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“Inflation” and “infrastructure” usually excite only professors and policy wonks, but everyday Americans need to bone up.
Infrastructure is the major accomplishment that could save President Joe Biden’s presidency.
Inflation is the force majeure that could doom it.
A government report out Wednesday suggested inflation was at its highest since the early 1990s.
But anyone filling up the tank in their gas guzzler can talk about inflation – gas prices are creeping toward $4 per gallon. The national average price of gasoline rose to $3.42 a gallon on Monday, up from $2.11 a year ago, according to AAA.
The problem for Biden is there’s not much he can do about it, according to CNN’s Kevin Liptak, who writes:
Bottom line – High gas prices are one of the most frustrating phenomena for any White House because they affect almost every American but are mostly immune from presidential action.
What’s driving higher prices – As the global economy rebounds from the pandemic, the price of crude oil is skyrocketing. US gas prices have surged to a seven-year high of $3.40 a gallon nationally and are flirting with $4 in Nevada, Washington and Oregon. The rise in prices comes as demand for oil surges back as the Covid-19 pandemic wanes, outpacing supply.
Some Senate Democrats have called on Biden to tap the Strategic Petroleum Reserve or stop oil exports to address the high prices, but these steps are unlikely to make much of a dent.
In other words, he’s largely at the whim of the market and OPEC.
Biden said inflation should be a reason for more government spending, not less, during an appearance Tuesday before Democratic activists:
“I know a lot of folks don’t feel the progress we’re making in the economy. I get it. I know the costs of gas, groceries and rent seems to be harder and harder to handle. That’s one of the more reasons why we have to pass my Build Back Better bill.”
That’s the second piece of his agenda, with new social programs like universal pre-K and measures to fight climate change.
The other “I” word. It’s much better news for Biden on infrastructure spending, which eluded Republican and Democratic presidents until now. The $1.2 trillion package is about to turn the country into a massive government-sponsored construction site.
Democrats and the few Republicans who joined them nowneed to sell Americans on the effort to fix roads and bridges, upgrade the electrical grid and a whole lot more.
We’ve written about the infrastructure bill here in terms of the politics – how progressives held their support in the House in an effort to force a vote on the even more ambitious social spending bill.
CNN’s Phil Mattingly has the full ticktock on how Biden and House Speaker Nancy Pelosi pushed the infrastructure bill over the finish line.
Now it’s time to pay attention to what’s inside. CNN’s Tami Luhby and Katie Lobosco have the full rundown.
The infrastructure package will fix things that need fixing – roads and bridges – and invest in things that need investment – like electric-vehicle charging stations and an upgraded electrical grid.
It’s a major accomplishment since previous presidents, like Donald Trump and Barack Obama, couldn’t get it done.
RELATED: Here’s how long it may take Biden’s infrastructure package to jolt the economy
Blowback for Republicans who voted for the bipartisan bill. You know it’s an accomplishment since Republicans who voted for it are facing backlash within their party.
“Very sad that the RINOs in the House and Senate gave Biden and Democrats a victory on the ‘Non-Infrastructure’ Bill,” Trump said in a statement on Sunday. RINO, by the way, is code for “Republican in name only.”
Trump’s opposition to this bill is focused mostly on politics. He didn’t want Biden to get a “win.”
On Monday, Republican Sen. Ted Cruz of Texas lamented on Fox News that the infrastructure bill allowed Democrats to move on from bruising defeats in Virginia’s governor’s race last week.
He said those in his party should be focused on blaming Biden for inflation by pushing new government spending.
“The price of food is going up; the price of milk is going up; the price of gasoline is going up … the price of rent, of homes, of lumber. … Everything is going up and the Biden administration is causing it,” Cruz said.
How long will this inflation last? Whether the additional spending adds to inflation is an open debate. That inflation is occurring is settled fact.
Goldman Sachs thinks inflation will get worse before it gets better. Economists who used to think inflation would quickly ease are now digging in for something more protracted, according to CNN’s Matt Egan.
“Like much of Wall Street and the Federal Reserve, Goldman Sachs had been anticipating high prices would swiftly come back to earth. Now, there is a realization that inflation will be sticking around longer as supply struggles to keep up with surging demand,” he wrote.
While inflation is here and it isn’t going away, it’s not expected to be a permanent problem.
“I think it’s almost certain to last for another six to nine months and could well last longer,” said Larry Summers, a former treasury secretary who has warned against the Biden administration’s big spending agenda overheating the economy.
Rising prices and the economy aren’t all bad news, according to Summers, who predicted workers will have more power.
“After a long time when the big thing was workers looking for jobs, now we’ve got a big thing which is jobs looking for workers,” he told CNN’s Brianna Keilar last week. “That should mean more of us have more power vis-a-vis our employers, and that’ll translate into higher wage increases.”
This story has been updated with additional information.
