Welcome back from the holiday weekend! President Biden had a dynamite day of meetings Tuesday, hosting New Zealand Prime Minister Jacinda Ardern, discussing inflation with Fed Chair Jay Powell and Treasury Secretary Janet Yellen and capping it off by having K-pop supergroup BTS visit the Oval Office. But Biden has bigger plans for June — like trying to convince the American public that the economy is doing pretty well and he’s got a plan to combat inflation.
Here’s what you need to know.
Biden Unveils Plan to Battle Inflation — and His Terrible Poll Numbers
Facing a brutal mix of sky-high prices and rock-bottom poll numbers, President Joe Biden on Tuesday unveiled a new three-part plan for fighting inflation, kicking off a month-long effort by the White House to focus its public message on the state of the U.S. economy.
In an op-ed published in The Wall Street Journal, Biden made the case for his management of the economy so far. “In January 2021, when I took office, the recovery had stalled and Covid was out of control,” he wrote. “In less than a year and a half, my administration’s economic and vaccination plans helped achieve the most robust recovery in modern history. The job market is the strongest since the post-World War II era, with 8.3 million new jobs, the fastest decline in unemployment on record, and millions of Americans getting jobs with better pay.”
At the same time, Biden recognized the stubborn persistence of inflation, and said it is now his top economic priority. His plan to fight inflation consists of three main pillars:
1. Recognize that the Federal Reserve plays the primary role; avoid interfering with the central bank’s efforts.
2. Reduce prices and boost the productive capacity of the economy.
3. Lower the federal budget deficit.
Biden addressed the politically sensitive issue of high fuel prices specifically, saying they are driven by Russia’s invasion of Ukraine. He highlighted his release of oil from the national strategic reserve to reduce prices and called on Congress to pass tax credits to boost new investments in clean energy. He also called for fixing supply chains, investing in infrastructure, negotiating lower drug prices and reducing the cost of daycare.
Shifting the blame? While some analysts expressed support for Biden’s plan — former Obama economic adviser Jason Furman said it offered “sound recommendations on dealing with inflation” — at least as many expressed doubts about how effective the plan would be, and some accused the president of seeking to blame others for problems in the economy.
Heading into a meeting with Federal Reserve Chair Jerome Powell on Tuesday, Biden emphasized the role the central bank plays. “My plan to address inflation starts with a simple proposition: Respect the Fed,” he said. “My job as president is not only to nominate highly qualified individuals for that institution but to give them the space they need to do their job. I'm not going to interfere with their critically important work.”
But by citing the Fed as his first line of defense against inflation, Biden could be seen as shifting some portion of responsibility for the effort to reduce inflationary pressure to the central bank. “He wants to deflect responsibility and make clear that the other guy is in charge,” CNN’s David Goldman wrote.
Bloomberg’s Nancy Cook, Justin Sink, and Josh Wingrove agreed, saying that Biden’s declaration of support for Fed independence is “simultaneously shifting responsibility for taming decades-high inflation ahead of the November midterms.”
No easy solutions: In part, the blame game is driven by the fact that controlling inflation is difficult, especially in the short run. “The administration … has few means for curbing inflation, possibly putting Biden’s political fortunes at the mercy of global markets,” Zeke Miller, Josh Boak and Christopher Rugaber of the Associated Press wrote. “The president has twice ordered the release of oil from the U.S. strategic reserve, only to see a short-term and muted impact on gas prices.”
Harvard economist Megan Greene underlined the difficulty that both Biden and the Fed are facing. “It’s not just the Fed or the end of infrastructure or the exact kind of stimulus or any one single thing,” she told Politico. “I actually thought the Fed had pulled it off last year waiting for inflation to come down on its own as the pandemic waned. Then Omicron hit China and Russia invaded Ukraine. A lot of this is just very, very bad luck.”
One eye on inflation, another on the polls: Whatever the causes, it’s clear that inflation is hurting Biden politically. The president is reportedly upset about his declining ratings, and White House officials are uncertain how to change course.
“I’ve heard him say recently that he used to say about President Obama’s tenure that everything landed on his desk but locusts, and now he understands how that feels,” a White House official told NBC News, referring to Biden.
The president is reportedly particularly upset about his poll numbers, and can’t understand how his level of support has fallen to levels in roughly the same range as the man he replaced. “He’s now lower than Trump, and he’s really twisted about it,” a source told NBC.
Quote of the Day
“I know that you’re all here to talk about trimmed mean inflation, and you’re as excited about that as you are for them.”
– Brian Deese, director of the National Economic Council, at a White House news briefing Tuesday at which he addressed reporters after an appearance by BTS, the wildly popular South Korean pop group, who drew more than 200,000 people to watch the White House’s live stream of the event. BTS met with President Biden and the media to talk about anti-Asian hate crimes on the last day of Asian American, Native Hawaiian and Pacific Islander Heritage Month.
Medicare Premium Cut Will Wait Until 2023
Seniors will have to wait until next year to see their Medicare Part B premiums reduced after the Centers for Medicare and Medicaid Services determined that a mid-year adjustment to reflect lower costs of a new Alzheimer’s drug would not be “operationally feasible.”
