Speech for Mr. Biden

Back in the salad days of 1992 I wrote a stump speech for Senator Tom Harkin of Iowa who was then running for president. The campaign liked it, wanted to use it, but Harkin dropped out of the race shortly after. Great timing, John. So here’s another one for President Joe. The independents are frustrated with him, largely because he doesn’t really speak to their issues.

My fellow Americans . . . and all those who didn’t vote for me:

Today, let’s talk about some painful issues, things that have come about in your lives and mine that are a little uncomfortable to speak about. I’m talking about the personal costs of inflation, the global economy, and the dreadful state of our politics.

I’m not going to give you an “America the beautiful” approach today. Inflation, I know, is what’s affecting all of us. It can be brutal—especially for those with low incomes. And it continues to rise unabated. The Consumer Price Index has jumped at an 8.2 percent annual rate—and that’s a 40-year high.

Compared to a year ago, food prices have gone up 11.2 percent. What I want to tell you is that this isn’t just an American problem. It’s global. You’ve heard the stories about famine in under-developed countries. People in our own country continue to go hungry.

Fires, famine and floods don’t have to be part of the human condition.

But inflation affects the price of most everything, not just food. Rising rent costs are driving many protests. Healthcare costs rose nearly 1 percent in September, the most in two years. New cars and most consumer goods cost more. I know: I’m telling you what you already know.

How to fix this? It won’t be easy. The Federal Reserve is working to get more people employed, but that can be a long haul. Claims of unemployment have jumped dramatically in states hard hit by the recent hurricanes. The labor market is very tight. Republicans have offered no—I repeat no—provisions to deal with any of this. They’d rather scare you with talk about how crime has taken over the country. Yet our most immediate goal must be to stabilize the economy.

Pocketbook and life issues are central to that. Covid is not beaten and could be merely in recession. And rising American healthcare costs are going to cripple the economy. We have to get them under control, but frankly that depends on winning you over to vote with us in the midterms and beyond. The opposition has no plans to fix our healthcare. For them, it’s not a right but just another business.

Ditto with gun control and abortion, the personal freedom issues of our times. The upcoming elections will determine whether we can make abortion legal again through new legislation. We simply must do this!

What I’m asking is that you simply vote for freedom over obstruction. Republican opposition leaves no room for compromise. And their obstruction begins and ends with Donald Trump’s conspiracy theories. The Big Lie about the 2020 election basically proposes a vast conspiracy to defraud the voters. If you believe in that, I have another bridge to sell you.

I won’t berate you here with the accomplishments of my administration. That doesn’t cut much ice when many of you are concerned with putting food on the table. I also know that many of you don’t want to return to the chaos and anxiety of the Trump years. As Americans, you know that we can do better, much better.

With your help we will do better! Thanks for listening.

Politics Visits the Dismal Science

A lot of people, myself included, avoid serious dealing with economics. You hear their gurus make pronouncements clouded with jargon, impenetrable concepts, and fixed ideas. They frequently disagree and like to argue. Many disdain the world of politics, though that is a living part of economics.

Now Larry Summers, the king of controversy, has joined with Ezra Klein on his show in a long but surprisingly enlightening discussion about the present inflation, how it developed, and what to do about it. This may be intimidating to some of you, yet very illuminating if you choose to get into it.

The problem both of them confront is the heavy downside of the strong U.S. economy. Both seem to agree that Biden’s American Rescue Plan was needed and welcome. But “it ran the economy hot.” Notwithstanding obvious benefits to the labor market, Summers believes, our virulent inflation resulted. Planners seemingly ignored the long-term consequences of runaway demand.

And the doctor who prescribes you painkillers that make you feel good to which you become addicted is generous and compassionate, but ultimately is very damaging to you. And while the example is a bit melodramatic, the pursuit of excessively expansionary policies that ultimately lead to inflation, which reduces people’s purchasing power, and the need for sharply contractionary policies, which hurt the biggest victims, the most disadvantaged in the society, that’s not doing the people we care most about any favor. It’s, in fact, hurting them.

For Summers this echoes and replays what happened in 1982, when Paul Volcker came in and instituted draconian reforms that finally tamed record inflation, though at the cost of a recession. There was outrage among many of the lefties, but the medicine worked. Now, once again, demand is out of whack, meaning too much money chasing too few goods. Ezra Klein seemingly accepts this but asserts that supply disruptions have played a role too: Ukraine and China and Covid have had their effects.

I think they both agree that the Fed must act soon and strongly. There is really no other instrument to control what seems likely—a long-term inflation of some 6% a year. The politics of all this become pretty obvious. Politico tells us:

Democrats worry about growth-killing [Fed] rate hikes in the middle of a midterm election year. But inflation is even worse for them politically. Recent polls show that price spikes are by far the top concern among voters. An NPR/Ipsos survey showed that 40 percent of Americans are worried about higher prices and 94 percent are aware of rising costs for food, energy, housing and other items.

One aspect of all this struck me. Left-leaning Democrats typically look for immediate relief to help the beleaguered victims (and counter the upcoming threat of the midterms). Bernie Sanders and others have proposed windfall excess profits taxes on Big Oil. Others want to rescind the federal gas tax.

More conservative Democrats like Larry Summers look for longer-term, painful fixes. I’m reminded of the blowback President Biden received for speaking his mind about Putin. He took a lot of undeserved flak for that, much of it from his own administration, which “overreacted and undercut him.” The State Department and the Kremlin both signaled unhappy long-term consequences from his remark.

Not everyone is on the same page regarding Putin, and unfortunately not everyone is on the same page regarding inflation. Summers and Klein did try to bridge that gap in a good, reasoned exchange.