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It becomes rather clear that things are not going well for President Biden when a former Obama administration official starts questioning his line of reason.
In his interview last week with NBC News’ Lester Holt — Biden called Holt a “wise guy” for questioning his earlier remarks about inflation being temporary — the president claimed that supply chain problems were largely to blame for a 40-year high inflation rate crushing American families, but Steven Rattner, the former counselor to the Treasury secretary under Barack Obama, pushed back in a New York Times op-ed, insisting that was a “totally dishonest” argument.
The president told Holt. “The reason for the inflation is the supply chains were cut off, meaning that the products, for example, automobiles — the lack of computer chips to be able to build those automobiles so they could function; they need those computer chips. They were not available, So what happens? The number of cars were reduced — it made up at one point one-third the cost of inflation because the price of automobiles were up.”
A shortage of semiconductors reportedly delayed car manufacturing and contributed to a 12.2% annual rise in vehicle costs.
“Well, no. That’s both simplistic and misleading. For starters, the supply chains have not been ‘cut off,’ just stretched. And supply issues are by no means the root cause of our inflation,” Rattner wrote. “Blaming inflation on supply lines is like complaining about your sweater keeping you too warm after you’ve added several logs to the fireplace.”
He said the “bulk of our supply problems are the product of an overstimulated economy, not the cause of it,” noting that Covid-related worker shortages in factories and among transportation workers also play a role — while health-related issues played a role here, it’s hard not to question what role, if any, vaccine mandates played.
“But most of our supply problems have been homegrown: Americans have resumed spending freely, and along the way, they have been creating shortages akin to those in a shopping mall on Black Friday,” Rattner said.
Consumption that’s being driven by “vast amounts of government rescue aid (including three rounds of stimulus checks) and substantial underspending by consumers during the lockdown phase of the Covid crisis,” according to the former Obama official. Rattner said with travel “still sluggish” and people slow to return to entertainment venues, they are spending their money on durable goods “like cars, electronics and building materials for housing — for which production and distribution capacity is limited.”
“It’s a classic economic case of ‘too much money chasing too few goods,’ resulting in both higher prices and, given the extreme surge in demand, shortages,” he charged. “A spending increase of the magnitude we’re seeing — 25 percent on durable goods in 2021 over 2020, according to the Bureau of Economic Analysis — would have challenged the capabilities of manufacturers under the best of circumstances.”
All of which was not only foreseeable, but predicted by critics who argued against the government dumping billions of dollars into the economy as a result of shutting down the country for so long.
Adding insult to injury, Rattner said Biden’s “Build Back Better” spending behemoth that the Democratic Party has been relentlessly pushing will only add to the problem. Instead, he called on the White House to prioritize reducing the deficit.
“The Biden administration needs to shift its approach. In particular, with the economy steaming along, it should make deficit reduction as important as its other initiatives,” he concluded. “But here again, Mr. Biden has been disingenuous. His Build Back Better plan claims to be deficit neutral, but that assertion is made credible only by using the fuzziest math. Over the first five years, the plan would add about $750 billion to the deficit, according to an analysis of the Congressional Budget Office’s estimates. With this year’s fiscal gap estimated at $1.3 trillion, any new version of the plan should reduce the deficit substantially in its early years using honest math.”
“That’s how Bill Clinton pivoted after he took office in 1993: He unexpectedly raised taxes in his budget to address the pressing matter of the federal budget deficit,” Rattner said. “That decision served the country well — and ultimately also served him well.”
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Writers and editors can be contacted at [email protected] with feedback, tips, or corrections.
Tom Tillison grew up in Maryland before moving to Central Florida as a young teen. It is in the Sunshine State that he honed both his passion for politics and his writing skills. Tillison also contributes to BizPac Review.
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