand met a supply constricted by disruption and diminished capacity. The resultant price surge was global.
“While this may absolve policy makers of responsibility for the initial rise in inflation, it serves also to highlight their culpability in their failure to respond to it.”
Baker argues that the “primary responsibility lies with the Federal Reserve, which by its passivity in the last year may have executed the most significant failure of monetary policy in most Americans’ lifetimes.
“But the Biden role is not to be diminished… His administration is guilty of [economic] sins of both commission and omission.
“The sin of commission was principally that American Rescue Plan that nobody now gives him credit for. Adding a demand boost of $1.9 trillion was a reckless gamble, and the Democrats… were repeatedly told so by some of their most prominent economic thinkers.
“But there are other sins of commission — or at least attempted ones. The [Biden] effort to pass Build Back Better was one. While the measure contained some elements that might eventually have eased some supply constraints, the anticipated shorter-term fiscal impact was enormous, with the real cost of the legislation much higher than the $1.7 trillion claimed. Another error was to respond to labor shortages by making it more remunerative for many workers to stay home with generous unemployment benefits.”
Baker also accuses the Biden administration of negligence for watching the rising threat of inflation for months and refusing to acknowledge it until it was too late to prevent it from doing serious harm to the economy in general, and especially to working-class and minority families.
INFLATION TURNING MINORITIES AGAINST BIDEN
A poll released by the Wall Street Journal this week found that 35% of black, Hispanic, Asian-American, and other non-white voters report suffering some level pain from inflation, compared with 28% for white voters. The highest impact was among black women and Hispanic men, 44% of whom said they were being affected by inflation.
People with lower incomes, regardless of race or ethnic background, were also affected the most by inflation. Almost half of those earning less than $60,000 a year reported a major financial strain, compared to just 13% of those making $150,000 or more.
Rising prices was the top issue cited by all voters asked to choose between inflation and the economy (50%), the war in Ukraine (25%), immigration and border security (15%), and the Covid pandemic (5%). Some 60% of non-white voters said that they consider inflation and the economy to be the most important issues, compared to 47% for white voters.
The heightened concern over inflation and the economy was more bad news for President Biden and Democrat candidates running in November’s midterm election. It was reflected in overall gains in support for Republican candidates among traditionally Democrat black and Hispanic voters. In addition, 71% of independent voters, a key Biden voter bloc in the 2020 election, now say they feel the economy is now going the wrong way, while 78% of Hispanics expressed the same negative sentiment about Biden’s economic policies.
In overall agreement with the poll by Schoen and Cooperman, the Wall Street Journal survey found that 59% of all voters disapprove of Biden’s handling of the economy, while a slightly higher percentage, 63%, specifically disapprove of the way he has been handling inflation.
One of the many ironies emerging from the Biden’s war on fossil fuels is that it put an end to the policies which provided so much more affordable natural gas, thanks to the fracking and horizontal drilling revolution. During that period, the US became the most successful country in the industrialized world in reducing in greenhouse-gas emissions, by voluntary replacement of coal-fired generators with much cleaner burning natural gas energy.
US ENERGY INDUSTRY STILL READY TO HELP
Harold Hamm, chairman of the Domestic Energy Producers Alliance, argues in a Wall Street Journal op-ed that, “Modern life is predicated on cheap, abundant and reliable energy, [and] this administration has manufactured scarcity and mandated insecurity around the globe.”
His answer to America’s current energy crisis is to tap “the largest strategic reserve in the world [which] is under our feet.
“The solution lies in three simple actions: First, make it official U.S. policy to restore energy-independence by using all sources of available energy…
“Second, re-open federal lands for energy development…
“Third, support energy infrastructure, including pipelines to transport natural gas, oil and CO2 safely.”
Hamm, who is also the founder and CEO of Continental Resources, an Oklahoma City -based gas and oil company which produces the energy equivalent of 300,000 barrels of oil per day, closed his op-ed with a message for Secretary Granholm and the Biden administration: “The people of the American oil and gas industry stand ready to work with you on US energy