Politics Joe Manchin and Larry Summers were both right about inflation but disagree on Biden's agenda. Who's right will determine the path of his presidency and the economy.
Can Joe Biden Save His Presidency?
With his domestic agenda at risk of failure and the prospect rising of a Democratic drubbing in the midterms, Biden needs to act swiftly to rescue his term.Even as Biden announced the terms last week of a $1.75 trillion framework to salvage his signature "Build Back Better" legislation—cut in half from the bill's original $3.5 trillion price tag—his approval rating was taking a beating. The latest Real Clear Politics average has just 42 percent of Americans approving of the job Biden has done so far, while 52 percent disapprove; that represents a sharp downturn over the past two months and a nearly 14-point drop overall from his post-inauguration peak of close to 56 percent.
- Two famous Democrats, Sen. Joe Manchin and Larry Summers, agree on inflation and disagree on Biden's agenda.
- Manchin thinks Build Back Better will worsen inflation, but Summers thinks the costs of not doing it are huge.
- While Democrats squabble, Americans are getting angrier and angrier about the economy.
Take your standard center-left Democrat.
He's in his 60s or 70s, and he remembers when inflation was terrible in the 1970s - he's been warning about it ever since Joe Biden was elected president.
The implosion that didn't happen -- and the very real issues Biden still confronts on his agenda
For about 30 minutes on Monday, it appeared as if West Virginia Sen. Joe Manchin had rolled a hand grenade down the hallway in which President Joe Biden's $3 trillion, two-bill domestic agenda was patiently waiting to move through the House as soon as this week. © Drew Angerer/Getty Images WASHINGTON, DC - SEPTEMBER 30: Sen. Joe Manchin (D-WV) and Director of the U.S. Domestic Policy Council Susan Rice exit a closed-door meeting at the U.S. Capitol on September 30, 2021 in Washington, DC. Manchin has stated that he will not support a social policy spending package that goes over $1.5 trillion, at odds with the $3.
So far, that describes both Sen. Joe Manchin and former Treasury Secretary Larry Summers. Manchin, the West Virginia senator, ripped into the White House and Federal Reserve on Wednesday, saying they misjudged how bad inflation would get after a print that showed prices rising at the fastest rate in 31 years.
Summers, the Harvard economist, has sounded the alarm on inflation so much that Republicanswhen warning about the perils of rampant price growth.
Both have been right so far that inflation is getting worse. The Consumer Price Index - a popular measure of US inflation -, exceeding the 0.6% forecast and marking the largest one-month jump since the Great Recession. The price index rose 6.2% on a year-over-year basis, marking the strongest inflation since 1990.
Crippling Inflation Could Kill Joe Biden's Build Back Better Bill
Senator Joe Manchin has previously suggested a multi-trillion dollar spending package could worsen inflation.The Consumer Price Index for October recorded a 6.2 percent increase year on year in figures published by the Bureau of Labor Statistics on Wednesday, with notable rises in the price of food and energy.
Where they disagree is on what to do next.
Manchin continues to withhold his support for Biden's Build Back Better plan, and said Wednesday the latest inflation data showed price growth "getting worse." Manchin has already called on Congress to hit pause on the spending package, and he cited the latest inflation data in doubling down on his stance.
Summers toldthat his fellow centrist is just wrong.
"Together, they are smaller over 10 years than this past year's stimulus was over a single year, and in addition, they are substantially paid for," the prominent Democratic economist said.
Progressive and centrist Democrats alike are pushing for the spending to be approved by the West Virginia senator, who is increasingly alone in his opposition. The recent November elections were athat voters are poised to turn against Democrats in the 2022 midterms, as a burgeoning red wave swept a Republican into the Virginia governor's office and nearly took out New Jersey's Democratic governor. The question Democrats have to answer is: who's right, Manchin or Summers?
Inflation spike gives ammunition to Manchin
Soaring inflation is shaking up negotiations on Capitol Hill over President Biden's Build Back Better agenda, giving Sen. Joe Manchin (D-W.Va.) and other centrists more leverage to push for a smaller reconciliation package.The annual inflation rate hit a 30-year high under Labor Department statistics released Wednesday, giving ammunition for Manchin to argue against government spending.In the wake of the numbers, Democratic aides and strategists are growing less optimistic that Manchin can be persuaded to support adding back a proposal to establish a national paid family leave program. And it's possible Manchin could more forcefully press for new cuts.
Manchin and Summers did not respond to requests for comment.
The clock is ticking on Democrats' spending ambitions
The inflation report was bad enough to make President Joe Biden change his tone. Instead of repeating the outlook that inflation will soon fade, the president said in a Wednesday speech the White House is prioritizing "getting prices down" and regarding inflation as "one of the most pressing economic concerns of the American people."
The White House has even viewed the inflation print as a strong argument for its spending push. Parts of the social-spending plan like child care funding could help "push back on inflationary pressures," Jared Bernstein, a member of Biden's Council of Economic Advisors, told.
Others doubt Biden's spending packages could dampen inflation. The packages won't "stoke inflation to any measurable extent," but neither "will they help reduce it," Arindrajit Dube, a professor of economics at the University of Massachusetts Amherst, said.
"As a friend of the White House who will always shoot straight, [the Bipartisan Infrastructure Framework and Build Back Better plan] aren't about inflation," Dube wrote in a Thursday. "It'd be good for the WH to be very clear about this point."
Either way, Americans are growing impatient with the Biden administration's inflation playbook. Consumer sentiment plunged to a decade low in November due to surging inflation and pessimism around the government's policy approach, according to the.
So far, Summers and Manchin both have credit for predicting historic inflation. But who's right on the next step is going to help determine both the path of Biden's presidency and the economy.
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Do the two senators who control fate of BBB value “corporations and billionaires" over their own constituents? Kyrsten Sinema and Joe Manchin Photo illustration by Salon/Getty Images