Recession ‘Not Inevitable,’ Biden Says

Recession ‘Not Inevitable,’ Biden Says

By Yuval Rosenberg and Michael Rainey
Friday, June 17, 2022

Welcome to the weekend! We’ll be back in your inbox on Tuesday after celebrating Juneteenth on Monday. Here’s what’s happening.

A Recession Is ‘Not Inevitable,’ Biden Says

With recession fears rising and his approval rating continuing to slide, President Joe Biden sought to soothe the national psyche on Thursday.

In a 30-minute interview with the Associated Press — his first such one-on-one in months — Biden said that Americans are "really, really down," an assessment reinforced by recent polling that found that 56% of U.S. adults say the country is already in a recession.

Biden blamed soaring gas prices and the coronavirus pandemic for the public’s sour assessment of the economy. But he said that a recession is "not inevitable" and argued that the United States is in a better position to fight inflation than any other country.

"We’re in a stronger position than any nation in the world to overcome this inflation," he said, later adding, "Be confident, because I am confident we’re better positioned than any country in the world to own the second quarter of the 21st century. That’s not hyperbole, that’s a fact."

Asked about the University of Michigan’s consumer sentiment survey, which has shown growing pessimism about the economy, Biden blamed the rising cost of gas, saying that until prices at the pump started going up, Americans "were much more optimistic." But, he acknowledged, "if you want a direct barometer of what people are going to talk about at the kitchen table and the dining room table and whether things are going well, it’s the cost of food and what’s the cost of gasoline at the pump."

Biden blamed Russia’s invasion of Ukraine for the surge in gas prices, and said that he had warned early on that helping Ukraine would come at a cost. "It’s not about my political survival. It’s about what’s best for the country," he said, adding that he feared that if the United States and NATO turned away from Russia’s aggression, the result might have been "chaos in Europe," with Russian President Vladimir Putin threatening other countries.

Hope for a domestic spending bill: Biden held out hope he’ll be able to pass other legislation to bring down costs for Americans. "I’m going to be able to get, God willing, the ability to pay for prescription drugs. There’s more than one way to bring down the cost for working folks," he said. "Gasoline may be up to $5 a gallon, but somebody who has a child with stage two diabetes is paying up to a thousand bucks a month for the insulin. We can reduce it to 35 bucks a month and get it done. We have the votes to do it. We’re gonna get that done."

Biden also expressed optimism that he’ll get the votes to enact a 15% minimum tax on corporations and raise taxes on the "super wealthy." And he suggested that he could secure tax credits for winterizing homes and $57 billion in funding to boost the domestic semiconductor industry and mitigate supply chain problems.

The bottom line: Biden has been trying to show Americans that he feels their pain while still trying to talk up his record, and the economic gains made since he took office. Hit exhortation to "be confident" carries echoes of President Jimmy Carter’s famous "malaise" speech, delivered in the midst of an energy crisis and stagflation. But Biden has also weaved in another warning for voters: "What seems to be emerging from the past couple of weeks or maybe months is not just a Biden echo of former president Bill Clinton, who deployed that ‘pain’ line to great effect in 1992, but also a warning to voters that Republicans will make the pain worse," The Washington Post’s Olivier Knox suggests.

Where Inflation Is Running the Hottest

In his interview with the Associated Press, President Biden also defended his accomplishments, touting the bipartisan infrastructure bill he signed into law and arguing that the $1.9 trillion American Rescue Plan Act passed in 2021 helped save the economy and ensure funding for the fight against Covid-19. He pushed back on Republican criticisms that the law specifically — and his policies in general — have fueled inflation.

"Isn't it kind of interesting? If it’s my fault, why is it the case in every other major industrial country in the world that inflation is higher?" he asked "If it’s a consequence of our spending, we’ve reduced the deficit. We’ve increased employment, increased pay."

The facts on global inflation: Biden was overstating his case for U.S. inflation being tamer than in other developed countries. "An analysis of inflation across 111 countries from Deutsche Bank puts the U.S. near the middle of the pack," Axios noted earlier this week.

On the other hand, a report released this week by the Pew Research Center makes clear that rising prices are a global phenomenon. The Pew analysis of 44 advanced economies finds that almost all have seen consumer prices rise since before the pandemic. "In 37 of these 44 nations, the average annual inflation rate in the first quarter of this year was at least twice what it was in the first quarter of 2020, as COVID-19 was beginning its deadly spread," the report notes.

The United States saw the 13th highest change in the rate of inflation over the first quarter of this year, better than countries including Israel, Greece, Italy and Spain — but worse than Germany, the United Kingdom, Canada, France and others.

"Regardless of the absolute level of inflation in each country," the report says, "most show variations on the same basic pattern: relatively low levels before the COVID-19 pandemic struck in the first quarter of 2020; flat or falling rates for the rest of that year and into 2021, as many governments sharply curtailed most economic activity; and rising rates starting in mid- to late 2021, as the world struggled to get back to something approaching normal."

