White House throws ‘inflation reduction’ party with James Taylor as stocks crash over dismal 8.3% rate
President Biden threw an “inflation reduction” party Tuesday — even as inflation hit a worse-than-expected 8.3%, the stock market tumbled and stubbornly high prices for food and housing continue to slam American households.
Biden, 79, had classic folk rocker James Taylor kick off the White House South Lawn bash with his 1970 hit “Fire and Rain” — a song reportedly about suicide and heroin addiction — to belatedly celebrate passage of his Inflation Reduction Act spending bill.
But Biden, who hailed the 74-year-old Taylor as “a voice that heals our soul and unites a nation,” failed to mention the market rout sparked by the dismal Labor Department’s Consumer Price Index released earlier Thursday.
The disappointing monthly report showed inflation continued to remain near record-high levels in August – despite a continued demand-driven decline in the cost of gasoline.
Cheaper gas was offset by steep 12-month jumps in the cost of food (up 13.5%), electricity (15.8%), rent (6.8%) and health insurance (24.3%).
The Dow Jones Industrial Average fell 4% Tuesday, or nearly 1,300 points — and CNN cut away from the presidential speech to focus on the dramatic stock stumble.
Still, Biden claimed to party guests that his recently passed spending bill would “help reduce inflation at the kitchen table” — plugging its nearly $400 billion in environmental spending, including tax credits of up to $7,500 to buy electric vehicles and subsidies for home energy efficiency, and roughly $64 billion to extend generous COVID-19-era Obamacare subsidies.
Republicans immediately attacked Biden as “out of touch” for hosting a celebration for the environmental and healthcare spending bill — noting that inflation remained at its highest level since the early 1980s.
“You can’t make it up: Hours after this terrible inflation report, the White House is hosting an ‘inflation reduction’ celebration,” Senate Minority Leader Mitch McConnell (R-Ky.) tweeted. “Democrats have spent our economy into disaster and now they’re partying while families pay. They could not look more out of touch if they tried.”
Moments before the celebrations kicked off, White House press secretary Karine Jean-Pierre claimed inflation was “essentially flat” – and insisted it was OK for Biden to celebrate his spending bill.
“Overall, prices have been essentially flat in our country these last two months,” Jean-Pierre said at her regular briefing. “That is welcome news for American families with more work still to do.”
Jean-Pierre faced a barrage of skeptical questions from reporters, including NBC reporter Kelly O’Donnell who asked if there’s “any concern that there’s a dissonance between the current economic moment and the celebration you’ll have this afternoon.”
“It’s not about us celebrating. It’s about the win for the histor — the win for the America,” Jean-Pierre responded.
“When you see costs that are going to come down for our seniors when you see costs that are going to come down for American families, as I just listed out — for energy costs, are going to come down and… about the health care costs are going to come down,” Jean-Pierre said. “That is great that we have been having for some time in Washington, DC. That is a huge it’s a huge win for the American people.”
Biden’s staff had repeatedly touted the South Lawn festivities in tweets from his account throughout the day.
One presidential social media post said, “Exactly four weeks ago, I signed the Inflation Reduction Act into law. So today, we’re celebrating. Tune in at 3 PM ET as I deliver remarks and welcome the leaders and advocates who made it happen to the People’s House.”
The conservative group Americans for Prosperity quote-tweeted Biden — adding a GIF from the TV show “Schitt’s Creek” ironically concurring with the celebration while noting 12-month increases in the cost of eggs (up 39.8%), meat (8.8%) and baby food (12.6%).”
Republicans and independent analysts say that despite its name, the Inflation Reduction Act will have little — if any — positive near-term effect on inflation, which this year soared to 41-year highs, peaking at 9.1% in June.
Studies by the Penn Wharton Budget Model and the Tax Foundation say the bill won’t lower overall consumer prices — at least not in the near future.
The new federal spending is offset by new taxes on corporations, including a new 15% corporate minimum tax, increased IRS enforcement and by allowing Medicare to directly negotiate drug prices.
Although the annual inflation rate in August of 8.3% nudged lower from 8.5% in July and 9.1% in June, the Bureau of Labor Statistics reported that new monthly data included worrying news as well.
“Increases in the shelter, food, and medical care indexes were the largest of many contributors to the broad-based monthly all items increase. These increases were mostly offset by a 10.6-percent decline in the gasoline index,” the official report said.
“The food index continued to rise, increasing 0.8 percent over the month as the food at home index [groceries] rose 0.7 percent. The energy index fell 5.0 percent over the month as the gasoline index declined, but the electricity and natural gas indexes increased. The index for all items less food and energy [core inflation] rose 0.6 percent in August, a larger increase than in July.”
The Republican staff on the House Ways and Means Committee tweeted Tuesday, “For a majority of low-income households, rising prices have become a source of ‘major financial stress’ as inflation has wiped out 26 million low-income households’ savings since Biden took office. The so-called ‘Inflation Reduction Act’ is, ironically, set to make things worse.”
“Grocery costs have surged 13.5 percent over the last year — a 43-year high!” wrote Rep. Vern Buchanan (R-Fla.). “It’s no surprise 78 percent of hourly workers are unsure they’ll be able to afford food in the next two weeks. #Bidenflation is draining Americans’ wallets and savings accounts. Plain and simple.”
Republicans and some independent analysts say government spending fueled inflation. A study released in March by researchers at the Federal Reserve Bank of San Francisco said that in the final quarter of 2021, about 3 percentage points of US inflation — or roughly half of it at the time — may have been caused by federal spending during the COVID-19 pandemic, including Biden’s $1.9 trillion American Rescue Plan Act.
