Sen. Chuck Grassley (R-Iowa) took to Twitter to warn that President Joe Biden’s economic policies will have an effect closer to the stagflation of President Jimmy Carter than to the New Deal of President Franklin Roosevelt (FDR).
Grassley wrote on Twitter that “Biden dreams of being [the] next FDR.”
FDR’s New Deal policies, which pushed federal intervention into the economy further than ever before, continue to draw heated debate from proponents and critics alike. Still, for many liberals, the policies represent an ideal to be emulated, and Democrats have drawn inspiration from the New Deal even decades after FDR’s death.
Grassley rejected the notion that Biden’s policies align with that track record, saying that Biden’s plans “are leading to an economic record closer to President Jimmy Carter.”
Throughout the 1970s, the United States experienced a significant economic downturn. Despite the Federal Reserve pumping money into the economy, which has historically been seen as a solution to economic stagnation and unemployment, both of these remained high, leading to a period of “stagflation.”
Since Biden assumed office in January, inflation has continued to rise. Speaker of the House Nancy Pelosi (D-Calif.) and others in the president’s party have insisted that this inflation is normal and transitory, but others have disagreed.
On an Oct. 11 interview with “Squawk Box,” Queen’s College President and economist Mohamed El-Erian warned that inflation had increased “way beyond” merely transitory inflation. El-Erian predicted that inflation is going to become “more and more of an issue for markets” and that it will “separate winners and losers in a significant way.”
The U.S. Department of Labor’s consumer price index showed that consumer prices increased 0.4 percent in September, exceeding Dow Jones’ 0.3 percent estimate. Employment figures were also lower than expected in September, with the United States adding only 194,000 new jobs; by contrast, 749,000 new jobs were added in Sept. 2020.
Grassley referenced this on Twitter, saying that “prices are surging while employment remains weak.”
The Iowa Republican ruled that these concerning signs showed that it is “time [to] pump the brakes on Democrat ‘fiscal insanity,’” referencing a critique from moderate Sen. Joe Manchin (D-W. Va.).
He concluded the tweet with a warning that the stagflation of the late 1970s and early 1980s is “just around [the] corner.”
Manchin Joins Republicans in Inflation Fears
While Republicans have expressed serious concerns over inflation for months, these same concerns have also split the Democratic caucus, threatening the future of the Democrats’ ambitious $3.5 trillion reconciliation bill.
Manchin, a swing-voting moderate who can make or break the bill in the Senate, rejected the spending package primarily over concerns about inflation.
In a Sept. 2 opinion piece, Manchin wrote: “some in Congress have a strange belief there is an infinite supply of money to deal with any current or future crisis, and that spending trillions upon trillions will have no negative consequence for the future. I disagree.”
He continued: “Now Democratic congressional leaders propose to pass the largest single spending bill in history with no regard to rising inflation, crippling debt, or the inevitability of future crises. Ignoring the fiscal consequences of our policy choices will create a disastrous future for the next generation of Americans.”
Primary among these consequences, said the West Virginia Democrat, is inflation, which Manchin called a covert “tax” on the American people.
One consequence of this, Manchin reported, is increased prices for his West Virginia constituents.
Specifically, because West Virginia is on the whole a poor state, many residents rely on dollar stores like Dollar Tree for food and other basic essentials. Due to inflation, the national chain announced in late September that its products will increase in price, breaking a decades-long “Everything’s one dollar” slogan and passing the costs of rising costs to customers.
Other chains have been forced to do the same.
Beyond this, Manchin expressed concerns over the effects that such inflation could have on existing government programs like Social Security.
Though Social Security payments are adjusted for inflation annually, runaway inflation could lead some recipients to have less money available than rising costs of living demand.
Inflation has already forced the Social Security Administration to increase benefit payments. On Wednesday, the agency announced that benefits would increase by 5.9 percent in 2022; this is the largest increase since 1982 when the country was still recovering from stagflation.
Tom Ozimek contributed to this report.