President Biden said Tuesday that Federal Reserve Chairman Jerome Powell was in charge of handling decades-high inflation as the central bank weighs more interest rate hikes that many fear could lead to a recession — and as fears about the economy threaten to sink Democrats in this year’s midterm elections.
Biden told Powell ahead of a rare Oval Office meeting that addressing inflation was his “top priority” before adding that his plan “starts with a simple proposition: respect the Fed.”
“I’m meeting with the chairman today and [Treasury] Secretary [Janet] Yellen to discuss my top priority, that is addressing inflation in order to transition from a historic recovery to a steady growth that works for American families,” Biden said in brief introductory remarks.
“And my plan is to address inflation. It starts with a simple proposition: respect the Fed and respect the Fed’s independence, which I have done and will continue to do.”
Biden’s top White House economic adviser, Brian Deese, insisted at a subsequent press briefing that the president wasn’t trying to pass the buck when he said it was the Fed’s job to handle the price spikes.
“Do you think that the Fed has moved too slowly?” asked Bloomberg reporter Josh Wingrove. “By saying it’s their responsibility, the implication of course is they are holding the bag for the fact that inflation is at the highs that it’s at.”
“I think by saying it’s their responsibility,” Deese replied, “what the president is doing is acknowledging and underscoring the pivotal role that the Fed plays institutionally and that monetary policy plays in the process of bringing prices down.”
It’s unclear what exactly Biden and Powell discussed during the closed-door meeting.
In an op-ed published Tuesday by the Wall Street Journal, Biden wrote that “the Federal Reserve has a primary responsibility to control inflation” before hailing various actions he took, including releasing oil from the national strategic reserve to lower gas prices.
In the op-ed, the president also dusted off his proposed $2 trillion Build Back Better initiative, which stalled in Congress due to centrist Democrats concerned about inflation.
Biden wrote that initiatives in the package would “make things more affordable for families” by lowering the cost of child and elder care and by subsidizing renewable energy, in addition to other items.
The president argued that the social-spending initiative would be fully paid for, but critics including Sen. Joe Manchin (D-WV) have decried what they call “gimmicks” to undercount the price tag.
The Congressional Budget Office projected in December that Biden’s sweeping Build Back Better Act would cost about $4.5 trillion and add $3 trillion in deficit spending if every program was extended over 10 years, or the same period of time used to calculate new revenue from tax changes.
Deese also said in response to reporter questions that Biden still hasn’t made a decision about whether to either cancel as much as $10,000 in student debt per person via executive order — which might increase inflation — or get rid of Chinese tariffs, which might lower the cost of some consumer goods.
The Fed’s interest rate hikes so far this year already have sent borrowing rates, including for mortgages, soaring in a bid to stem increasing prices. Biden’s predecessor, Donald Trump, frequently broadcast his opinion about potential Fed actions, creating tension with the independent agency.
The annual US inflation rate declined slightly to 8.3% in April after hitting a 40-year annual high of 8.5% in March, according to official data from the federal Bureau of Labor Statistics.
Biden repeatedly downplayed inflation last year as it crept higher.
In December, he claimed that November’s 6.8% annual inflation rate was likely the “peak.” He said in July 2021 that high inflation was “temporary” when it was around 5%.
Biden has also repeatedly blamed price increases on supply chain bottlenecks caused by the COVID-19 pandemic, as well as Russia’s three-month-old invasion of Ukraine, which increased energy and food prices. But his critics blame Biden’s anti-fossil fuel actions and soaring government spending.
Biden last year signed a $1.9 trillion economic stimulus bill that Democrats passed without revenue offsets and a $1.2 trillion bipartisan infrastructure bill, of which about $256 billion wasn’t paid for, according to the Congressional Budget Office.
A study released in late March by researchers at the Federal Reserve Bank of San Francisco said that in the final quarter of 2021, about 3 percentage points of inflation — nearly half the total price index increase at that time — may have been caused by government pandemic spending.
A poll released last month by CBS found that 69% of US adults disapprove of Biden’s handling of inflation. Even among Democrats, 41% disliked Biden’s response to the issue.
Earlier this month, a Pew Research survey found that 70% of Americans described inflation as “a very big problem” for the country, the highest share for any issue tested in the poll. Yet another poll, from NBC News, found this month that 71% of Americans disapproved of Biden’s handling of the “cost of living” issue.
