Why Biden can’t fix his poll numbers on inflation alone

Democrats have traditionally had at least a slight advantage over Republicans when it comes to being the party voters trust more to handle the economy. But President Joe Biden is deep underwater on that front in recent polls.

That’s crystal clear in a Monday poll from CNN and SSRS. According to their findings, “a majority of US adults say Biden’s policies have hurt the economy, and 8 in 10 say the government isn’t doing enough to combat inflation.” Moreover, only 34 percent of respondents approve of his handling of the economy, while 66 percent disapprove.(Apparently nobody CNN asked was undecided this time around.)

What most Americans don’t seem to get is what it means for the federal government to “fight inflation.”

The political implications for the downward trend line of Biden’s numbers aren’t great. But what’s got to be frustrating for the White House is that so much of what’s being measured here is the country’s mood — which can be both fickle and resistant to any fixes the president has in his toolbox.

Let’s use the inflation question from this poll as a prime example. Respondents were asked: “Do you think the US government is doing (too much), (too little), or the right amount to try to reduce inflation?” Eighty-one percent said “too little,” while 15 percent answered it’s doing just enough. (Another 4 percent responded “too much,” and I have follow-up questions for them.)

What most Americans don’t seem to get is what it means for the federal government to “fight inflation.” For that, we turned to another recent poll, this one released on April 30 by Axios and Ipsos. It found that 34 percent of respondents knew the Federal Reserve plays a role in fighting inflation. Encouragingly, 51 percent had heard the Fed had increased interest rates in March as part of its efforts to rein in price increases.

But here’s the bad news for Biden: The vast majority of Americans don’t know the Fed is independent of the White House. Respondents were asked to identify whether the statement “the President can order the Federal Reserve to address inflation” was true or false. Fifty-two percent didn’t know. Another 23 percent incorrectly said it was true.

It’s also not clear that Americans get what the Fed’s interest rate increases in tail and what it hopes to achieve. Rate increases are meant to make it harder to borrow money, which in turn prompts saving by individuals and businesses instead of spending, cooling off an economy. What a cooler economy most likely means, though, is a rise in unemployment and a freeze in wage increases.

The Fed triggered a recession in the early 1980s to help finally get the inflation of the 1970s under control, kicking off the worst economic downturn since the Great Depression at the time. Most respondents in a CNBC survey of economists, fund managers and strategists believe the Fed’s upcoming moves will trigger a recession. It’s hard to imagine that’s what most of the 81 percent of Americans CNN surveyed have in mind as their preferred solution.

The alternative would be some kind of government action to actively set price ceilings for goods. Now, I’m not some kind of big-government skeptic, but the last few times the federal government has tried its hand at price controls, it hasn’t exactly gone smoothly. During World War II, amid shortages of goods and the threat of spiraling inflation as the government revved up the economy, the Roosevelt administration set up a system of consumer vouchers and a sprawling bureaucracy to keep prices artificially low. The backlash was intense.

Nearly 30 years later, the Nixon administration tried the same tactic to stop a surge in inflation. The first phase of the plan, a 90-day freeze on price and wage increases, was successful. The next phase, though, was deeply unpopular. When the program initially ended, the “stock market promptly plummeted and the rate of inflation exploded,” as the demand for goods had surged — much as we’ve seen demand for durable goods spike throughout the Covid-19 pandemic.

It’s a real “damned if you do, damned if you don’t” spot that Biden is in.

A second attempt by the White House in 1973 to impose price controls happened at the same time OPEC slapped an oil embargo on the US and other Western countries, driving up fuel prices. The combination made things much worse, similar to the energy cost increases that Russia’s war in Ukraine has created.

So let’s say the government did what voters wanted and addressed inflation. That would involve either having the Federal Reserve increase interest rates even further — which Biden can’t order it to do — and trigger a recession. Or it would involve Biden’s going the Roosevelt/Nixon route and setting up price controls, which would require an act of Congress to make it possible and would give the GOP a new “creeping socialism” attack to trot out.

It’s a real “damned if you do, damned if you don’t” spot that Biden is in, one that Jimmy Carter learned a president can’t explain his way out of. When the country is in a bad mood, it doesn’t matter that 8.3 million jobs have been filled or that America’s GDP grew 5.5 percent in 2021 after it dropped 3.4 percent the year before. There’s no policy cure for bad vibes that Biden can reach for here.

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