White House Press Secretary Karine Jean-Pierre recently blamed Russian President Vladimir Putin for inflation in the US. Much like blaming the border crisis on Republicans despite years of Trump wrangling to “Build That Wall,” this effort to project American inflation onto Putin’s shoulders rings hollow.
Examining this false claim exposes greater truths – Biden policies, including sanctions against Russia, gargantuan spending bills, COVID-19 lockdowns, and attacks on fossil fuels … All these have directly fueled US inflation without any help from Vlad.
Habitual Russia-Blaming
In her January 30 iteration of the “Putin did this!” stance regarding inflation, Ms. Jean-Pierre stated:
“Putin’s war … has caused prices to go up, and so the President took action to make sure gas prices went down, which they have, and we’re coming out of this pandemic, so all of those things have been part of where inflation is, but inflation is moderating….”
This is hardly the first time the Biden White House has cited Russia’s invasion of Ukraine (or the pandemic) as the cause of US inflation, and certainly there is more than one factor that can influence price hikes. Yet Biden’s sanctions against Russia have spiked prices (and somebody blew up the Nord Stream Pipeline). Sanctions have had no measurable effect on Russia’s economy but have pushed up global inflation.
Stimulus Spending Increased Inflation
However, ignoring the impacts of at least two massive Biden spending initiatives – the American Rescue Plan Act (ARPA) and the Inflation Reduction Act (IRA) – disregards basic monetary theory as well as statements by Treasury Secretary Janet Yellen that the surge of money into the economy had boosted inflation. Former Obama National Economic Counsel head Larry Summers strongly warned that such a huge stimulus package as ARPA dangerously threatened to fuel inflation, but he was disregarded.
Economist and monetary policy expert Milton Friedman emphatically urged that “Inflation is always and everywhere a monetary phenomenon:” Nothing is more directly impactful of monetary value than money supply. Famous examples of reckless currency management that unleashed vicious hyperinflation include Robert Mugabe’s Zimbabwe, Germany’s Weimar Republic, and post-WWII Hungary. Printing money excessively dilutes the value of any currency.
Biden Blame Game
This possibility persistently eludes President Biden, who has also repeatedly scapegoated “supply chain disruptions” as the inflationary culprit. Yet these disruptions resulted from excessive payments to American consumers under ARPA. Steven Rattner, a former counselor to the Treasury Secretary during the Obama Administration, observed in 2022 that supply delays were caused by “vast amounts of government rescue aid (including three rounds of stimulus checks),” and that “Blaming inflation on supply lines is like complaining about your sweater keeping you too warm after you’ve added several logs to the fireplace.”
National Public Radio conceded that ARPA spending seeded inflation but ironically sought to defend Biden by blaming the citizenry:
Had everyone gotten vaccinated, or had the Delta and Omicron variants not burst onto the scene, the economy and President Biden’s approval ratings might well look a lot better. Economists have been telling us since the beginning of the pandemic that the best way to recover from the pandemic is to end the pandemic. It’s hard to end the pandemic when large chunks of society aren’t cooperating.
On the contrary, many argue that lockdowns caused economic harm and that vaccines did not perform as advertised. These would constitute additional Biden failures, which compounded the inflationary impacts of overspending.
The IRA that followed exploited the monetary crisis caused by overspending to … spend more! Cloaked in the name of reducing inflation, the spending spree for renewable products that were the real goal did nothing to reverse inflation. The purchase of solar panels, EVs, and heat pumps under IRA was regressively provided to those who could afford them while running up the national debt for workers and retirees who couldn’t. Later, the president himself abandoned all pretense that the IRA would reduce inflation, arguing at a New Mexico fundraiser that it “has nothing to do with inflation. It has to do with the $368 billion, the single-largest investment in climate change anywhere in the world, anywhere.”
Joe Biden’s open war against fossil fuels, pipelines, and oil and gas drilling clearly drove gasoline and fuel prices high – before Russia invaded Ukraine. Then the administration claimed the president rescued Americans from gasoline inflation (allegedly caused by price-gouging energy companies, not efforts to eliminate fossil fuels by government edict) when he released supplies from the nation’s emergency reserves.
Stop the Spending!
The federal government has steadily gouged the real value of Americans’ savings, retirement accounts, and fixed-income payments by essentially printing too much money. The interest payments required to service the nation’s $34.2 trillion debt will drag down the economy and reduce the resources available for public services. Every penny of IRA and ARPA spending was borrowed money, adding to that intergenerational tab.
Blaming Putin for US inflation is like trying to blame Republicans for the open southern border with Mexico. Voters can easily see that Biden’s policies have contributed to both problems. But it’s easier to secure the border than it is to reverse inflation: Both Janet Yellen and Jerome Powell recently stated the consumer price increases of the last few years are very unlikely to come down – ever.
