President Joe Biden used his Monday remarks to counter concerns from Republicans and some economists that his spending proposals are leading the country into a prolonged inflationary period.
White House officials told the Washington Examiner ahead of Biden’s speech that the president would make the case that both the Bipartisan Infrastructure Framework and the Build Back Better budgetary request will offset inflation by spreading out the trillions in spending across roughly a decade.
Furthermore, the White House believes that modernizing the nation’s roads, bridges, internet hardware, and waterways will increase economic efficiency, while investment in domestic manufacturing and research and development will help address supply chain deficiencies at least partially responsible for the current inflationary run.
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The president himself first addressed the topic by stating Monday that the White House’s “experts believe, and the data shows, that most of the price increases we’ve seen are expected to be temporary.”
“My Build Back Better plan will be a force for achieving lower prices for Americans looking ahead. It’s another reason why the investments are so important. We make prudent multiyear investments on better roads, bridges, transit systems, and high speed internet,” Biden continued. “Goods get to consumers more rapidly and less expensively. Small businesses create and innovate much more seamlessly.”
He further claimed that “these steps will enhance our productivity, raising wages without raising prices.”
“That won’t increase inflation. It will take the pressure off of inflation, give a boost to our workforce, which leads to lower prices in the years ahead,” the president surmised. “So if your primary concern right now is inflation, you should be even more enthusiastic about this plan.”
Consumer price index figures published by the Bureau of Labor Statistics showed a 5.4% year-over-year increase for June. The Biden administration maintains that nearly three-quarters of the increase was transitory and driven by a spike in post-coronavirus demand for cars, travel, and other services heavily affected by the pandemic.
Many Republicans and economists, however, have argued that inflation is actually running much higher than the CPI currently indicates and hasn’t factored in the looming increases caused by skyrocketing housing prices.
Phil Kerpen, president of the Committee to Unleash Prosperity, previously told the Washington Examiner that “the year-over-year figures obscure that the last few months have been substantially higher inflation than the last half of last year, and if you look at the five months since Biden took office, the change since January, we’ve got consumer prices increasing at a 9.5% annualized rate, producer prices are already in double digits, and a lot of the runoff in housing costs has not really worked its way into the indexes yet.”
“So, as that happens, I think you’re going to see a further increase, and there’s been this line that it was transitory, and the fact that you’re seeing a retreat from that now, from the excuse-makers of our current fiscal and monetary policy, I think is sort of a recognition of the reality that none of the factors that are driving this are temporary,” he explained. “It’s more likely than not that we are going to see double-digit inflation on a full-year basis.”
Kerpen is right that the administration has slightly shifted its messaging around inflation after spending roughly the first six months of Biden’s term claiming that the president’s ambitious spending proposals would not lead to prolonged price increases for consumer goods.
“We will have several more months of rapid inflation,” Treasury Secretary Janet Yellen told CNBC on Thursday. “So, I’m not saying that this is a one-month phenomenon.”
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“We understand the threat that inflation poses. We will be vigilant as responses are needed,” White House press secretary Jen Psaki added during Thursday’s press briefing, the White House’s first on-camera response to the June CPI numbers. “We are quite mindful of it. We do monitor it. I would also note the Federal Reserve, who’s independent, has also projected that the inflation numbers will come down to about 2.2 next year from where they’re projecting for this year, which is something we also watch closely.”
