How Dems Can Punch Back on Inflation
Inflation is the Democrats' biggest political challenge, a good offense is the best defense
Another day, more bad news on inflation. As CNBC reported on Thursday morning:
Consumer prices in January surged more than expected over the past 12 months, indicating a worsening outlook for inflation and cementing the likelihood of substantial interest rate hikes this year. The consumer price index, which measures the costs of dozens of everyday consumer goods, rose 7.5% compared to a year ago, the Labor Department reported Thursday.
That compared to Dow Jones estimates of 7.2% for the closely watched inflation gauge. It was the highest reading since February 1982.
Economically, this is a problem. Politically, it’s a potential crisis for Democrats. Remember a few weeks ago when Fox News White House correspondent Peter Doocy — the Connor Roy of the Doocy Clan — stumbled into brief relevance by shouting “Do you think inflation is a political liability ahead of the midterms?" at President Biden. On a hot mike, Biden responded to the stupid question by referring to Doocy as a “stupid son of a bitch.”
Biden reacted in this manner because inflation is a political liability. In fact, it is probably the biggest liability facing Democrats. The question is: what are we going to do about it? While the economy and the political environment would improve for Democrats if inflation receded before early voting begins this fall, that is unlikely to happen. Therefore, every Democrat on the ballot — from school board to Senate must find a way to talk about it. A big political fight over inflation gives Democrats an opportunity to go on offense, to remind voters who we are fighting for, and drive a wedge into the Republican coalition.
Not an Issue: The Issue
On the whole, Biden’s economic record is historically great. While I cringe every time a Democratic politician posts the hashtag #BidenBoom, there is no question America is creating jobs at a record pace and growth bounced back faster than anyone imagined possible. Even the Omicron surge failed to stop the economic momentum. Yet, the public is quite grumpy about the state of the economy. No one should be surprised inflation is the most tangible of economic impacts. When costs go up and wages stay the same, people have less money to spend. Rising costs — particularly at the grocery store and the gas pump — are the most easily identifiable and infuriating economic pain points. Good macroeconomic news will always be trumped by adverse microeconomic impacts. Presidential approval ratings almost always rise and fall with gas prices.
The political peril for Democrats can be summarized as follows: people are very worried about inflation and the electorate does not believe President Biden and the Democrats are sufficiently focused on addressing that worry. A January CBS News/YouGov poll showed the magnitude of the problem; nearly two-thirds of voters believe the Biden Administration is not sufficiently focused on inflation.
A Navigator Research poll from early February found that 40 percent of voters selected inflation as an issue that Biden and Congress should be focused on, but only 20 percent of voters selected it as an issue that Biden and Congress are most focused on.
I do think it is important to note that the Biden Administration is tremendously focused on dealing with inflation. They are working hard to deal with the supply chain issues contributing to higher costs, and the Build Back Better legislation would put money in people’s pockets. But we should also be honest with ourselves. There are limited levers to pull to bring down costs in the short term.
Go on Offense
Because they are power-hungry nihilists, the Republican reaction to the inflation news was not one of concern. It was a celebration. Punchbowl News reported:
Republicans are convinced the spike in consumer prices is the single most important dynamic right now. They’re also convinced Democrats don’t have a real plan to address it.
“It’s the biggest issue in the country, and I think their biggest liability going into the fall,” Senate Minority Leader Mitch McConnell told us in a brief interview Thursday.
The best defense is a good offense. So instead of parrying these attacks with proof points about what we have done and want to do, Democrats should consider turning the entire conversation around inflation into an argument for populist economics. This is an opportunity to expose Republicans for siding with highly profitable corporations. There are two elements to this message. First, Democrats should grab onto the mantle of economic nationalism. Data for Progress recently tested several messages on inflation. The best testing one by far was:
President Biden says that we need to bring back manufacturing jobs in the United States to drive down prices. Our supply chains need to be housed here at home, rather than outsourced abroad.
Making things in the U.S. and bringing jobs home is the top testing message in basically every poll I have ever seen in every campaign I have ever worked on. But it is also a point of contrast with the Republicans. The 2018 Trump Tax law rewarded companies that shipped jobs overseas. That fact is political kryptonite and gives Democrats the opportunity to punch back with an argument about how Republicans made the problem worse.
The reasons for the recent spike in inflation are complex and specifically tied to the pandemic. However, while American families are struggling to make ends meet, corporations are reaping record profits. Instead of lowering costs, they are using the money on stock buybacks and bonuses for executives. According to a recent report from Accountable.US:
[The big four oil companies] raked in $24.4 billion in quarter four of 2021, bringing their total profits for last year to over $75.5 billion. Chevron, Shell, BP, and Exxon used these bloated profits to shower billions onto their shareholders – including their wealthy executives whose salaries are heavily padded with stocks.
Groundwork Collective has a rundown of how mega-retailers used the holiday season as an opportunity to jack up prices under the cloak of inflation. One example from the report states:
After a strong second quarter profit this year, Macy’s paired price hikes with stock buybacks, recently approving $500 million in buybacks. The company’s chief executive even admitted it is experimenting with where it can get away with higher prices: “We’ve clearly been through these inflationary cycles before, and so we have a lot of experience with it… And with fashion, sometimes you can pass that on, and you can get a higher ticket and a higher sale price.”
Pushing hard against rapacious corporations is strong political ground for Democrats. Right now, polls show that most voters cite increased government spending as the leading cause of inflation. This is factually incorrect and politically problematic for Democrats. Therefore, we need to shift the blame in a more accurate and politically advantageous direction. In that same Data for Progress poll, the Republicans have an eight-point advantage over Democrats on whom the public trusts to control inflation. But Democrats have a nine-point advantage on “cracking down on corporate abuses and corruption.” Hammering corporations as part of a populist argument has the added advantage of exploiting the fundamental tension in a Republican Party with a working-class base and a corporatist agenda.
Under all scenarios, inflation will be a “liability in the midterms,” but going on offense is our best bet. In politics, you can either parry or you can punch. I vote punch.