Washington’s two power centers revealed on Wednesday the politically toxic dynamics of a top economic issue that threatens President Joe Biden’s congressional majority with the midterm elections less than a week away.
The Fed launched another historic interest rate hike, and about a half-mile away at the White House, Biden hosted an event to highlight the administration’s massive efforts to expand the workforce in key areas such as broadband and construction. A policy decision is expected to send ripples through markets, media and politics alike, directly turning the spotlight on an issue that Democratic officials say has caused significant damage to their political prospects. Another will detail an intensive administrative effort designed to reshape the pipeline for entry into the profession over time.
The difference between the two events, on the compressed political schedule Democrats are now scrambling for redistricting, is stark.
Federal programs aimed at training Americans and building a strong pipeline of skilled workers who can work in specialty fields, officials say, are part of a long-term solution to addressing the labor shortage — one of the many drivers of persistent inflation that remains. At a nearly four-decade high.
The Fed, meanwhile, continues its months-long effort to hit the brakes on an economy running red hot. The Fed on Wednesday approved a fourth-straight rate hike of three-quarters of a percentage point as part of its aggressive battle to curb inflation plaguing the US economy.
Hold on to the assets you have: Larry Summers advises during the recession
Sandwiched between Biden’s White House events and speeches is the campaign – he was in Florida on Tuesday and will travel west to New Mexico on Thursday.
His efforts to combat inflation, both through major legislation and an array of executive actions to lower the cost of living, have been a feature of Biden’s stump speech.
“Democrats are cutting your everyday costs like prescription drugs, health care premiums, energy bills and gas prices,” Biden said in remarks at Democratic National Committee headquarters last month.
The administration’s unprecedented moves to lower gas prices centered on the release of 180 million barrels of oil from the Strategic Petroleum Reserve in the past seven months also featured prominently.
But implicit in Biden’s pitch is the broader problem presented as the clock ticks down to counting day. The scale of the problem has been made increasingly clear by the hawkish approach pursued by the Fed, but perhaps more critically by the aggressive tone of its chairman, Jerome Powell.
“We want to act aggressively now and get this done, and continue to do it until it’s done,” Powell said at his September news conference.
And so far the White House has stood by the Fed’s actions despite growing criticism from Democrats. After the rate hike, White House press secretary Karin Jean-Pierre maintained that the administration respected the agency’s independence, saying it was “part of our transition to more stable and stable growth.”
“That’s the kind of economy that provides for working families, and that’s how we see the Fed working,” he added.
Biden and his top advisers have made a deliberate effort to reframe the economic debate hanging over the midterms 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 out there, but they’re under a lot of pressure.”
But even as Republicans hammer home the economy with millions of dollars worth of campaign ads, the entangled nature of the political problem remains.
Biden confronts Russia’s war in Ukraine, which has pushed up energy market prices. The global economy also faces ongoing challenges from the Covid infection, supply chain constraints, labor unrest and political instability. Yet American consumers have shown few signs of reducing their spending — and America’s job market remains strong.
Powell said the job market would have to suffer in order to reduce inflation
Biden, as he stepped back from his prepared remarks at an event last week, pointed to one issue that has long hung over White House officials: fatigue.
“I just think that one of the things that frustrates the American people is that they know the world is in a bit of chaos,” Biden said, pointing directly to the uncertainty caused by Russia’s attacks this year. “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 an “infrastructure talent pipeline challenge,” Biden on Wednesday touted efforts by both the private and public sectors to train workers in three sectors in particular: broadband, construction and electrification. Union workers made presentations on how they are training workers in the region, and the president talked about both new and existing efforts to train additional workers.
Biden said “more than 350 organizations across the country” have committed to the challenge, which was initially launched by the administration in June. The challenge aims to connect Americans to new opportunities and is a call for employers, unions, education and training providers to make tangible commitments to support workforce development.
White House officials see the challenge pledge as the tangible result of three cornerstone legislative victories, which have laid the foundation for dramatic changes in the long-term infrastructure of the U.S. economy. All three — bipartisan infrastructure legislation, as well as a bill to boost American semiconductor chip production and a $750 billion health care, tax and climate bill — were highlighted during Wednesday’s event and remarks.
Still, Biden’s economic team has worked tirelessly for months to find policy options to ease the burden of rising prices, even if hopes of steady declines in the run-up to the election are dashed.
While they are very careful not to make economic predictions, officials in the spring saw a clear price-cut path through the fall — which would be a critical part of their economic pitch in the final weeks of the campaign.
Instead, they’re stuck staring at a rapid acceleration of the Fed’s efforts that has rattled markets and some companies’ hiring plans, inflation that’s stubbornly high and barely moving, and an American electorate that registers overwhelming disillusionment.
That Biden’s major policy wins were designed to address many of the pandemic-era drivers of the current inflationary moment — and yet all will take time to implement — only serves to vent the frustration felt by many advisers in the moment they now face.
The legislative accomplishments of the Biden White House are specific and significant — and the future they portend, officials say, aligns in many ways with the proposals the Biden campaign is running. Private sector investment flooding the U.S. with tens of billions of dollars only serves to bolster the merits behind the effort, officials say.
Still less than a week away from the midterm vote count, Biden — and his team — remain at the political mercy of a problem they have no immediate tools to control, highlighting events in the White House that will take root over time.
Meanwhile, the Fed — and its dramatic and now-unrelenting months-long push to rein in inflation — will remain in the spotlight as undecided Americans make their final voting choices.
This story was updated Wednesday with additional developments.