In his second full-length news conference since taking office, President Biden made some incorrect statements or made claims that lacked important context. Here’s a roundup of the statements that caught our attention.
Biden is engaging in a practice perfected by former president Donald Trump — offering numbers without context. The United States is emerging from a pandemic that caused huge job losses in 2020 — 9 million jobs, in fact. The rounds of stimulus bills — passed under Trump and Biden — certainly had an impact. The unemployment rate did fall more than many experts had expected, but in part that was a consequence of people dropping out of the workforce.
“The economy has seldom seen such a mismatch between so much demand for workers and so few people willing to work,” The Washington Post recently observed.
“And for the first time in a long time, this country’s working people actually got a raise — actually got a raise. The people of the bottom 40 percent saw their income go up, the most of all the categories.”
Again, this comment is missing context — the impact of inflation.
Biden is citing the wage growth tracker of the Federal Reserve Bank of Atlanta. But it expresses nominal figures, not adjusted for inflation.
Between the second and third quarter of 2021, the bottom 40 percent saw huge growth in hourly earnings, surpassing price growth. But workers between the 50th and 80th percentile — the middle class — experienced wage growth below inflation levels, noted economist Arindrajit Dube in November.
“It will do all of this without raising a single penny in taxes on people making under $400,000 a year or raising the deficit. In fact, my plan cuts the deficit and boosts the economy by getting more people into the workforce.”
Biden has largely kept to his promise not to raise taxes on people making less than $400,000. But his spending plan only cuts the deficit if you ignore various accounting gimmicks to make the numbers add up. In fact, Biden originally claimed his spending bill and the infrastructure bill combined would reduce the deficit. But the infrastructure bill increased the deficit, putting Biden in the hole even if you accept the White House calculations.
In the effort to please many factions in the Democratic Party, the overall cost was reduced but many elements ended up with shortened time frames.
Originally, Biden would have extended a child tax credit through 2025 and established an affordable child-care program and universal pre-K.
Now, in the version of the bill stalled in the Senate, the child tax credit is extended for only one year, while the universal pre-K and affordable care programs only last six years. A plan to provide Affordable Care Act tax credits to low-income people in states that did not expand Medicaid would run for four years. Such maneuvers reduce the top-line number, but they also mean lawmakers would soon face pressure to extend the programs when they expire. (The framework also includes substantial spending on green-energy programs.)
The Penn Wharton Budget Model estimates that if all of the spending initiatives in the new framework lasted 10 years, the total spending would amount to $3.98 trillion, in large part because the child tax credit would cost $244 billion a year by 2031. In its analysis of the framework’s revenue provisions, Penn Wharton concluded the plan would raise $1.527 trillion, or almost $500 billion less than the administration’s estimate.
“That’s why 17 Nobel Prize winners for economics say it will ease long-term inflationary pressure. The bottom line, if price increases are what you’re worried about, the best answer is my Build Back Better plan.”
“Seventeen Nobel laureate economists said that if, in fact, we can pass it, it would actually lower the impact on inflation, reduce inflation over time, et cetera.”
Biden twice referred to a letter signed by 17 Nobel Prize-winning economists, claiming that his spending plan would reduce inflation over time. The letter was released in September, when Biden’s Build Back Better plan called for $3.5 trillion in spending on top of a bipartisan infrastructure plan. It included this line: “Because this agenda invests in long-term economic capacity and will enhance the ability of more Americans to participate productively in the economy, it will ease longer-term inflationary pressures.”
As we have noted, Biden’s plan has changed significantly since then. The bipartisan infrastructure plan became law, but the rest of the spending proposal has been pared back to $1.75 trillion. The tax changes lauded in the letter — higher taxes on the wealthy and corporations — have been largely dropped.
In November, we asked the signers if their minds had changed, and some indicated that the proposed changes have lessened the potential impact on inflationary pressures.
Moreover, it’s misleading for Biden to suggest that the bill would have an impact on current inflation, just moments after he correctly said the impact of the bill would be in the long term.
“Look, think of what we did on covid when we were pushing on AstraZeneca to provide more vaccines. Well, guess what? They didn’t have the machinery to be able to do it. I physically went to Michigan, stood there in a factory with the head of AstraZeneca and said, ‘We’ll provide the machinery for you.’”
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