Democrats are bracing for a bad election night this November, and if they aren't worrying, the pundits certainly are on their behalf. The president's party usually loses seats in midterm elections, especially the first off-year election for a new president, and Democrats have no seats to spare in Congress. But this year, Democrats have the added headwinds of high inflation — and worse, the dreaded specter of "stagflation," or the combination of rising costs and lower economic growth.
How might inflation affect the 2022 midterms?
How bad is inflation?
The Consumer Price Index — the benchmark U.S. inflation gauge — rose 8.3 percent year-over-year in April, down slightly from 8.5 percent in March but still the highest inflation rate since 1982. "Inflation erodes living standards, and especially the kind of inflation we're talking about — of basic needs — food and shelter and energy, the three pillars of existence," Diane Swonk, chief economist at the consulting firm Grant Thornton LLP, tells The Wall Street Journal.
Inflation is high everywhere, not just the U.S. — Britain's inflation hit its own 40-year-high of 9 percent in April, and the European Union reported annual inflation of 7.4 percent. But Europeans aren't voting in U.S. elections this fall.
Why is inflation such an electoral loser?
It can be hard to get a good read on what actually motivates voters, but "at this point, the answer to what Americans are most worried about is pretty straightforward: inflation," Geoffrey Skelley and Holly Fuong write at FiveThirtyEight. "We asked Americans this question in a variety of ways, but regardless of how we asked it, the top answer was always the same: inflation."
So while "the fundamentals of the U.S. economy are solid, with households still in a strong position financially as more people get jobs and return to old habits like traveling, dining out, and going to concerts," and wages are rising and unemployment is at a historically low 3.6 percent, the Journal reports, people aren't necessarily feeling it.
"Democrats tend to point to and focus on unemployment, which is certainly important to the people that are unemployed and their families and communities," veteran political analyst Charlie Cook tells NPR News. But about 4 percent of Americans are affected when unemployment rises, while "100 percent of people are affected by inflation, and so you could actually argue that it's like 25 times more." And people are confronted with higher prices every time they buy groceries or fill up their car at the gas station.
Why is inflation so high?
The main causes, as Democrats will highlight, are enduring supply chain issues stemming from the COVID-19 pandemic plus rising fuel and food prices tied to Russia's invasion of Ukraine and its fallout. President Biden also argues that some companies are greedily raising prices even as they rake in record profits, while Amazon's Jeff Bezos recently joined Republicans in blaming high inflation on Biden's American Rescue Plan and previous (bipartisan) stimulus checks — people had money to spend on scarce products, driving up prices.
"They're both right. And they're both wildly overstating their positions," Allison Morrow writes at CNN Business. "The truth is that inflation doesn't have any single cause," or an "easy cure." Along with the Ukraine war, Chinese COVID shutdowns, and other supply chain kinks, the Federal Reserve "unleashed a flood of easy money while cutting interest rates to near zero to prevent an economic collapse," she adds. "And just to pile on: There remains an unsolved, psychologically complex imbalance in the labor market that's forcing businesses to shell out more on wages and other benefits."
Is it Biden's fault?
It doesn't really matter, politically speaking, analysts say. With inflation or other bad economic news, "the one thing certain is that an incumbent president will get the blame," Stuart Rothenberg writes at Roll Call. "Indeed, Biden already has." It "wouldn't matter how great a job President Biden is doing on handling Ukraine or the coronavirus," Cook tells NPR. "If voters are mad about the economy in general and inflation in particular, then that's the rifle-shot vote, and that's what Democrats have to really worry about."
Republicans are pretty open about using it against Democrats, too. "We're going to continue to have inflation, and then interest rates will go up," Sen. Rick Scott (R., Fla.), who heads the Senate Republican campaign arm, told The Wall Street Journal last fall. "This is a gold mine for us." And, he told NBC News, "this is going to be devastating for them."
What can Democrats do about it?
If Biden "stresses that the economy is still growing, he risks looking out of touch," Rothenberg writes. "And it he turns to a revised 'Build Back Better' plan, he has to call for more government spending during a period of inflation — not exactly an ideal place to be." But "the president doesn't have a lot of options when it comes to trying to slow inflation," he adds. "It's the Federal Reserve, after all, that is tasked to assure price stability, and the Fed may well have already miscalculated."
Presidents can't do much to lower consumer prices, tamp down oil prices, stop Russia's invasion, or unkink supply chains, but political strategists say it is still important for Biden "to communicate empathy and action even in the absence of good options as an otherwise divided Republican party unites around attacking the president over 'Bidenflation,'" Reuters reports. The White House has also "developed a three-prong strategy: act as aggressively as it can on prices it thinks it can impact on the margins, stress the role of Russian President Vladimir Putin and the pandemic, and attack Republicans, suggesting their economic policies would be worse."
And in fact, Biden honed in on Scott's "Rescue America" proposal, which the president said would "raise taxes on 75 million American families" while doing nothing "to hold big corporations and companies accountable." Look, "I happen to think it's a good thing when American families have a little more money in their pockets at the end of the month," Biden said. "The Republicans in Congress don't seem to think so. Their plan is going to make working families poorer." He went on list actions he has taken to address inflation, "his No. 1 priority," including cutting the budget deficit and hacking away at gas prices.
In the end, said economist Jason Furman, chairman of the Council of Economic Advisers under former President Barack Obama, "I don't think there's any message that would make people feel good about 7 percent inflation."
What would Republicans do if they were in charge?
"Interviews with a half-dozen Republicans showed that while the party is not yet unified around a specific plan," NBC News reported last fall, their "proposals include boosting domestic energy production, eliminating COVID-19 restrictions and vaccine mandates, and cutting shipping and trucking regulations," ideas experts said "amount to a mixed bag: Some could help alleviate inflationary pressures, while others would have little effect or no effect in addressing the cause of increased costs or would not materially affect the economy for years."
Ideally, Republicans would get creative and come up with "a comprehensive program to dramatically cut back government benefits and tax breaks for people and businesses in the top 1 percent of income for their age cohort or firm size," conservative commentator Henry Olsen writes at The Washington Post. "A program such as this would combine populist politics with conservative economics," shrinking the government in a politically winning way.
In reality, "there's no great mystery behind the GOP's strategy: It's rooted in the idea that Americans are upset about something; Democrats hold the reins of federal power; so voters should blame the governing majority," Steve Benen writes at MSNBC. "It doesn't matter whether it makes sense or whether Republicans have meaningful solutions." And honestly, "that strategy might very well work."
And if we get stagflation, that "obviously would be a nightmare for Biden and his party," Rothenberg adds "Of course, anyone who has been around for a while knows that predictions about the economy and the stock market are even less reliable than the promises of a snake oil salesman. The problem for Biden is that snake oil salesmen seem to be having a pretty easy time selling their snake oil these days."