The chart below from NBC News provides a good overview of which sectors of the U.S. economy have seen inflation running hottest.


White House Gives Gas Rebate Cards Another Look: Report

White House officials have in recent days revisited the idea of sending American drivers gas rebate cards, The Washington Post’s Jeff Stein and Tyler Pager report.

Biden aides reportedly had considered the idea months ago and dismissed it after finding that semiconductor chip shortages could make it hard to produce enough cards.

Stein and Pager add: "White House officials also fear there would be no way to prevent consumers from using them for purchases other than gasoline, according to another person familiar with the discussions. Even if the administration embraces the proposal, it would probably require congressional approval and face long odds among lawmakers wary of spending more money."

Gun Deal in Question as Republicans Balk at Key Details

A bipartisan group of senators announced earlier this week that they have agreed on a framework for a piece of legislation intended to reduce gun violence in the U.S., but partisan disagreements over some key details in the plan are threatening to slow the effort, if not derail it entirely.

Soon after the announcement of the agreement, which lawmakers hoped to quickly turn into a bill that could pass before July 4, Sen. John Cornyn of Texas, the lead Republican in the negotiations, pushed back on reports about how senators plan to approach "red flag" laws, which empower local officials to take guns temporarily from individuals who have been determined to be a threat to themselves or to others. The negotiators intend to include federal funding to help states implement and manage red flag laws, but Cornyn wants to allow states to opt out and to be able to use the federal funds for other purposes, such as outpatient mental health services.

"I’m sure the other states are going to want to try to get some access to some of that financial support for the programs they have since they decided not to do red flag laws," Cornyn said earlier this week.

Sen. Chris Murphy of Connecticut, who is leading the Democratic effort on the bill, said he thinks the problem can be resolved. But the issue will require more negotiations over how much money states will receive, and how they can use it.

Who’s a boyfriend? Another issue that has tripped up negotiations is a plan to close the "boyfriend loophole." Currently, anyone convicted of domestic violence cannot own a gun, but that ban applies only to those married to, living with or sharing a child with their victim. The plan is to expand the definition so that it includes other romantic partners as well, making it easier to prevent violent abusers from getting firearms.

The problem is that lawmakers are having trouble translating that idea into concrete language. "The surface explanation seems like it would be fairly simple, but I know that as they try to reduce it to legislative text, I think it’s gotten a little bit more uncomfortable," said Sen. John Thune (R-SD), who is not directly involved in the negotiations.

GOP pressure: More broadly, Republicans in the Senate are reportedly not happy with what they’ve heard about the proposed bill. Although 10 Republicans have expressed support for the framework, Axios’s Jonathan Swan and Alayna Treene say that frustration with the talks is "boiling" among many of the hard-line conservatives who are not directly involved in the talks, including Sens. Mike Lee of Utah, Rick Scott of Florida, Ted Cruz of Texas, Josh Hawley of Missouri, Tom Cotton of Arkansas and Rand Paul of Kentucky. The red flag law proposal is of particular concern, with many conservative lawmakers saying it would make it too easy to violate Americans’ constitutional rights.

"There's considerable unhappiness in the conference that we seem to be approaching a bill that will unite all the Democrats and divide the Republicans," one senior Republican told Axios.

Cornyn, who returned to Texas on Thursday, said he, too, was frustrated with the negotiations. "It’s fish or cut bait," he told reporters. "I don’t know what they have in mind, but I’m through talking."

Cornyn’s reception at the Texas GOP convention on Friday probably won’t help foster the bipartisan spirit of compromise required to bring the agreement to fruition. The senator was booed by the crowd in Houston as he spoke about the bill, even though he provided plenty of tough talk about his refusal to give Democrats much of what they wanted. "Democrats pushed for an assault weapons ban, I said no," he said. "They tried to get a new three-week mandatory waiting period for all gun purchases, I said no. Universal background checks, magazine bans, licensing requirements, the list goes on and on and on. And I said no, no, 1,000 times no."

Cornyn tried to reassure the crowd that he is focused on mental health issues — Republicans’ preferred explanation for the exceptional levels of gun violence in the U.S. — while highlighting his opposition to limitations on gun owners. "I will not, under any circumstance, support new restrictions for law-abiding gun owners," he said. "That will always be my red line. And despite what some of you may have heard, the framework that we are working on is consistent with that red line."

The bottom line: Some lawmakers had hoped to announce a deal by the end of this week, with a Senate vote coming before the two-week holiday recess that starts at end of next week, but both of those deadlines are looking less likely. Negotiations are continuing nonetheless. However, as Cornyn warned Thursday, the longer it takes to negotiate the bill, the less likely it is to succeed. "Indecision and delay jeopardize the likelihood of a bill because you can't write what is undecided and without a bill there is nothing to vote on," he said.


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