Why Biden Doesn’t Get More Credit
– By Lisa Rutherford –
I am not here to say that President Biden is without flaw. I am here to look at the situation and perhaps provide a slightly different perspective than what I’ve been reading and hearing lately. No one person can single-handedly control the multi-trillion-dollar U.S. economy. However, many seem to think that the president can or at least should assume the majority of the blame. In any case, whoever was poised to win the 2020 election would start out with by far the lowest interest rates in the history of the data. Because of that and other economic factors, this was one of the most challenging market environments to start a presidential term in history, although that seems rather counterintuitive. Is his presidency doomed when even some in his own party seem focused on undermining his efforts, and certainly the Supreme Court has offered no help recently? Some writers have compared Joe Biden to President Jimmy Carter and say he’s worse, but let’s see if that’s the case.
Carter’s term in office witnessed some of the worst inflation many of us have ever experienced. Inflation is what drives up costs as we have witnessed recently when it comes to gasoline prices, food, and other household costs. That’s very important in Americans’ lives. The double-digit inflation during President Carter’s presidency is not what we are experiencing now. However, even then, there were those who benefited from the high interest rates. Those invested in bonds and CDs did well.
Inflation has many contributing factors, and as Treasury Secretary Janet Yellen explained recently “is behaving differently than it did in the past.” For instance, low unemployment has been associated with inflation due to driving up wages, but some economists assert the current low unemployment has not done that. In this case, the pandemic had a serious impact on inflation. During the pandemic many factories around the world shut down and people stopped buying. But as the covid cases headed downward demand for consumer goods started picking back up. The historic $1.9 trillion stimulus bill was passed making money available and shopping started again. But the supply wasn’t there. More dollars chasing fewer goods caused prices to surge. So, although something Biden and Congress did contributed—passed the much-needed stimulus bill—we, too, contributed by our own actions. Maybe if people slow down their buying that might help. When people stock up for fear that certain goods won’t be available, that does not help the situation overall. Businesses that anticipate more inflation and raise their prices accordingly help to perpetuate rather than solve the problem. Interest rates going up could help by making money more expensive to borrow—less money, less spending—but that can be a painful cure as I will show. It’s a delicate balance and not all one man’s fault. It’s unfortunate that citizens hold a president responsible when they themselves have contributed in some part.
And some efforts by presidents to control inflation can backfire, as happened when President Nixon’s wage-price controls expired after his re-election resulting in even more inflation. He was followed by President Ford who, faced with high energy prices, tried with his WIN (Whip Inflation Now) slogan to get Americans to help by carpooling, turning down the thermostat, and planting WIN gardens. But overall inflation peaked above 12%, and along with other issues, cost Ford the election in 1976. Then Ford handed the mantle to President Carter in 1977 who seems to have borne the brunt of everything that came before him and after. Carter was faced with soaring inflation (13% in 1980), long lines for gasoline due to an energy crisis, and a host of conflicts including the Iran revolution. Carter chose Paul Volker as Chair of the Federal Reserve, a man who had no trouble raising interest rates within the banking system causing interest rates to blow past 10%, which hammered economic growth and jobs.
All of this cost Carter reelection. His successor Ronald Reagan inherited the economic problems but stood by Paul Volker and by 1983 inflation was headed downward. Carter had made the right decision with Volker. It had cost him the presidency but saved the nation economically. Carter had other problems, too, but it’s only fair to give him credit where credit is due. Once inflation came under control, it remained fairly stable until the early 90s with a slight blip under President George H.W. Bush.
This past December’s 7% inflation is of concern, but we were at 13% in 1980 and down around 3% in 1983. So, it can be tamed and quite quickly at times—not without some pain however. Biden’s $1.9 trillion American Rescue Act and the $1.2 trillion infrastructure plan may not be the silver bullets and may make things worse. It remains to be seen. However, we have squandered much time and allowed many problems in this nation to fester for these past thirty years as we have enjoyed low inflation rates. In fact, the American Society of Civil Engineers gave our nation’s infrastructure a C minus score and said an additional $2.6 trillion is needed over the next decade. Biden’s infrastructure plan will help bridges, roads, airports, ports, waterways, the nation’s broadband, schools, and water and energy systems. These are all things that we count on in our daily lives. Before we bash old Joe too much, let’s see what comes of all of this.
It’s important to remember that inflation is global. The inflation rates for numerous household goods including food were already at their highest levels in a decade even before Biden entered the White House. It’s also important to remember that economic data is generally “backward” looking. Even with all our technology, we seem unable to capture “real time” data and analyze it but, rather, must look backward.
Perhaps Biden and his party reached too far with their legislation. I personally feel that’s the case, but as president when you feel it might be your only chance maybe going for it makes sense. With the Republicans seemingly being so united and the Democrats appearing so dysfunctional with the extremes pulling the party apart, it’s a difficult situation for President Biden. I don’t envy him his position. There are rumblings of discontent in the Democratic party about his leadership, but perhaps those who are grumbling should take a good hard look at themselves and what they have contributed…or not.
Comparing presidents is difficult because presidents deal with so many different issues. Biden was ranked as worse than Jimmy Carter in one poll based on economic issues, but it remains to be seen where he will land when the dust settles. In a recent January 2022 poll, 70 precent polled said that improving the inflation situation would improve their opinion of the president. For his sake and ours, let’s hope that happens. Inflation is not good for any of us.
In closing, as readers consider President Biden’s current situation and ponder their financial futures under Democrats or a Republican replacements, consider that economists Alan S. Blinder and Mark W. Watson reviewed economic performance from Presidents Harry Truman to Barack Obama’s first term, and inflation was lower under Democratic leaders, real GDP growth was higher, and unemployment lower, too. A more current NY Times article backs this up asserting that Democrats are bolder when dealing with problems.
