After nearly eight months of gridlock, President Biden’s push to overhaul the economy is finally gaining momentum as congressional Democrats overcome their internal divisions and advance his signature legislative initiatives.
The burst of progress on Biden’s economic agenda comes amid unresolved strains that the administration in recent months has struggled to confront, with high inflation emerging as a top concern for American voters amid the biggest price hikes in nearly three decades. Republicans have blamed the inflation problems on Biden’s economic agenda, but there are signs that the White House could soon push back more forcefully, saying that large corporations are partly to blame for the dramatic increase in costs.
White House aides also are hopeful that coronavirus booster shots, the authorization of vaccines for younger children, and predictions of fast economic growth for 2022 could represent a major turnaround. They have spent much of their first year in office refereeing legislative infighting and dealing with the pandemic’s continued economic impact.
“Consumers are out there in the economy buying goods; initial claims for unemployment [benefits] are almost where they were before the pandemic, and a lot of the disappointing job claims over the summer have been revised upward‚” said Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas. “We’re coming to the end of 2021 in much better shape that I think most people expected even a few months ago, when delta was raging.”
Even as Biden secures long-awaited progress on his legislative agenda, the White House is weighing action to confront other problems. They are considering whether to escalate an attack on parts of corporate America over rising consumer prices, according to an administration official and three people with knowledge of the discussions who spoke on the condition of anonymity to reflect private meetings.
Several outside advisers have pitched senior White House officials — including White House Chief of Staff Ron Klain and White House National Economic Council Director Brian Deese — on an offensive in which the administration would amplify criticisms of large firms in heavily concentrated industries for passing higher prices on to consumers as they benefit from high profits, the people familiar with the matter said. The effort would be aimed at both directing voters’ attention to companies over inflation as well as giving companies a reason to think twice before raising prices. But the push could backfire, should it antagonize many of the firms it is highly dependent on to resolve supply chain pressures ahead of the holiday season.
The White House took a step in this direction earlier this week, with Biden urging the Federal Trade Commission to escalate its investigation of anti-competitive behavior in the oil and gas industry, which the president alleged was leading to higher prices for drivers at the pump. Administration officials have discussed launching similar measures, with aides discussing calling attention to consolidation in the grocery sector as food prices rise, two people familiar with the matter said.
A senior White House official, who spoke on the condition of anonymity to reflect internal thinking, said the administration has been focused since the beginning of the administration on antitrust measures — from housing to agriculture — aimed in part at reducing consumer costs. Senior White House officials published an analysis in September on the role of concentration in the meatpacking industry on higher prices. The administration has also already appointed a number of aggressive antitrust advocates to key positions.
“The White House is working to make clear inflation is not happening for organic reasons; it’s happening because it’s profitable for enormous corporations to raise prices on consumers,” said Sarah Miller, executive director of the American Economic Liberties Project, a think tank that supports aggressive antitrust policy, who said her views had been made clear to the administration.
Miller acknowledged Biden’s letter to the FTC about oil and gas companies, but said: “I think that strategy can be expanded through resources the White House has to do a broader and more urgent investigation into rising prices in key industries for consumers and identifying excess profits that’s resulting in. They should do that now.”
Many economists are skeptical of whether publicly cajoling firms would actually lead them to lower their prices. And Biden has leaned heavily on the heads of companies such as FedEx, Walmart and Target over the supply-chain crunch, with the administration just this month touting executives’ commitments to stock their shelves ahead of the holidays. It is unclear how these corporations would react to being criticized over corporate consolidation.
Conservative and even some nonpartisan economic experts say that trends in consolidation since the start of the pandemic do not explain a massive increase in inflationary expectations over the last year.
“This is just a fantasy — there’s no corporate consolidation that explains it,” said Douglas Holtz-Eakin, a Republican policy analyst. “This is just an attempt to change the subject.”
The White House has found itself hemmed in on short-term price pressures even amid the advancements of the bipartisan infrastructure law and social spending bill — which are primarily intended to address long-term structural problems in the economy.
One of the federal government’s most traditional ways of dealing with inflation is through actions by the Federal Reserve, and Biden is expected to announce whom he will nominate to lead the agency in the next few days. Fed Chair Jerome H. Powell’s four-year term expires in early 2022.
In a previously undisclosed meeting at the White House on Monday, a bipartisan group of 10 centrist senators met with Biden around the signing of the bipartisan infrastructure law that they had helped broker. Biden gave comments to the group that were highly complimentary of Powell, two people who attended the meeting told The Washington Post, speaking on the condition of anonymity to reveal details of the private conversation. A White House spokesman said that the president had not yet made a decision about the Fed selection.
But later the same week, Powell came under increasing attack from two Democratic senators who joined Sen. Elizabeth Warren (D-Mass.) in opposing the renomination of the central bank chair. Democratic Sens. Jeff Merkley (Ore.) and Sheldon Whitehouse (R.I.) said Powell had not done enough to use the regulatory power of the central bank to address the financial risks of climate change.
“President Biden must appoint a Fed Chair who will ensure the Fed is fulfilling its mandate to safeguard our financial system and shares the Administration’s view that fighting climate change is the responsibility of every policymaker,” Merkley and Whitehouse said. “That person is not Jerome H. Powell.”
Despite the internal divisions, the White House was buoyed Friday by passage through the House of the Build Back Better legislation. The bill would devote more than $2 trillion to dozens of key policy priorities, and the administration is eager to tout improvements to early-childhood education, energy policy, health care, housing, and other key policy areas where Americans are facing high costs.
“It puts us on the path to build our economy back better than before by rebuilding the backbone of America: working people and the middle class,” Biden said in a statement after the bill passed the House.
Conservatives have blasted the measure, with Rep. Jason T. Smith (R-Mo.) saying in a statement: “Washington Democrats have spent months consumed by infighting and backroom dealmaking in pursuit of a partisan tax and spending agenda that bankrupts our economy, benefits the wealthy, and builds the Washington bureaucracy.”
The legislation will now head to the Senate, where Kyrsten Sinema (D-Ariz.) and Joe Manchin III (D-W.Va.) have made clear it would have to undergo key changes before it can be approved. The revised package from the Senate would then have to be approved again by the House. Party leaders hope final passage of the bill could come before the end of the year.