Gas prices are seen Nov. 29 in Mount Rainier, Maryland. (CNS/Reuters/Leah Millis)
The Federal Reserve finally stepped up on Wednesday, Dec. 15, to address rising inflation, announcing it was expecting to raise interest rates three times in the new year. The Fed also said it would begin scaling back its monthly purchases of bonds, which had helped bolster the economy during the worst of the pandemic. The deflationary pressures of the pandemic shutdowns have given way to surprisingly strong inflationary pressures of the recovery.
The move comes while President Joe Biden's poll numbers for his handling of the economy are tanking. A new CNN poll out this week showed that 54% of Americans disapprove of the president's handling of the economy. The poll also showed between two-thirds and four-fifths of Americans listing rising costs of food, housing and gasoline as issues of greater concern to them than the economic effects of the pandemic.
Whether it is fair or not, whoever is in power gets blamed for a bad economy — and credit for a good one — even though a host of factors over which a president has no control are as significant as any particular policy in dictating overall economic performance. For example, it is clear that supply chain problems are a key driver of current inflation rates, but a president's ability to solve those problems in a global economy are very limited. Add that to the psychology of pent-up consumer demand, and inflation is bound to be strong. Good luck to any president who wants to tackle consumer psychology!
In The New York Times yesterday, Paul Krugman pointed out that even when wages are rising faster than expenses, as they were in the early 1970s when inflation hit 12%, "Americans were unnerved by the way a dollar seemed to buy less with each passing week. That feeling may be one reason many Americans now seem so downbeat about a booming economy."
That said, this White House has been abysmal at confronting the politics of economic anxiety. His team has repeatedly downplayed the significance of data pointing to higher inflation, which has only made them look out of touch. The rest of us do not have the luxury of downplaying inflation: Every time you check out at the grocery store or fill up the car with gas, the bill gives some sticker shock.
It did not help when White House chief of staff Ron Klain retweeted a tweet from former Obama economic advisor Jason Furman that called inflation and supply chain issues "high class problems." It got worse when White House press secretary Jen Psaki tried to brush off Klain's tweet, then explained why it was not as offensive as it sounded, forgetting the First Commandment of political communications: If you're explaining, you're losing.
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Biden, Klain and Psaki are Democrats, of course, and Democrats are almost uniquely inept when it comes to political language. At The American Prospect, Bob Kuttner looked at some of the self-defeating language liberals use when discussing economic – and other – issues. He notes that "the word 'entitled' has come to describe an obnoxious person who claims privileges that are excessive or undeserved. Sheesh, does that describe Social Security and Medicare? No, but they are described in budget lingo and more broadly as entitlements."
Kuttner prefers the term commonly used in the United Kingdom, "social income." That would be fine but it has no afflatus. How about "solidarity funds" or "community checks"? Or, specifically in the case of Social Security and Medicare, why not "Just Desserts"? Who doesn't like dessert? I do not think that would take, but the conversation would get us away from "entitlements" while we all try and think of something better.
The point is that Democrats need to show more discipline and creativity about their messaging. If you watch Fox News (and I do so you don't have to!), you know how good Republicans are at messaging consistently and creatively, even when what they are communicating is an obvious falsehood. Furthermore, on the economy, because Democrats claim to represent the working class, but their political teams are staffed with highly educated, largely well-off young people, a misstep like a tweet about "high class problems" resonates in ways it wouldn't if it came from a Republican staffer.
Another part of the problem is that Americans now see even their own economic well-being through a partisan lens. In The Washington Post last week, Philip Bump looked at how polling demonstrates that Republicans sour on the economy as soon as a Democrat moves into the White House, and vice versa. But not just their views of the national economy are colored by the partisan lens: In 2018, he points out, a CNBC poll had Republicans reporting they had seen an increase in their take-home pay immediately after Trump's tax cuts became law, while Democrats and Independents reported no such change. The polling offers no insight in to how to change this politicization of reality, but it does indicate that independent, unaffiliated voters are the ones whose perceptions matter and whose votes are decisive.
As Catholics, our views on the economy always start with how policies affect the poor and the marginalized. That does not mean our moral concern stops with the destitute. Many working-class Americans are poor, and millions more are only one paycheck away from being poor. The shrinking middle class is not exactly swimming in luxury. Inflation hits them all very hard.
There is good news too. Wages have begun to rise and there is new energy in the labor movement: The Starbucks baristas in Buffalo may have been to first to vote to unionize, but they won't be the last. Staff at two Boston Starbucks have already filed to hold a union election. Building solidarity takes time, and after 40 years of Republican laissez-faire policies (and mostly-laissez-faire policies from the Democrats) we need to reframe the way we think and talk about the economy.
Pope Francis — and Pope Benedict XVI and Pope John Paul II and Pope Paul VI and Pope John XXIII and Pope Pius XII and Pope Pius XI and Pope Leo XIII before him — have given us the intellectual and moral tools to create that new frame. For more than 100 years, papal teaching has warned us against the hegemonic extremes of socialist materialism and libertarian individualism, challenging the former to respect the transcendent dignity of each human person and the latter to respect moral claims demanded by the common good. They have called us to solidarity, within our families, within our communities, within our countries and across the globe.
The Biden administration needs to double down on passing its Build Back Better plan, which would begin to fundamentally restructure parts of the economy in ways that enhance solidarity. And taxing the uber-rich is the best way, and the most politically effective way, to ease inflationary pressures.
One thing is clear: If the Democrats are talking about anything other than fixing the economy so that it works for all Americans, they are talking about the wrong thing. In American politics, when the economy is good, other issues predominate. When the economy is bad, it is the only thing that matters.
