The Progressive Populist Today Blog: 2021-11-28

Saturday, December 4, 2021

Editorial: Inflation Blame Game

Americans, it seems, just can’t stand prosperity. Or maybe it’s just the corporate news media that can’t stand to give Joe Biden credit for the recovering economy.

The COVID pandemic caused an economic collapse under Donald Trump that cost nearly 25 million jobs in March and April 2020 and sent the unemployment rate to 14.8%. By the end of 2020, many Americans had returned to work, but there were still approximately 10.7 million people out of work, for a 6.7% unemployment rate when Biden took over in January 2021. He promptly set up a system to distribute COVID vaccines and encouraged the use of public health precautions, such as the use of masks, to prevent the spread of the coronavirus, over the opposition of Republican governors.

Biden promoted the American Rescue Plan, which Democrats in Congress passed in March, without any support from Republicans. The $1.9 trillion bill sent $1,400 checks to nearly all American families, extended a $300 weekly supplement to unemployment assistance through Sept. 6 and expanded child tax credits to $3,600 per child under age 6 and $3,000 per child up to age 17, which is expected to cut the nation’s child poverty rate in half. The bill also increased subsidies for insurance through the Affordable Care Act, provided $25 billion for rental assistance; provided $25 billion to support restaurants; $4.5 billion to help low-income families with energy and water bills; and $7.6 billion to expand internet connectivity for students and teachers during the pandemic.

During the first nine months of Biden’s administration, 5.6 million new jobs were created, and the unemployment rate dropped to 4.6%, the strongest recovery since World War II. Jobless claims in November were at a 20-month low and workers’ wages are up, as the reluctance of some workers to re-enter the workplace has given leverage to the workers who are coming back. Leisure and hospitality workers have gained an average 11.2% average increase in wages.

A recent Washington Post-ABC News poll, conducted Nov. 7-10, found that majorities of Americans support elements of Biden’s $1.2 trillion bipartisan infrastructure package and a pending bill that would spend nearly $2 trillion on social programs and climate initiatives, but it is hung up in the Senate over one senator’s concerns it will drive up inflation. However, Biden’s approval rating has dropped to a new low, driven largely by more negative views among Democrats and independents.

Biden is 16 points underwater on his handling of the economy, as 39% approve while 55% disapprove. Just 29% of Americans described the nation’s economy in positive terms (excellent/good) while 70% viewed it negatively (not so good/poor). And only 35% of Americans think Biden has accomplished a great deal or a good amount since he took office, while 63% said the president had achieved either not very much or little to nothing. Benefits from the American Rescue Plan are largely forgotten.

Biden may be down in the polls because the corporate media is reluctant to give him too much credit for the economic recovery (and he might not be good at taking credit). But when Americans were eager to get back to shopping as vaccines caused the COVID threat to subside, and merchants were eager to recoup the sales lost during the year of lockdown, customers found prices higher, by an average of more than 6%, and they wondered what Biden was going to do about it.

Robert Reich notes on page 13 that if markets were competitive, companies would seek to keep their prices down in order to maintain customer loyalty and demand. When prices of their supplies rose, they’d cut their profits before they raised prices to their customers. But that isn’t happening. Corporations are raking in record profits and more than 80% of major corporations have topped analysts’ forecasts, driving stocks higher.

People also are frustrated by gasoline prices, which have increased from an average of $1.938 per gallon in April 2020, when the COVID lockdown started, to $3.348 in October, the US Energy Information Administration (EIA) reports. Many Americans expect Biden to do something about it. But the current price is not a record high, and it is simply another indicator of how much the economy has recovered. As more people are on the road, getting back to work, the price of gas goes up. The law of supply and demand rules.

Gasoline prices in the US peaked at $4.06 per gallon in July 2008, when the price of crude oil was $3.07 per gallon, due to worldwide oil demand, according to EIA, but gas prices dropped precipitously in the next six months, as the collapse of subprime mortgage-backed securities sparked the Great Recession. When Barack Obama took over as president in January 2009, gas had bottomed out at $1.79 per gallon. As the economy improved, the cost of gas increased to $3.91 per gallon in May 2011 and it fluctuated throughout the Obama administration. Under Trump, gas prices got up to $2.86 in October 2018, dropped to $2.25 in January 2019, climbed back up to $2.86 in May 2019, then slipped to $2.44 in February 2020, before plummeting to $1.84 in April 2020, when the COVID lockdown started.

The average price of gasoline in the US was $3.758 on Nov. 22, according to GlobalPetrolPrices.com. That might hurt, but it’s still a better deal than $6.933 in Germany, $7.018 in France, $7.477 in Britain, $8.372 in Israel, and $9.908 in Hong Kong. And, honestly, we’ve had 48 years, since the OPEC Oil Embargo of 1973-75, to switch to more fuel-efficient vehicles, such as the Toyota Prius hybrid, which gets more than 50 miles per gallon, or the plug-in Ford Focus Electric, which claims 105 mpg equivalent.

Joe Biden can’t admonish people who still drive gas guzzlers, because he would be accused of being insensitive to the needs of working people who still drive vehicles that get less than 20 miles per gallon. Instead, he is planning to release 50 million gallons from the Strategic Petroleum Reserve in the hopes of appeasing oil executives, to give us a break on gas prices. These same corporate executives are exporting an average of 5.5 million barrels of petroleum products a day, including 3.5 million barrels of crude oil. So the US is still a net exporter of petroleum. Courts haven’t let Biden stop federal oil leases, and the Keystone XL pipeline, which he has blocked, merely stops Canadian tar sands oil from reaching Gulf ports for export overseas.

If Biden wants to cut gas prices in the US, a more effective way would be to remove barriers to oil exports by Iran and Venezuela. If we can deal with Saudi Arabia, we can deal with Iran and Venezuela, which at least have elements of democracy that we should encourage, even if it ends up putting more carbon in the air.

And if Biden wants to control inflation brought on by profiteers, he should sic the Federal Trade Commission and the Department of Justice on monopolistic corporations. A little trust-busting might go a long way toward bringing profiteers in line.

Democrats might even want to put a bill on the congressional calendar to punish inflation profiteers — and let Senate Republicans filibuster it. Would that be wrong? — JMC