President Biden continues to absolve himself of responsibility for the fact that his gargantuan $1.9 trillion pandemic-relief package likely contributed to the current record-breaking inflation.
“You could argue whether [the American Rescue Plan] had a marginal, minor impact on inflation,” Biden told the Associated Press in an interview Thursday. “I don’t think it did. And most economists do not think it did. But the idea that caused inflation is bizarre.”
Biden’s comments stand in stark contrast to a speech he gave in November 2021, when he acknowledged that the “checks for $1400” the government distributed to Americans, in addition to many other relief provisions, could pump up inflation.
At that time, he seemed to grasp the economic concept of “more money chasing fewer goods,” the dynamic that drives inflation. Since the pandemic erupted, many supply chains have been disrupted and markets have been out of balance.
Referring to his stimulus funds, he said, “It changes people’s lives. But what happens if there’s nothing to buy and you got more money to compete for getting [goods]? It creates a real problem.”
Besides contradicting himself, Biden’s assertion to the AP also contradicts that of Treasury Secretary Janet Yellen, who admitted before the House Ways and Means Committee last week that the March 2021 package “modestly” fueled higher prices. But she praised the legislation for cushioning Americans’ finances during the Covid-19 downturn, claiming it “produced excellent rewards for Americans and, at most, it contributed modestly to inflation.”
Even as inflation appears to be spiraling, prompting the Federal Reserve to finally intervene and hike interest rates in an attempt to put on the brakes, Yellen argued that fundamentals of the economy are robust, pointing to our “strongest labor market, arguably in the entire post-war period.”
Despite the predictions of economic analysts that a recession may be imminent, given that the Fed has started to reverse its accommodative monetary policy, Biden assured that it is “not inevitable,” speaking to the AP. While Yellen dodged on that question recently, saying “Don’t look to me to announce it,” former Treasury Secretary Lawrence Summers predicted on Sunday that a recession will likely hit the United States within the next two years.
“I think there’s certainly a risk of recession in the next year,” Summers told CNN State of the Union host Dana Bash. “I think given where we’ve gotten to, it’s more likely than not that we’ll have a recession within the next two years.”
To divert blame from the administration, Biden, as well as Yellen, have made seemingly false assertions that major industrialized nations are experiencing higher rates of inflation than the US
“If it’s my fault, why is it the case in every other major industrial country in the world that inflation is higher? You ask yourself that? I’m not being a wise guy,” Biden told AP.
“We’re seeing high inflation in almost all of the developed countries around the world. And they have very different fiscal policies,” Yellen said during a hearing before the Senate Finance Committee on June 7. “So it can’t be the case that the bulk of the inflation that we’re experiencing reflects the impact of the American Rescue Plan.”
Some recent international figures on inflation show Germany at 7.9 percent, Japan at 2.5 percent, Canada and Italy, at 6.8 percent, France at 5.2 percent, India at 7.04 percent, and Saudi Arabia at 2.2 percent. Domestic inflation in the US climbed to a starting 40-year high of 8.6 percent in May, most of which Biden continues to attribute to “Putin’s price hike” stemming from the conflict in Ukraine.
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