History has a way of repeating. With the Great Recession of 2008, President Obama inherited the worst economy since the Great Depression of the 1930s. Upon Obama’s election, Senator Mitch McConnell vowed to make him a one-term president. Republicans fought Obama’s measures to get the economy moving again.
With Republican opposition to Obama’s economic proposals, along with demagogic opposition to the Affordable Care Act, Democrats suffered disastrous losses in the 2010 mid-terms. While McConnell failed to make Obama a one-term president, Republicans hammered the Democrats over three election cycles. With their opposition to sufficient stimulus measures to get the economy back to full capacity, Republicans spent the decade blaming Obama for “the most anemic recovery ever.”
So, 2020-2022, here we go again, with some new twists. With Trump’s failure to get on top of the pandemic, Biden inherits another economy in terrible condition. It could have been worse. With the rescue packages under the Trump Administration, supported by Democrats, and even by corporate Republicans who normally despise Keynesian economics — any port in a storm — the economy was saved from total disaster. Even with the economy largely shut down, many managed to increase their savings, thanks to government relief measures.
Even as this economy has long harbored weaknesses, the pandemic exacerbated those weaknesses. Clearly, Biden’s path forward was to get on top of the pandemic and get the economy moving again.
Key to getting on top of the pandemic was to get the population vaccinated. Key to getting the economy moving was to get kids back to in-class learning, get their mothers and other women back into the work force, and passing bold legislation for much needed roads, bridges, ports, child and elder care assistance, climate issues, and much more.
It is here that Republicans revisited their successful strategy of the previous decade — fight Biden every step of the way, both on getting on top of the pandemic, and on both short and long term measures to improve the economy. Then blame him for failure.
Republicans would oppose mask mandates and vaccination mandates under the guise of “freedom.” The more savvy Republicans would get vaccinated themselves, but keep it low key, insisting that it was a matter of individual choice. Some Republican governors would even deny local governments and school districts the right to impose mandates. So much for standard Republican dogma urging “local control.”
Traditional infrastructure, including roads, bridges, and ports has traditionally been bi-partisan. But not this time — such a bill for these much-needed items would give Biden “a win.” Eventually, that bill passed, with but a handful of Republican votes, including Senator McConnell’s. He wanted that bridge across the Ohio River connecting Cincinnati to Kentucky suburbs. We note that, as happened with Biden’s American Rescue bill that they unanimously opposed, Republicans receiving money under the infrastructure bill for projects in their area are taking credit for those moneys they received from the very bill that they voted against.
Nevertheless, with legislative victories including the American Rescue Bill — unanimously opposed by Republicans — and the just barely bi-partisan infrastructure bill, Biden’s beginning looked encouraging. An increasing number of Americans got vaccinated. A record number of jobs were recorded in a short time. Unemployment fell to 3.9 percent. People were traveling again and spending money again.
But then, what public health officials had most feared, occurred with a vengeance. A new variant of the virus came on — a virus that spread at an alarmingly fast rate. Deaths and hospitalizations increased, mostly for the unvaccinated, putting renewed stress on healthcare providers who had too long been stretched to the limits. A public weary of the virus was ripe for disinformation on the vaccine and opposition to vaccination and mask mandates.
An angry and restless public then gets hit by another result of the pandemic, inflation. Supply chain interruptions caused by the pandemic, combined with consumers with cash and pent-up demand, provided the classic ingredients for inflation. Current inflation is not just an American phenomenon — it is world-wide. But Biden is the president, “so it must be his fault.” The president is much like a football quarterback — when things go right they get the credit; when things go haywire, they get the blame, or likely more than they deserve.
The dilemma regarding this inflation is that there is not much a president can do about it, especially in the short run. And neither can the Fed that is normally charged with solution. The conventional policy response to inflation is for the Fed to raise interest rates, with the objective of decreasing demand and reducing spending. However, in this case, the problem is more about deficient supply. While raising interest rates would put a dent in spending, it would do nothing to increase supply to take pressure off prices. Raising rates too much, too fast, raises the danger of putting the economy back in recession, with no expansionary effect on supply.
There are some items in Biden’s “Build Back Better” plan that could take some pressure off prices in both the short run and long run. Reducing prescription drug prices would immediately help many consumers. Aid for child care would help women to get back into the workforce, with implications for supply and economic efficiency. But with unanimous Republican opposition, crying “socialism,” these measures appear to be doomed.
Even with inflation, the economy is much better off than when Biden took over. But it isn’t helping him. Politically, it doesn’t matter if unemployment is down and GDP is rising if people are paying more for gas, milk, eggs, and meat. And the ongoing pandemic is a wet blanket over everything.
The economy is still tied to the pandemic. Policy measures to deal with inflation are limited, as increasing supply of goods depends on unwinding the glitches in supply chain caused by the pandemic. Short run measures such as reducing prescription drug prices and child care assistance are opposed by Republicans, and even by a couple of recalcitrant Democrats.
All this, along with history favoring the out-of-power party for the midterms, spells a tough road ahead for Biden and the Democrats.
— John Waelti’s column appears monthly in the Times. He can be reached at jjwaelti1@tds.net.