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We can agree to disagree. There is a reason P. BIDEN has one of the lowest approval ratings in American history. “The emperor wears no clothes” – may be an old overused cliche these days, but it works perfectly in this case. He is not running the show. Afghanistan pull out despite MSM outlets like CNN and MSNBC declaring it a victory of sorts was clearly a devastating screw up engendered by a failure of leadership -even topped off with a political drone strike killing innocent people. As far as the economy is concerned he gets to be the President who allowed the largest transfer of wealth in the history of mankind to the richest 1% who of course back his Presidency. Bottomline – 2022 elections will create gridlock and hopefully stop the current trajectory. Americans are fed up. But let’s be more clear… AMERICANS are beyond FED up. And let’s add this caveat, the answer is not 4 more years of P. Trump. I do not know the answer, but I do believe in the existence of miracles.
Some of what you say I can agree with, but I will add, as I noted in my column, that Americans themselves are part of the problem when it comes to the economy and inflation, which so many are bitching about. The pent up demand that is putting unnecessary pressure on prices and those companies that are “anticipating” inflation and raising their prices to accommodate that – or rather “create” that – are not helping. People need to see how their own actions contribute. As for the transfer of wealth, Trump certainly helped with that. I guess the real thing we agree on is that four more years of Trump would not help.
Not sure if you are a sports fan Lisa. Here is my simple analogy. Your favorite college football team gets a new coach. Normally your team is a top contender and for several decades never has had a season of more losses than wins. Suddenly that changes and added to that things keep getting worse the following season. You watch your team play and cannot believe the stupid calls and mistakes made by the coaches during the games. Thr situation becomes obvious.. The truth is there are BAD COACHES that can literally destroy an athletic program – it happens. The same goes for leadership positions such as the Presidency and this country. P. Trump may have had his issues especially with emotional intelligence but he was at least competent. So far P. Biden has been clearly incompetent and completely out of touch with the American people. There is no doubt this is the case based on his current track record. NO DOUBT. Inflation is irrelevant when you consider nobody is steering the helm of the ship. Personally I do not dislike the guy. Unfortunately he clearly has cognitive issues and it is obvious he is not running the show. Peace out.
I will just have to disagree with your analogy of comparing a sports team to running a huge government and economy like that of the U.S. The two are not comparable in my opinion, and the U.S. economy has many more forces playing on it that one man can control no matter how much he tries. I think the take away from my article basically is that history shows that the economy does better under the Dems than the Reps. So that should be kept in mind by all voters who are concerned. I think it is way too early in Biden’s administration to make any “calls” if we are going to stick with your football analogy. Best to you!
Well the football analogy did not work. (I predicted that may be the case) Seemed you used that as your main counter point. How about justifying the bail out of the Junk bond market billionaure hedge funds in 2020. Was that necessary or OK? How about expanding the National Debt by trillions and trillions of dollars? Was that necessary? How many people lost their family businesses? How much stimulus money went ro waste? America was fleeced… My point is our current leadership vacuum has destroyed the fabric of this country and the American people have been sold out. You, on the other hand see a partisan divide, and criticism of the Biden administration as somehow being related only to media bias and distorted/ignorant opinion. You are welcome to that opinion, but it does not change the facts. In 2019 the Harmon’s large chicken Alfredo dish cost $8. In 2020 it went up to $9. 2021 it cost $10. As of this week it just went up to $11, and I think they are using smaller packaging as well. Policies have implications. My guess before the end of 2022… $12. 2023. $15…. But before then (2023) the digital dollar bait and switch will take place. I have an undergrqd degree in Finance and an MBA as well – I know nothing. All good … Biden is the best we ever had ! Weimar Republic here we come! Yee Haaaa! Tiny Houses for zoomers who can rent them from BlackRock inc. It is called a plutocracy. You’re EYES ARE WIDE SHUT – Lisa. Solution – political campaign reform (reversing citizens united and other related judicial rulings) in addition to targetted anti corruption laws for government officials… NOT HAPPENING… Corporate feudalism has won the day. Peace out – and always fun to go back and forth with you.
Fulcanelli, I understand all of these concerns, and they are valid. Not all one man’s fault. This is a systemic problem. Political campaign financing has been allowed to run amok and efforts at reform have been stopped in the past. Now, with more money being dumped into coffers by those who can afford to and need political support to maintain status quo, the problem is only worse and fixing not going to happen in my opinion. Our nation is in a sad predicament. Citizens United was a travesty. How can corporations be considered citizens when it comes to donating money but then be treated differently when it comes to other matters like taxes? I agree that there is a leadership vacuum. What we have mostly is people who want to get money by running for office and then pass bills that help them and their cronies – on both sides. Politics has always been ugly, in my opinion, but is even uglier now. I did not say that Biden is the best we ever had. I was sharing my thoughts on how he compares to others and the challenges he faces. He is what we have, and there are many factors at play in this government and economy that are beyond his control. As for prices increasing, that stage was set by the pandemic, and as mentioned in my column, as the pent up demand surges into the market with more money chasing fewer goods, it will continue to get worse. People should slow down and take a breather. They’re helping to create their own problem. Also, if businesses are anticipating inflation and thereby raising their prices due to that anticipation, they too are helping to create the problem. It’s not “peace out.” “Chill out” is what is needed. Government is bad but sometimes we are our own worst enemies. I understand that people are fed up with their lives under the virus restrictions but buy, buy, buy and loading up the goods pipeline at this time is not the answer. Also, for those who are tired of high gas prices, driving gas guzzling huge vehicles at 90-100 mph as seen during our recent trip to SLC certainly is not the answer to saving money there! People have some control. They just choose not to exercise it in many cases.