President Joe Biden is trying to blame February's record-high inflation numbers on Russia — but a former Obama administration official is not having it.
Steven Rattner, a former counselor to the treasury secretary under President Barack Obama, called out Biden on Thursday for misleading the American people on the record high inflation rates seen in February.
"This is Biden's inflation and he needs to own it," Rattner tweeted after the president released a statement blaming Russia for rising prices.
Earlier, the Labor Department's Bureau of Labor Statistics reported a 7.9% increase in the consumer price index over the past year — representing a 40-year high inflation increase.
Biden referred to the price increases as "Putin's price hike," claiming the Russian invasion of Ukraine is behind the surge in fuel prices punishing American pocketbooks.
"A large contributor to inflation this month was an increase in gas and energy prices as markets reacted to Putin’s aggressive actions. As I have said from the start, there will be costs at home as we impose crippling sanctions in response to Putin’s unprovoked war, but Americans can know this: the costs we are imposing on Putin and his cronies are far more devastating than the costs we are facing," Biden said in a written statement.
The president pledged to take further action to ease the supply chain logjams that have contributed to inflation and to "reduce the huge federal budget deficit that I inherited from my predecessor."
But Rattner said the president was wrong.
"Well, no. Those are Feb #'s and only include small Russia effect," he explained.
Putin's full-scale invasion of Ukraine began on Feb. 24. The BLS report covered price increases for the entire month of February. And inflation is an issue the Biden administration has struggled to address for months. Last year, Federal Reserve Chairman Jerome Powell and others dismissed rising prices as "transitory" and expected inflation to subside as the economy recovered from COVID-19 lockdowns.
But inflation never slowed down, and over the past year it rose at the highest rates seen in 40 years. In response, the Fed has made plans to raise interest rates in order to combat rising prices, with the first rate hikes expected to come next week.
Before blaming Russia, Biden blamed disrupted supply chains for rising prices, but Rattner also called this excuse "simplistic and misleading" in an op-ed for the New York Times three weeks ago.
"Blaming inflation on supply lines is like complaining about your sweater keeping you too warm after you’ve added several logs to the fireplace," Rattner wrote.
"The bulk of our supply problems are the product of an overstimulated economy, not the cause of it," he stated, explaining that as pandemic restrictions eased, Americans began spending more money — aided by generous COVID-stimulus payments started by President Donald Trump and continued under Biden's American Rescue Plan.
"All that consumption has resulted from vast amounts of government rescue aid (including three rounds of stimulus checks) and substantial underspending by consumers during the lockdown phase of the COVID crisis," Rattner wrote, chocking inflation up to "a classic economic case of 'too much money chasing too few goods'" once the pandemic began to end.
He suggested that Biden "make deficit reduction as important as [his] other initiatives" to combat inflation, noting that "smaller deficits reduce net spending by government, thus helping offset demand by consumers."
However, Biden and Washington Democrats have shown no appetite for reduced government spending. The president has instead prioritized a multi-trillion dollar Build Back Better plan projected to add at least $750 billion to the deficit, which has already eclipsed $1.3 trillion for this year.
If Biden follows Rattner's advise he has two options: Compromise and work with Republicans to reduce spending, over the protestations of his progressive base, or attempt to raise taxes ahead of the 2022 midterm elections. Neither seems likely to happen.
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