No, Biden, U.S. Inflation Rose Long Before Putin’s Invasion

COMMENTARY Markets and Finance

No, Biden, U.S. Inflation Rose Long Before Putin’s Invasion

Apr 4, 2022 5 min read
COMMENTARY BY
Peter St Onge

Research Fellow, Thomas A. Roe Institute

Peter is a research fellow in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
A gas station in Los Angeles shows the price of a gallon of gasoline on March 18, 2022. CHRIS DELMAS / AFP / Getty Images

Key Takeaways

Biden characterized the inflation jump as “Putin’s price hike,” pinning 14 months of inflation on a 2-week-old war.

Biden decimated domestic oil production, stood by while unions held West Coast ports hostage, and threatened vaccine mandates to throw millions more out of work.

We should not have to endure an economy always teetering on a knife’s edge, and that’s all Biden has offered, with the excuses to go with it.

President Joe Biden has yet another inflation scapegoat: the war in Ukraine. On March 10, in response to new data showing year-on-year inflation hitting 7.9%, Biden characterized the jump as “Putin’s price hike,” pinning 14 months of inflation on a 2-week-old war.

This administration needs to quit the excuses and get to work reversing the trillion-dollar deficits, the war on energy and supply chains, and the bumbling mandates, regulations, and subsidies that drive up prices and drain Americans’ pockets.

When Biden took office 14 long months ago, inflation was running at a 3% annual rate, and prices had risen just 1.4% during the previous year under President Donald Trump. Almost immediately, the administration and its allies in Congress got to work for the activists who installed them, pushing trillion-dollar spending bill and ham-handed executive orders targeting, above all, energy. These drove inflation to 7.9% year-on-year—a 40-year high—long before Russian President Vladimir Putin’s war ever began.

Indeed, this administration has put the American economy on such fragile footing, particularly in energy, that it’s entirely possible that Ukraine could drive prices even higher, as Biden’s anti-energy policies starve the domestic production that could have easily replaced Russian imports.

And so, once again, Biden takes regular crises and turns them into severe crises, then pulls a “c’mon man” when the bill comes due.

The scapegoating is nothing new. For over a year now, Biden’s handlers have been cycling through excuses. First it was COVID-19, then lockdowns, then online shopping. Even global warming made an appearance. After denial comes anger, so it was greedy oil companies, greedy grocery stores, greedy meatpackers to blame for inflation. By Christmas, it was greedy families buying exercise bikes.

Absent from the parade of excuses is what’s actually driving inflation: $6 trillion in deficit spending crashing into supply chains, and energy production crippled by green mandates, labor restrictions, and handouts that took millions of workers off the job when we needed them most.

Biden decimated domestic oil production, stood by while unions held West Coast ports hostage, and threatened vaccine mandates to throw millions more out of work.

As for Ukraine, when Putin invaded on Feb. 23, 2022, annual inflation in the U.S. was already at 7.5%. Indeed, it had taken off immediately after Biden assumed office, 13 long months before Putin rolled his dice.

While 7.9% is a 40-year high, inflation has been much worse in areas where Biden’s regulatory insanity and helicopter money hit hardest: energy, shipping, and supply chains. These hit working Americans much harder, so they’ve driven a lot of the anger. Take energy: before Putin ever invaded, Biden had driven American energy prices up by 25.6%—roughly four times core inflation. How? By slashing domestic production.

Biden imposed moratoria on gas leases, canceled the Keystone XL pipeline, and even threatened oil executives with prison for global warming. Just last October, all long before Ukraine, congressional Democrats demanded CEOs of Exxon, BP, Shell, and Chevron tell what steps they’re taking to produce less oil and gas. The White House had actually scheduled a follow-up to threaten the CEOs some more, but canceled last minute as gasoline passed $5, ruining the optics of pressuring oil companies to produce less.

In actual numbers, domestic production dropped by almost a third compared to the Trump-era annual trends in domestic production. That one-third drop represents several times what Russia exports to the U.S. In sum, Biden did everything possible to shut domestic supply, leaving America vulnerable to whatever dictator is on a rampage this week, from Russia to Venezuela to Saudi Arabia.

Far beyond oil, Biden’s anti-production policies and reckless spending have rendered great swatches of our economy fragile, making even Wall Street nervous—Goldman Sachs recently estimated up to a 35% chance of a recession in 2022. If that happens, we will have stagflation for the first time in nearly 50 years.

Biden needs to:

  • Quit playing blame games and man up on inflation, so the rest of the economy can recover.
  • Cut the deficit spending that overwhelms suppliers and lures people out of the labor force, pushing the Federal Reserve into a no-win choice between inflation and a recession that could engender another financial crisis.
  • End the regulatory war on energy and supply chains that continues to sideline millions of barrels of oil and tens of thousands of trucks that we already have, but regulators won’t let us use.

This all will require Biden standing up to the activists, saying no to their demands for environmental and labor mandates, and trillions in vote-buying and crony spending paid for by working Americans.

So far, this administration has been a party for left-wing activists, and it’s been a struggle for the rest of us forced to pay for it. Generational highs in inflation, a weakening job market, and a country lurching from existential crisis to crisis is not what the American people were promised.

We should not have to endure an economy always teetering on a knife’s edge, and that’s all Biden has offered, with the excuses to go with it.

This piece originally appeared in The Daily Signal