The way forward for Biden: overcoming Manchin’s inflation fears
Today’s inflationary surge stems from a confluence of factors, many of which are linked to the pandemic. The coronavirus has shut down factories and clogged ports, disrupting the supply of goods Americans stranded at home wanted to buy, such as electronics, televisions and home furnishings.
This strong demand has been fueled in part by consumers who are overflowing with cash after months of foreclosures and repeated government payments, including stimulus checks. Federal Reserve research showed inflation was most likely getting a temporary increase in the coronavirus relief program in March, which included direct checks of $ 1,400 to families and generous unemployment benefits. But Mr Biden’s social policy bill would do relatively little to stimulate increased consumer spending next year and not enough to make up for the government’s loss of stimulus to the economy as aid pandemic expires.
White House advisers have attempted to make the case with Mr Manchin – and the public – in recent weeks, pointing to a series of analyzes that have dismissed inflationary fears over the bill. This includes analysis of a pair of Democratic economists who warned of rising inflation earlier this year – Lawrence H. Summers and Jason Furman of Harvard – and the non-partisan budget model Penn Wharton of the ‘University of Pennsylvania. All of these analyzes conclude that the bill would add little or nothing to inflation over the coming year.
The mismatch between economic reality and Mr Manchin’s stated concerns has infuriated the White House, which is grappling with voter dissatisfaction with Mr Biden over the price hike, as well as an unyielding pandemic.
In a scathing statement about Mr Manchin on Sunday, White House press secretary Jen Psaki noted that Penn Wharton’s analysis revealed that Mr Biden’s bill “will hardly have no impact on short-term and long-term inflation, the policies it includes will ease inflationary pressures.
White House officials, who, along with party leaders, spent weeks trying to get Mr. Manchin comfortable with Mr. Biden’s bill, recorded a sense of betrayal after the senator.
Ms Psaki said Mr Manchin had personally submitted to the president last week the outline of a bill “which was the same size and scope as the president’s cadre and covered many of the same priorities”. He also promised to continue talks towards a deal, she said.