Two economic advisers of former President Barack Obama expressed disappointment toward the current administration, saying that President Joe Biden has refused to heed their warnings about rising inflation.

Steven Rattner, former counselor to Obama-era Treasury Secretary Timothy Geitner, wrote an op-ed for the New York Times to say that he “warned the Democrats about inflation.” In the Nov. 16 op-ed, Rant said that Biden’s American Rescue Plan is the “original sin” that triggered the ongoing inflation. The $1.9 trillion stimulus package was passed in March 2021.

“The bill – almost completely unfunded – sought to counter the effects of the [COVID-19] pandemic by focusing on demand-side stimulus rather than on investment. That has contributed materially to today’s inflation levels,” Rattner wrote.

“How could an administration loaded with savvy political and economic hands have gotten this critical issue so wrong? They can’t say they weren’t warned. We worried that shoveling an unprecedented amount of spending into an economy already on the road to recovery would mean too much money chasing too few goods.”

Rattner was among many donors who gave sums of money to Biden’s 2020 presidential campaign. However, this did not deter him from calling on the president to “come clean with voters about the impact of the administration’s spending plans on inflation.”

Larry Summers is another economic adviser who is critical of Biden’s approach to inflation. Back in February 2021, he predicted that the American Rescue Plan could have serious consequences. “[It] could set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability,” he said. 

Summers served under two Democratic presidents. He previously sat as the treasury secretary under former President Bill Clinton from 1999 until 2001. He also served as director of the National Economic Council under Obama from 2009 to 2011. Just like Rattner, he also donated significant amounts to Biden’s 2020 campaign.

Summers later remarked in November 2021 that his predictions about the stimulus package triggering inflation had come true. “Unfortunately, some of the predictions that I made about the consequences of [the] stimulus [bill] do seem to have come true. I think inflation is almost certain to last for another six to nine months, and it could well last longer.”

Biden and other federal officials downplay inflation concerns

Despite the warnings by Rattner and Summers, White House officials have consistently downplayed inflation concerns throughout the spring and summer. In a statement to Fox News, the White House defended the American Rescue Plan from negative comments.

The statement penned by a White House official said: “The American Rescue Plan saved our country from economic catastrophe, helped get millions of Americans back to work and helped make sure American families had money in their pockets from tax cuts and rising wages.”

“That doesn’t make rising prices due to global supply chain issues – affecting countries around the world – any less frustrating for the American people. [But] there are no regrets about the most robust economic recovery in history and [a] historic vaccination effort that has helped keep us and our kids safe.”

Biden also defended his spending plans. He said that these will actually decrease inflation by getting more people to participate in the economy. The president also said most Americans cannot understand the problems faced by U.S. supply chains.

“You hear a lot about the supply chains in the news, but not a lot of people have a clear understanding – whether they have a Ph.D. or they didn’t go to school – about how a supply chain works. In simple terms, supply chain is just the journey that a product takes to get to your doorstep,” Biden said during his Nov. 10 visit to the Port of Baltimore.

He also insisted that his $1.2 trillion Build Back Better infrastructure bill will help slow the growing inflation problem.

White House Press Secretary Jen Psaki insists that product shortages and rising prices, which are some signs of inflation, are “good things.”

“The fact is: The unemployment rate is half of what it was about a year ago. More people have jobs, more people are buying goods, that’s increasing demand. That’s a good thing. At the same time, we know supply is low because we’re coming out of the pandemic,” Psaki said.

No comments:

Post a Comment