“‘The counterfactual here is not that if we did not pass the American Rescue Plan, that we are sitting here today with 2% inflation and 4.5% unemployment. I think that the counterfactual is that we would be sitting here with still record high inflation and much higher unemployment — and be in a much worse position to tackle these challenges.’”
That was Bharat Ramamurti, a top economic adviser to President Joe Biden, as he spoke Thursday in defense of the $1.9 trillion COVID-19 relief package that Biden signed into law last year.
Republicans have criticized Biden frequently over high inflation and often charged that 2021’s American Rescue Plan has contributed to high prices, with Senate Minority Leader Mitch McConnell saying in a recent floor speech that it’s “directly responsible for as much as three percentage points of our current inflation.”
But Ramamurti, deputy director of the president’s National Economic Council, continued the Biden administration’s effort to push back on that point made by GOP lawmakers and some economists.
“Every country in the world is dealing with record high inflation, by and large,” said Ramamurti, who previously was an economic adviser to Democratic Sen. Elizabeth Warren of Massachusetts.
“What’s different is that the United States is attacking that problem from a position of strength. We are in a much better position than the United Kingdom, than the eurozone and other countries — if you look at our household balance sheets, if you look at the state of our labor market, if you look at business investment and consumer spending. So I don’t want to diminish the challenges that we’re facing, but I think it’s very important to note that were it not for the robust recovery that this administration helped lead, we would be tackling these challenges from a weaker position.”
He said inflation has been driven primarily by the emergence of the economy from the COVID pandemic and its shutdowns, as well as Russia’s invasion of Ukraine, which has lifted prices for energy
minerals and other commodities. His remarks came during a panel discussion hosted by the Roosevelt Institute, a liberal think tank.
Analysts have been predicting defeats for Biden’s Democratic Party in November’s midterm elections if high prices persist.
Republicans are widely expected to regain control of the U.S. House of Representatives in those elections, with betting market PredictIt giving an 87% chance for that outcome. The GOP is getting good odds for taking back the 50-50 Senate, too, as PredictIt puts them at 78%.
On separate occasions in early May and mid-April, the Biden White House pushed back as reporters brought up how economists such as Larry Summers had warned last year that government spending would lead to high inflation.
The most recent release for the consumer price index showed the annual rate of inflation fell to 8.3% in April, down from a 40-year high of 8.5% in March. A CPI reading for May is slated to come on June 10, with economists expecting a year-over-year rate of 8.3%.
closed sharply higher Thursday but have tumbled this year. The S&P 500
is down about 12% in 2022, as investors fret about inflation, the Federal Reserve’s interest-rate hikes and the potential for a recession.
Now read: As Biden fights inflation, economists warn his weapons for this battle look ‘extremely limited’
And see: Mitt Romney, Elizabeth Warren, other senators send bipartisan letter to Biden urging him to keep Trump’s China tariffs, saying they’re ‘not a driver of today’s inflation’
This report was first published on June 2, 2022.