The latest inflation figures were thrown up by the Bureau of Labor Statistics today – and yes, “up” is certainly the right word (WaPo [1]).
Prices soared by 9.1 percent in June, compared with a year ago, a new peak with inflation remaining at 40-year highs, driven in large part by higher energy prices.
The inflation report, released Wednesday morning by the Bureau of Labor Statistics, showed June prices rose 1.3 percent, compared with prices the month before, which were also considered high, reflecting how Americans continue to stretch budgets to keep roofs over their heads, fill gas tanks and buy groceries.
President Biden’s response [2] was to remind everyone that gas prices have been falling recently, which is indeed true, but only part of the story. As I write this (Wednesday afternoon), my fellow BD contributors have yet to weigh in, but I’m sure they will rail about Biden’s reaction and insist there are things he could actually do to fight inflation …
… and when they do, they’ll be right. While the Fed clearly needs to get interest rates back to pre-2008 normal, they can’t implement the supply-side reforms we need to get inflation down without risking a recession. Only Biden and Congress can. In fact, there are a number of things Biden can do by himself that would have immediate and long-term impacts.
Reverse All Trump Tariffs: While the tariffs on washing machines and various imports from China get the most attention, the most crippling ones were on inputs from our own allies. Production cost is a key inflation driver. Trump’s tariffs rose them. They need to go.
Defer All Jones Act Enforcement: Biden should ask Congress to repeal the act entirely, but in the interim, he should permanent waive enforcement of this supply-chain snarler.
Reverse All Trump Immigration Restrictions: We have a labor shortage – and don’t just take my word for it [3]. Higher immigration will alleviate the shortage. Trump’s immigration restrictions have gotten in the way. Get rid of them.
Those can have immediate or near immediate effect. However, Biden can also do a couple things that can improve the long-run outlook.
Rejoin the Trans Pacific Partnership: Freer trade and smoother markets reduce cost to businesses and to consumers. The nations in the TPP have formed one of the largest free trade zones on the planet. Leaving the TPP was the first major mistake [4] Trump made.
Support nuclear energy – especially by reversing the ban on nuclear recycling: The Carter-era ban on nuclear recycling is utterly senseless. It turns nuclear waste into a political curse instead of energy fuel, thus creating a serious political and economic impediment to nuclear power. Greater use of nuclear power will reduce demand for fossil fuels, thus ensuring lower prices at the gas pump and less carbon dioxide in the atmosphere.
These are all things that Biden can do right now to address inflation. None of them would risk a recession. Biden could have implemented them on Inauguration Day; he could have implemented them last month.
He can still implement them today.