Beware the politics of inflation
Inflation is here, and it's sticking around.
That appears to be the message from Wednesday's news that the Consumer Price Index (CPI) rose 5.4 percent in September on a year-on-year basis. That's significantly higher than the Federal Reserve's target of 2 percent and somewhat higher than what analysts were expecting. Then there was the nearly simultaneous announcement that Social Security benefits in 2022 will be increased by 5.9 percent, the biggest cost-of-living adjustment in four decades.
It's not a coincidence that four decades ago was the last time the United States suffered from persistent high inflation. Not that prices are rising as quickly now as they were then, at least at an aggregate level. But on a range of household items — gasoline, used and rental cars, hotels, bacon, beef, pork, eggs, TVs, kids' shoes, furniture — prices are going up at double-digit levels. For the past several months, the conventional wisdom has been that recent price spikes were a function of pandemic-related supply-chain disruptions that should soon be resolved. That might still be true, though everything comes down to what "soon" turns out to mean.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Until we get there, politicians — and especially the Democrats who control the White House and both houses of Congress — will need to adjust to the precarious politics of an inflationary economy. It's been a long time since anyone has needed to do that, and younger pols have no experience of it at all.
When inflation is running high, everyone feels like they're losing ground, growing poorer from week to week and month to month. And unlike with slow growth or lagging job creation, the answer isn't more government spending. In fact, pumping more money into the economy can make things worse. (For that reason, the CPI news is likely to make it more difficult for the reconciliation package currently languishing in Congress to pass in anything like its originally proposed size of $3.5 trillion.)
This is liable to leave Democrats feeling powerless. That feeling could verge into something even darker if the Fed decides to try combatting inflation by raising interest rates, which is also something we haven't seen in a while. Suddenly, talk of the irrelevancy of government debt could be replaced by an anxious concern with the unsustainability of running large deficits, with substantially higher interest payments, from year to year.
As my colleague Noah Millman recently pointed out, an inflationary economy could well favor Republicans, who have historically been more comfortable with emphasizing supply-side issues. And that's obviously on top of the political advantages the GOP will enjoy just by being out of power when inflation became a problem for the first time since the Carter administration. (High inflation continued into the first year or so of the Reagan era, but then it ended and hasn't been a major economic factor since.)
Democrats better hope that September's CPI is as bad as it gets and that we soon turn the corner on inflation. How soon? Very soon.
Create an account with the same email registered to your subscription to unlock access.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Damon Linker is a senior correspondent at TheWeek.com. He is also a former contributing editor at The New Republic and the author of The Theocons and The Religious Test.
-
Government shutdown looming? Blame the border
Talking Points Democrats and Republicans say funding for immigration enforcement is the budget battle's latest sticking point. That's about all they agree on.
By Rafi Schwartz, The Week US Published
-
'Conservatives have not limited their attack on reproductive rights to the US'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
Housing costs: the root of US economic malaise?
speed read Many voters are troubled by the housing affordability crisis
By Peter Weber, The Week US Published
-
'Trickle-down economics is a scam'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
'Biden has contaminated the historic public support for LEGAL immigration'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
'The Great Resignation has given way to the Big Stay'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
'The car did, in the end, get the Apple makeover'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
The debate about Biden's age and mental fitness
In Depth Some critics argue Biden is too old to run again. Does the argument have merit?
By Grayson Quay Published
-
It's not really about Biden's brain — unless it is
Talking Points Depending on who you ask, the renewed focus on the president's mental acuity is an election-year distraction, a legitimate point of concern, and sometimes both
By Rafi Schwartz, The Week US Published
-
'The death penalty, it seems, is just too embedded in America's DNA to go away'
Instant Opinion Opinion, comment and editorials of the day
By Harold Maass, The Week US Published
-
The politics of music: should political rallies use well-known songs?
Talking Point The Smiths star Johnny Marr is latest musician to object to use of his music at a Donald Trump rally
By Sorcha Bradley, The Week UK Published