Medicare Part B premiums were raised by 14.5% this year, to $170.10 a month, as officials prepared for a potential spike in costs due to the rollout of a high-priced and controversial new Alzheimer’s drug, Biogen’s Aduhelm. “By law, CMS is required to set each year’s Part B premium at 25% of the estimated costs that will be incurred by that part of the program. So in its calculation for 2022, the agency had to account for the possibility of broadly covering Aduhelm,” CNBC’s Sarah O’Brien explains.
But after Biogen cut the price of the drug, lowering it from $56,000 a year to $28,200 amid tepid initial demand, Health and Human Services Secretary Xavier Becerra called for a review of the premiums. Medicare officials also decided to limit access to the new drug to patients enrolled in clinical trials following questions about its efficacy and the process that led to its approval.
Becerra announced Friday that the premium reductions would have to wait until 2023.
“After receiving CMS's report reevaluating the 2022 Medicare Part B premiums, we have determined that we can put cost-savings directly back into the pockets of people enrolled in Medicare in 2023,” he said in a statement. “We had hoped to achieve this sooner, but CMS explains that the options to accomplish this would not be feasible. CMS and HHS are committed to lowering health care costs – so we look forward to seeing this Medicare premium adjustment across the finish line to ensure seniors get their cost-savings in 2023.”
The bottom line: The premium reduction won’t happen this year, and it’s not clear yet what premiums will be for next year. “Given the information available today, it is expected that the 2023 premium will be lower than 2022,” CMS said in a statement Friday. “The final determination will be made later this fall.”
Number of the Day: 23.1%
The official unemployment rate is a remarkably low 3.6%, but according to the Ludwig Institute for Shared Economic Prosperity, a non-profit organization that focuses on the economic well-being of middle and lower-income Americans, workers are in worse shape than the commonly used top-line number suggests.
According to the organization’s True Rate of Unemployment — an alternative measure that includes people who are looking for work, working part-time but want a full-time job, or earn below the poverty line — 23.1% of Americans are not benefiting from what is supposedly an extraordinarily tight labor market.
“We think it misleads the American people to say, ‘Oh, we’ve got 3.6 percent of America that is unemployed, ergo, a huge percent of the population is employed,’ when in fact they can’t make above a poverty wage,” Gene Ludwig, the former Comptroller of the Currency who founded the group, told Politico.
It’s not all bad news, though. While the analysis indicates that nearly one in four Americans is in a difficult place at best in the labor market, the measure has fallen rapidly since the pandemic began, and is now near an all-time low.
Chart of the Day: Omicron and Older Americans
The New York Times reports that Covid-19 deaths have become even more skewed toward the elderly, with older people still accounting for an overwhelming share of lives lost even as per capita death rates have fallen. The Omicron wave this winter was even more deadly than the Delta wave that preceded it: “Almost as many Americans 65 and older died in four months of the Omicron surge as did in six months of the Delta wave, even though the Delta variant, for any one person, tended to cause more severe illness,” Benjamin Mueller and Eleanor Lutz write. “That swing in the pandemic has intensified pressure on the Biden administration to protect older Americans, with health officials in recent weeks encouraging everyone 50 and older to get a second booster and introducing new models of distributing antiviral pills.”
- Biden and Fed Chair Powell Meet as Inflation Dogs the Global Economy – New York Times
- Biden, in Rare Powell Meeting, Seeks to Deflect Inflation Blame – Bloomberg
- Inside Biden’s June Pivot to the Economy – Politico
- Oil Prices Surge, Gas Hits New High After E.U. Cracks Down on Russia – Washington Post
- Why the Once-Hawkish Heritage Foundation Opposed Aid to Ukraine – New York Times
- States Help Business Owners Save Big on Federal Taxes With SALT-Cap Workarounds – Wall Street Journal
- Window Closing for US to Implement Global Corporate Tax Deal – Roll Call
- Biden Wants to Rebuild the EPA. He Doesn’t Have the Money to Do It – Washington Post
- Covid Was Vanishing Last Memorial Day. Cases Are Five Times Higher Now – Washington Post
Views and Analysis
- My Plan for Fighting Inflation – Joseph R. Biden Jr., Wall Street Journal
- Biden Just Admitted He Doesn’t Have a Clue How to Fight Inflation – Henry Olsen, Washington Post
- Inflation Blame Game: Sorting Out the Culprits – Ben White, Politico
- The Have/Have Not Economy Is Back in the U.S. – Heather Long, Washington Post
- A Recession Won’t Just Hurt at the Bank. It’ll Make Us More Divided – Helaine Olen, Washington Post
- Where Do We Go From Here: Inflation or Recession? – Megan McArdle, Washington Post
- The Next Recession Will Make Income Inequality a Lot Worse – Timothy Noah, New Republic
- Biden Can Still Avoid Offering Wasteful Student Debt Forgiveness – Washington Post Editorial Board
- Biden Goes for the Safer Play on Canceling Student Loan Debt – Aaron Blake, Washington Post
- What America Needs Is a Liberalism That Builds – Ezra Klein, New York Times
- Calling In Sick Is More Fraught Than Ever – Aaron E. Carroll, New York Times