Yahoo Finance This week in Bidenomics: Battle of the bridges
When was the last time you thanked President Biden for a bridge?
Maybe you have. Maybe there’s a span somewhere, completed with money from the 2021 infrastructure bill Biden signed, that shortened commutes or created a shortcut to grandma’s house. A bridge to somewhere.
Tangible as they may be, however, bridges don’t win votes in tight elections. At least that’s the contention of Biden’s former chief of staff, Ron Klain, who argued recently that while running for reelection, Biden “is out there too much talking about bridges. He does two or three events a week where he’s cutting a ribbon on a bridge. You go to the grocery store, eggs and milk are expensive.”
Klain dinged his former boss's priorities at an off-the-record event that wasn’t meant to be public. But he probably doesn’t mind that somebody leaked the audio. Klain is channeling the frustration many Democrats feel toward Biden, who is broadly failing to generate voter enthusiasm about a second term. In public follow-up remarks, Klain basically made the same point, though a bit more politely.
Inflation news that followed Klain’s kvetching seems to support his point. Inflation dropped from a peak of 9% in June of 2022 to 3.1% in January. But it has since ticked back up to 3.5%. That could be an anomaly that reverses itself in coming months. But the uptick spells trouble for Biden, even if it’s short-lived.
Inflation has clearly been Biden’s top economic problem. It explains why his approval rating is weak even though the economy is chugging along and employers have created record numbers of jobs. The cost of staples such as food and transportation has gone up and stayed up, taking a bigger bite out of workers’ wallets. Many people feel like they’re falling behind, which is what makes inflation so corrosive.
Had inflation stayed on a straight-line downward course, Biden might have been in good shape by Election Day in November. Investors have been looking forward to Federal Reserve interest rate cuts, enabled by an inflation battle the Fed seemed to be winning. At the start of 2024, markets thought there was a high likelihood of several rate cuts in 2024, which would have boosted consumer spirits by lowering the cost of loans for homes, cars, and other things.
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With inflation reemerging, the odds of rate cuts are rapidly receding. The Fed could even decide to wait till after the election to cut rates, so it doesn’t appear to be trying to help Biden. The inflation bump could be a temporary setback that barely affects the longer-term outlook for stocks and financial markets, but it could have outsized importance for Biden’s reelection campaign and its Nov. 5 terminus.
Klain’s critique, however, doesn't spell out what Biden should be doing about inflation. On his own, the president has almost no power to bring down prices. That’s the Fed’s job, through monetary tightening, which takes time. Should Biden start showing up at grocery stores and complaining about the price of milk and eggs, like some ordinary Joe shopping for his family?
Sympathizing with ordinary shoppers isn’t as simple for presidents as it might seem. While campaigning for reelection in 1992, President George H.W. Bush visited a supermarket convention in Florida, where he appeared to be astonished by the novelty of a bar code price scanner — even though they were in wide circulation at the time. It turned out Bush was seeing a demo of new technology not yet publicly deployed, but the details got lost and the media lampooned Bush for being a rich guy unfamiliar with ordinary checkout procedures. Bush lost to Bill Clinton.
Biden has actually been trying all along to split the difference on inflation. He routinely touts the accomplishment of bringing inflation down by more than 5 percentage points while acknowledging that “we have more to do to lower costs for hardworking families.” In tone, at least, Biden is getting it more or less right. He’s highlighting the things going right without trying to tell people everything is great, which would make him seem out of touch.
Yet Biden’s approval rating, which fell as inflation rose, hasn’t recovered at all. Some voters don’t believe Biden, but the bigger problem may be that they don’t even hear what he’s saying. For better or worse, Biden has none of the bombast of his likely Republican challenger, Donald Trump. When Biden comes to town, his milquetoasty remarks don’t generate a lot of interest, whether he’s talking about bridges, groceries, semiconductors, or taxes.
Biden’s main reelection strategy, for now, seems to be running against Trump and the chaos he’s famous for. Arizona’s recent decision to reimpose a Civil War-era law banning abortion — made possible by Trump’s appointment of three anti-abortion judges to the Supreme Court — will generate a lot more Biden campaign rhetoric than any piece of infrastructure. Anything that can get voters to stop thinking about inflation for a while is good for Biden, even if they don't care about his bridges.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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