Democrats, who as recently as last week dismissed inflation as “transitory,” have got a major dilemma on their hands.
Feeling is the core problem. Policymakers can point to the backlogged supply chains and pandemic-related purchasing surges that are likely driving inflation. But what’s resonating right now is as much emotional as intellectual — maybe more so: People find sudden price increases distressing, and they look to punish those they think are responsible. And that’s usually the political party in the White House.
A 1997 survey by economist Robert Shiller is still a must-read for policymakers trying to make sense of attitudes toward inflation. Shiller surveyed people in the United States, Germany and Brazil and found that people so disliked unexpected prices increases that many would “choose low inflation even if it mean that millions more people would be unemployed.” Nice!
The survey also found that people appeared to view inflation in moral terms, accusing corporations of greediness, or blaming governments for borrowing or spending too much money. And if they received salary increases that kept them on track with inflation? They still felt ripped off. Why? People think of pay boosts as a deserved reward for a job well done, not simply compensation for price increases. Few internalize the economic arguments for raises — that they can (but don’t always) decrease inequality and make it easier to pay off debt held at fixed interest rates.
Little surprise then that voters tend to blame inflation on the party controlling the government. A 2008 study of decades of presidential approval polls found that voter dissatisfaction increased when prices rose at a higher-than-expected rate. (If you are wondering, lower-than-expected inflation did not increase approval. Voters are ungrateful curs!)
Inflation "has all the characteristics of something that will bother you,” John Forren, executive director of Menard Family Center for Democracy at Miami University, told me last week. “It’s such an in-your-face kind of indicator of where the economy is. People feel it quickly, and they feel it personally.”
They don’t want to hear explanations, which can come across as excuses. They want the problem fixed.
Which brings us to Democrats’ quandary.
The Biden administration forecast this spring that inflation would resolve by early 2022. Now Treasury Secretary Janet L. Yellen suggests the best way to get the economy under control is to control the coronavirus. “If we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do,” she said Sunday on CBS’s “Face the Nation.”
At some point, voters get cynical — and angry. Inflation is almost certainly contributing to Biden’s falling approval ratings. As former treasury secretary Lawrence H. Summers — an early voice warning about inflationary dangers this year — put it on Friday, “People see it as a sign the government doesn’t have things under control.”
It doesn’t help that no one can guarantee what will make inflation go away. Inflation controls are the responsibility of the Federal Reserve, not the president or Congress. And ill-thought-out initiatives that try but fail to solve the problem can boomerang back against their proponents — think President Gerald Ford’s effort to Whip Inflation Now (a.k.a. WIN), or the meat boycotts of the 1970s, or Jimmy Carter’s infamous malaise speech.
All argued that food and energy inflation could be defeated by voluntary personal efforts such as foregoing meat, car pooling and shopping less. Though initially popular, they ultimately didn’t accomplish anything besides leaving people with the impression that advocates were out-of-touch moral scolds, suspicious of consumer comforts.
Democrats have tried to explain that salaries (at least initially) were keeping pace with inflation and that complicated, coronavirus-related economic issues were affecting almost every country, not just ours. But that’s not the sort of response voters want right now.
And while Democrats have failed to appreciate Americans’ feelings about rising prices and declining service, Republicans are asking: Isn’t your grocery bill bigger? Can you afford your heat this winter?
Guess what’s the better talking point?
Denial doesn’t beat back inflation. It’s just given Republicans an issue to use against Democrats. So far, there is no reason to think today’s inflation will reach the double-digit levels of the 1970s. But no amount of jawboning or appealing to reason is going to change how voters think about this issue.
The quicker Democrats recognize inflation as a serious threat to their agenda, the quicker they can work to address it in ways the public will understand: Breaking the logjam at the nation’s ports and ending supply-chain bottlenecks will do more for their 2022 electoral prospects than continuing to try to explain away or rationalize rising prices.