The Fed and the White House combine for a day that cuts to the heart of Biden’s political problem
Two Washington centers will be able to expose a politically toxic dynamic on Wednesday of the main economic issue threatening President Joe Biden congressional majorities with midterm elections less than a week away.
The Fed probably will trigger another historic rate hike and, about half a mile away at the White House, Biden will host an event highlighting the administration’s sweeping efforts to expand the workforce in critical areas like broadband and construction. A policy decision is expected to ripple through markets, media and politics, shining a spotlight squarely on an issue that Democratic officials say has significantly harm their political prospects. Others will detail intensive administrative efforts designed to reshape the pipeline to eventually enter the professions.
The difference between these two events, in the compressed political schedule that Democrats are now trying to reset, is huge.
A federal program aimed at training Americans and creating a strong pool of skilled workers who can work in specialized fields is, officials say, part of a long-term solution to the labor shortage — one of many drivers of persistent inflation that remains at a nearly four-decade high.
The Fed will continue its months-long acceleration to put the brakes on a red-hot economy.
Biden’s event and speech at the White House are sandwiched between campaign trips – he was in florida on tuesday and on Thursday they will head west to New Mexico.
His efforts to fight against inflationboth through major legislation and a series of executive actions to lower the cost of living are hallmarks of Biden’s speech.
“Democrats are lowering your everyday expenses like prescription drugs, health care premiums, energy bills and gas prices,” Biden said last month at the Democratic National Committee headquarters.
The administration’s actions to lower gas prices without precedent, centered on the release of 180 million barrels of oil from the Strategic Petroleum Reserve over the past seven months, were also highlighted.
But implicit in Biden’s speech is the difficulty the overarching problem presents as the clock ticks down to count day. The scale of the problem has increasingly highlighted the hawkish approach of the Fed, but perhaps even more critically the aggressive tone of its chairman, Jerome Powell.
“We want to act aggressively now and get this job done, and continue to do it until it’s done,” Powell said at his September news conference.
Biden and his top advisers have made a deliberate effort to reframe the debate as a choice between the two parties rather than a referendum on Democratic control of Washington.
“This is not your father’s Republican Party, it’s a different deal now,” Biden said at an event in Florida on Tuesday. “And there are a lot of good Republicans there, but they’re under a lot of pressure.”
But while Republicans pump millions of dollars worth of campaign ads on the economy, the entrenched nature of the political problem remains.
Biden is dealing with Russia’s war in Ukraine, which has shaken energy prices. The global economy also faces the ongoing challenge of Covid-19, supply chain constraints, labor unrest and political instability. Still, U.S. consumers have shown few signs of pulling back on their spending — and the U.S. job market remains strong.
Biden, as he deviated from his prepared remarks at an event last week, alluded to an issue that White House officials have long seen as hanging over everything: exhaustion.
“I just think one of the things that I think frustrates the American people is that they know the world is in a little bit of a mess,” Biden said while pointing directly to the uncertainty this year caused by the Russian invasion. “And they want to know what we’re doing? And there’s a lot going on that we’re doing.”
Billed by the White House as the “Infrastructure Talent Challenge,” Biden will showcase private and public sector efforts to train workers in three sectors in particular: broadband, construction and electrification. Union workers will give presentations on how they are training employees in these areas, and the president is expected to talk about new and existing efforts to train additional workers.
White House officials see it as a tangible result of three landmark legislative victories, which have laid the groundwork for a dramatic shift in the long-term infrastructure of the American economy. All three — a bipartisan infrastructure bill, as well as legislation to boost U.S. semiconductor chip manufacturing and a whopping $750 billion health, tax and climate bill — will be featured during events and remarks Wednesday.
Still, Biden’s economic team has worked relentlessly for months to find policy options to ease the burden of rising prices, even as hopes of a steady decline ahead of the election have been dashed.
While they are extremely careful not to make economic predictions, officials in the spring saw a path to a clear slowdown in prices by the fall — something that would be a critical part of their economic goal in the final weeks of the campaign.
Instead, they’re stuck watching a rapid acceleration of the Fed’s efforts shake markets and some companies’ hiring plans, inflation that remains stubbornly high and barely budging, and an American electorate that is overwhelmingly frustrated.
That Biden’s major policy victories were designed to address many of the drivers of the current pandemic-era inflationary moment — and yet all will take time to implement — only serves to reveal the frustration many advisers feel in the moment they now face.
The legislative accomplishments of the Biden White House are concrete and significant — and the future they portend, officials say, in many ways matches the proposals on which Biden campaigned. The tens of billions of dollars in private-sector investment flooding the U.S. only serve to bolster the merits behind the effort, officials note.
Still, less than a week from the midterm vote count, Biden — and his party — remain at the political mercy of problems they have no tools to immediately control, stuck at White House events highlighting policies that will take hold over time.
Meanwhile, the Fed — and its dramatic and now relentless months-long push to get inflation under control — will remain in the spotlight as undecided Americans make their final choices.
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