Inflation Will Cost Dems Midterms Despite White House's 'Putin's Price Hike' Mantra, Scholars Say
21:48 GMT 12.04.2022 (Updated: 13:36 GMT 06.08.2022)
As inflation is at a 40-year high and gasoline prices are going up, US President Joe Biden's approval rating is continuing to plummet, threatening to backfire on the Democratic Party's odds in the forthcoming November midterm election.
President Joe Biden’s approval rating remains mired at around 40% and the Democratic Party is struggling to bring attention to their accomplishments of the past 14 months in order to improve their election odds ahead of the midterms, according
to the Hill. And still, inflation is what everybody is talking about, the media outlet admits. The US' inflation surged to yet another 40-year high of 8.5% in March from the same month a year ago, according to the Labor Department.
The White House is trying to pin the blame on Russia and its special operation in Ukraine, dubbing skyrocketing gasoline prices "Putin's price hike." However, the US mainstream media acknowledges
that the soaring inflation is a combination of factors, adding that the Republicans are accusing the Democratic Party of rising prices and urging Americans to vote for the GOP in November.
"It is very easy to blame Putin for the inflation," says Dr Gal Luft, co-director of the US-based Institute for the Analysis of Global Security. "It’s an easy target, and most voters have no economic knowledge to understand the causes and effects behind inflation. But the reality is that what we are seeing today is not the so-called 'Putin's price hike,' referring to the rise in energy and food prices in light of the situation in Ukraine."
The unfolding inflationary pressure has been in the making for several years, and can be attributed to the Obama, Trump and Biden administrations, according to the scholar.
"The US is now paying the price for years of cavalier 'deficits-don’t-matter' attitude which has brought to a national debt of $30 trillion," he notes. "When you run deficits in the trillions it is only a matter of time before inflation rears its ugly head."
According to Luft, 15 years of near-zero interest rates have finally backfired on the American economy.
"Inflation everywhere is primarily the result of the COVID lockdowns," says Dr Paul Craig Roberts, US economist and ex-assistant secretary of the treasury under former US President Ronald Reagan. "In the US, for example, the lockdowns dramatically reduced production, but the money supply increased due to lockdown payments. The lockdowns also disrupted and in many cases destroyed supply chains so that many items became unavailable. When money is abundant relative to the supply of goods and services, prices go up."
Commenting on the Labor Department's inflation numbers, Roberts points out that "the government's measurements of inflation are understatements in order to hold down the cost-of-living increases in social security payments."
Actually, inflation is the responsibility of the central bank, the Federal Reserve, it is not a president's responsibility, Roberts stresses.
"The appropriate question is what the central bank's plan is," the economist continues. "No one knows. I doubt even the central bank knows."
Oil Reserve Release & Crude Embargo on Russia
Seeking to stabilise oil prices, Biden on 31 March launched an unprecedented release from the United States Strategic Petroleum Reserve (SPR). Most of Europe, Canada, Mexico, Japan and South Korea vowed to join the US in a bid to reduce prices. However, this could hardly stop soaring inflation, according to the observers.
"The release of oil from the reserves will do very little to ease inflation," says Luft. "It’s a feel-good solution that aims to signal to voters that help is on the way. Other than the Fed raising interest rates, the administration can do very little to improve the situation. In all likelihood it will only make things worse by resorting to market interventions like price controls, which would only add fuel to the fire. This is what Nixon did in the 1970s. Not only that Washington did not solve the problem - it made it much worse."
Prior to that move, the US president slapped an oil embargo on Russia over Moscow's special operation in Ukraine. Biden also urged Washington's allies and partners to follow the US' suit despite warnings from energy experts that the embargo will facilitate further rise in oil prices and accelerate inflation
'Democrats Will Lose Badly'
As midterms are nearing, the Dems are counting on the media to demonise the Republican opponents as the media did with former US President Donald Trump, according to Roberts. He is more than sure that the Biden administration will continue to blame Russia and China for growing prices and disrupted supply chains.
Nevertheless, it appears that American voters are inclined to blame the president
and the Democratic Party for the galloping inflation in the first place. According to the latest CBS poll, 69% of respondents disapprove of how Biden is dealing with inflation, which remains one of the key concerns of voters.
What’s more, the Washington Post's senior political reporter Aaron Blake acknowledged
in late March that "Americans aren’t really buying into the ‘Putin price hike.'"
"The Democrats have no chance of holding onto power," says Luft. "Independents are leaving them in droves. Their leadership is aging. All the leadership of the House Democrats is in their 80s. They don’t understand the new generation of voters and the demographic changes in the country. They will lose badly and there is nothing they can do about it. The sad thing is that Republicans are not any better and offer no real solutions."