October Blues
A volatile market, a struggling effort to reduce inflation, and recession-threatening numbers shade an otherwise positive economic story. (1)
What?, you ask.
There, I said it: “a positive economic story.”
In an October 20 New Yorker piece, Susan Glasser recounts a January live mic episode when President Joe Biden called out Peter Doocy of Fox News who asked, “Do you think inflation is a political liability ahead of the mid-terms?” Biden’s response was less than charitable. (2)
The question, unanswered was, who’s political liability, the President’s or Congressional Republicans’? Doocy was threatening Biden with losing his political advantage in Congress and Doocy’s ‘gotcha’ showed perfect timing.
This past week, Doocy struck again:
On Wednesday, Biden got into another brief scrap with Doocy, at the tail end of a White House photo opportunity. With less than three weeks to go before the midterm elections, the President was signing an order to release fifteen million more barrels of oil from the Strategic Petroleum Reserve. “It’s not politically motivated at all,” Biden insisted, though even the most diehard Democrat would have a hard time seeing the move as anything other than a last-ditch effort to stop gas prices at the pump from rising further before the vote. Republicans were quick to pounce: Was this the kind of strategic use for which the stockpile was intended?
As Biden stood to leave, Doocy shouted a question. “Top domestic issue: Inflation or abortion?” he asked.
“They’re all important. Unlike you, there’s no one thing,” Biden retorted. “We oughta be able to walk and chew gum at the same time.”
The issue for Dems is why Biden and Dems, writ large, fall for this forced choice q and a, this false equivalency about the economy Republicans cherish.
And also of issue is what Doocy infers by his goading: what confidence do Democrats have of linking social issues like abortion and climate change to a regulated economy, precisely what Biden has achieved?
Aren’t Democrats acting the privileged class here? Where is ‘the rest of us?’
Republicans are the voice of scarcity, not abundance; scarcity of demand, not supply. (3)
So, what exactly is Biden looking at? That inflation matters? Or that inflation can be managed, which Republicans are eager to debase?
And Democrats are reluctant to reframe. (4)
Remind me again what economic proposals to curb inflation Republicans have come up with. More tax breaks for the wealthy? As one writer on Medium proposes recently, while the world is applauding “Bidenomics,” and political ethicist Sen. Bernie Sanders is criticizing liberals for deserting the party’s core values, who is linking social issues like crime and health care to redistributing wealth — exactly what Biden has accomplished, albeit meagerly, without the support of elected representatives?
If one speaks to independents, and moderate Democrats, yes inflation is a political liability; if one speaks to women, youth and social progressives, no, inflation is not a political liability — losing one’s rights are. (5). And this oversight in election 2022 voter reporting is just the beginning.
Chile took nearly a decade to get out from beneath low taxes, low government benefits, widespread poverty and class division, compliments of American economist Milton Friedman and the government of Augusto Pinochet.
Japan, riddled with an aging population and a low birth rate, is still trying to get out from beneath austere measures adopted in the 90’s and aughts.
The United Kingdom took 44 days to root out supply side loyalist Liz Truss and her staff of financial wizards. Their cutting taxes and borrowing money to fund the British governing system received a vote of no confidence.
Yes, the public welfare matters.
‘Inflation’ is easy to observe:
Price increases, windows of opportunity closing, shared pain.
Loss of one’s rights, economic and social, are less easy to observe. As one political commentator asserts, if Americans don’t vote to protect democracy, the discussion of fixing inflation is off the table. (6)
If America had experienced the blanket tax cuts, as the UK did, the result would have been the same. In America the markets have responded positively to new levels of inflation — as long as stability is the goal. Look closer at Wall Street’s gyrations: they are responses to risk more than they are reactions to tighter money supply or fiscal tweaks.
So, what’s left of inflation? Tax cuts like the one Liz Truss and company proposed, a la Thatcher, strip governments of the primary tool to reducing debt — funding distribution of wealth? Trump’s tax cuts, which benefit the wealthy, put a huge burden on the country’s debt which in turn sparked a global retreat from investing. Biden shored this financial debacle with three bills to reduce the deficit and expand public investment: Infrastructure, CHIPS Act, Inflation Reduction Act.
“We’re back,” spoke Biden after assuming leadership at the White House two years ago. The economy responded positively.
Fast forward: wasn’t it Biden who commented that Truss’s tax cuts were not a good idea? And this economic observation and opening for a real discussion of inflation received stingy exposure.
Yes, the public welfare matters.
As for the Wall Street ‘October Blues,’ what are they?
The Wall Street index gyrations are not linked exclusively to economic policy, but rather to market performance: volatile markets are caused by fourth quarter investment portfolio reckoning and end of year profit taking.
Yes, there are narratives American voters (and Biden) can’t control:
Global/political standoffs trigger a year-end concern about the future and there is an unrelenting war in Ukraine.
But America can endorse linking social issues to redistribution of wealth.
That’s not too hard to vote for.
October 22, updated November 2
Notes
1-In this essay the words ‘economy’ and ‘inflation’ refer to ‘macro-economy,’ and ‘price inflation.’ In other words, those financial forces which government policies, as executed by public institutions, can influence.
2-https://www.newyorker.com/news/letter-from-bidens-washington/joe-bidens-walk-and-chew-gum-campaign
3–If the Dems Lose the Midterms, This Will Be Why by umair haque
4-Correction and update, November 1. Two candidates for office, both from California — Gavin Newsom and Katie Porter — are making the case that the economy is a factor and Democrats have managed the store better in fact than Republicans. So why have Democratic Party strategists not repeated their compelling story?
5-Michelle Goldberg, “The Midterm Race That Has It All,”
5-Michael Steele, MSNBC, October 19
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