The White House is shifting its approach to selling President Biden’s $4 trillion domestic spending plans, as the administration responds to polling data suggesting the threat of inflation represents a potent political risk.
In a speech on Wednesday, Biden cast a wide range of his key economic policies — from breaking up monopolies to child-care subsidies to education funding — as part of an agenda to “bring down the biggest costs” for working-class families.
Biden said his plans are focused on lowering “the everyday costs that have been taking a bigger and bigger bite out of middle-class families’ incomes,” taking aim at “the expenses that keep parents up at night and rob parents of their dignity.” He talked about how his plans would ameliorate high costs in housing, health care, groceries, gasoline, elder care, child care and education. He gave another speech Thursday devoted entirely to the “outrageous costs” of prescription drugs and his administration’s plans to reduce them.
The White House Council of Economic Advisers and Office of Management and Budget published a report this week outlining how price increases have hurt family budgets and how the president’s policies would reverse those trends. And White House press secretary Jen Psaki has taken to turning questions about the president’s agenda into opportunities to highlight how they reduce families’ costs.
“The Build Back Better agenda could also be called the Cost-Cutting Agenda for Working Families,” Psaki told reporters when asked about concerns by Sen. Joe Manchin III (D-W.Va.) about more spending at a time of high inflation. “Build Back Better sounds better,” she added.
While the administration has always partially sold some of its economic plans as easing families’ financial burden, the change in emphasis to directly confront the inflation debate highlights how the administration has adjusted to the new political and economic realities.
White House officials have looked at polling data suggesting that rising prices could prove a political head wind for Democrats, particularly among older voters far more likely to be worried about inflation, according to two people aware of the matter who spoke on the condition of anonymity to reflect private conversations.
Mike Donilon, Biden’s longtime political strategist, and Jen O’Malley Dillon, the president’s deputy chief of staff, have helped lead the discussions on the strategic shift, the people said. White House Chief of Staff Ron Klain and White House communications director Kate Bedingfield also have been involved in the talks, the people said.
In addition to responding to these political challenges, the new approach also bends to the legislative realities of Biden’s agenda, which will require the votes of centrist Democrats in the House and Senate. Many of these lawmakers, including Manchin, have openly warned about their concerns about inflation.
West Virginia’s other senator, Republican Shelley Moore Capito, penned an op-ed that published Friday blasting Democrats for their tax and spending proposals and alleged it was already leading to inflation in all pockets of the economy.
“In West Virginia, a gallon of gas is nearly one dollar more than it was a year ago, and we’re paying about thirty cents more for a gallon of milk than we did at this time last year,” she wrote.
A White House official said focusing on how the president’s agenda will lower costs is meant to in part defang Republican attacks that new spending will fuel inflation, particularly given that the bulk of the spending in Democrats’ $3.5 trillion budget plan would occur well after next year.
“The President’s Build Back Better agenda will give American families relief from financial burdens that have been staggering for years … and from the moment he first proposed this during the campaign, he has made his case in those terms,” White House spokesman Andrew Bates said in a statement.
“He’s fighting to build on the record job creation he’s achieved and the fastest rate of economic growth in roughly 40 years with policies that both make paychecks go for the long haul and that simultaneously guard against inflation,” he said.
The irony of the shift in strategy is that it comes at a time when some economic indicators suggest the pace of inflation may be cooling down — a trend Biden pointed to Wednesday.
Prices are still up markedly from their lows in the pandemic’s early months, as the president’s stimulus and economic reopening lead to a surge in demand. Data released this week by the Bureau of Labor Statistics showed prices rose 5.4 percent in July compared with a year ago. Groceries have been inching higher for well over a year. Just from June to July, the cost of meats, poultry, fish and eggs climbed 1.5 percent. On Wednesday, the national average for a gallon of gas hit $3.19, a new high for the year, according to AAA.
But the month-to-month data may show signs of a cool-down: Prices overall rose 0.5 percent in July compared with June. Used-car prices jumped 10.5 percent in June compared with May. But in July, they grew only 0.2 percent compared with June.
The Federal Reserve and the White House expect prices may keep climbing, as long as consumer demand rebounds faster than supply chains can catch up. Their prediction is that as supply backlogs have time to clear, inflation will settle back down closer to the Fed’s 2 percent annual target, perhaps next year.
But that message is increasingly difficult to stomach for households facing rising grocery bills, rent or airline tickets right now. Persistent shortages of semiconductors have squeezed the market for used cars and trucks, sending prices soaring 41.7 percent compared with last year.
Republicans say the price increases are already hurting too many families and their pocketbooks. They have criticized Biden’s sprawling spending agenda for heating up the economy recklessly, pointing first to the $1.9 trillion stimulus plan passed in March and now to the $3.5 trillion budget plan moving through the Senate.
One of the measures watched closely by the Fed is not suggesting baked-in expectations for widespread, long-term price increases. But another survey of consumer expectations, released by the Federal Reserve Bank of New York, shows that households expect prices will stay high — well above the Fed’s 2 percent target — into next year.
Biden has increasingly sought to convince the public that his efforts represent the best chance to lower high prices. He argued Wednesday that breaking up the largest agricultural producers — as part of his broader antitrust efforts — could curb “price gouging” that inflates the cost of groceries. He has said the infrastructure deal brokered with Republicans will make it quicker and easier to transport goods, which will reduce consumer prices. And he has increasingly pushed Democrats’ $3.5 trillion spending package — a proposal with major new spending to address health care, climate change, education, and other social priorities — as aimed at reducing families’ price pressures.
Julia Coronado, president of Macropolicy Perspectives who worked for the Federal Reserve Board of Governors, said the Biden administration’s refined approach made sense by aiming to expand the amount of economic capacity — addressing supply-side concerns — rather than reducing the amount of spending support fueling consumer demand.
“They’re trying a new message: The message is, ‘We understand there’s inflation, and the right way to get at it is to invest in improving our supply chain, not pulling back on policy support for the economy.’ That’s a smart message,” Coronado said. “If you can relieve the pressure on these supply chains — not by hitting demand, but by improving infrastructure — you’re basically lifting the economy’s potential to meet that demand.”
But other experts said the inflation rhetoric reflects how many missed the extent of the political challenge posed by inflation.
“I think this reflects the fact that inflation has been higher and longer lasting than the administration thought it would be or wants it to be,” said Adam Ozimek, an economist at Upwork. “There are economists who dismiss concerns about inflation, but clearly the administration does not agree with them. A lot of economists underestimated how big of a political problem this would be for the White House.”