White House scrambles to avert supply chain crisis

Shortages in the global supply chain are creating steep challenges for President Biden at a time when he’s already grappling with low approval ratings and major hurdles to getting his economic agenda through Congress.

The White House sought to demonstrate that administration officials are tackling the supply chain disruptions head on with Wednesday’s announcement that the Port of Los Angeles, as well as FedEx, UPS and Walmart, will rev up operations to 24 hours a day, seven days a week. Biden also delivered a speech detailing the efforts.

The supply chain bottlenecks — such as chip shortages and a resulting lack of new cars on the market — are largely due to the enduring stress on the global economy sparked by the COVID-19 pandemic more than 18 months ago. They now threaten to disrupt the holiday shopping season.

“Certainly this is a danger point for the administration. Whatever the cause of the bottlenecks, the public has not been overly patient with these kinds of problems in the past,” said Austan Goolsbee, economics professor at the Chicago Booth School of Business who served as chairman of the Council of Economic Advisers (CEA) under former President Obama.

Goolsbee said Biden’s moves to expand port capacity are “important and correct” but will only ease the problem, not fix it.

“And Republicans don’t much care whether Biden’s economic plan would expand supply or even if it has nothing to do with prices at all. If something unpopular is happening, they will say it is because of the president,” he added.

When asked if there’s a sense at the White House that Biden could be blamed for a frustrating holiday season, White House press secretary Jen Psaki said Biden has taken steps this week out of a desire to get Americans goods when they want them.

“I think what’s motivating some of these steps is the president wants to ensure the American people are able to order goods, they’re able to get toys delivered to their home, they’re able to go to the grocery store and be able to afford meat and any goods that they want,” she said.

During his speech on Wednesday, Biden underscored the need for the transportation and retail sectors to “step up” by increasing operations to help move goods more quickly.

“If federal support is needed, I will direct all appropriate action. And if the private sector doesn’t step up, we’re going to call them out,” Biden said. “Our goal is not only to get through this immediate bottleneck but to address the longstanding weaknesses in our transportation supply chain that this pandemic has exposed.”

Psaki indicated there are ongoing conversations among officials about other actions the administration could take.

Jason Furman, who also chaired the CEA during the Obama administration, said there are no other obvious steps Biden could take to lessen the impact of the bottlenecks, beyond reducing tariffs on goods from China and other countries.

“There is no off-the-shelf playbook to handle the supply chain disruptions that we are seeing. It remains to be seen how big of a difference it makes,” Furman said. “I think this will speed the process; I don’t know how much it will speed the process.”

White House officials recently warned that Americans could see higher prices and empty shelves this holiday season. Transportation Secretary Pete Buttigieg said this week that some of the supply chain issues are “longer term issues” in an interview with Bloomberg when asked if the bottlenecks will be solved before Christmas.

Administration officials have avoided making any promises or guarantees that goods will be available whenever people want them, particularly during the upcoming holiday shopping season.

“We can’t overpromise here, and I’m not going to do that from here because there are a lot of issues in the global supply chain,” Psaki said.

When asked if the administration can guarantee that holiday packages will arrive on time, Psaki said, “We are not the Postal Service or UPS or FedEx. We cannot guarantee.” 

“What we can do is use every lever at the federal government’s disposal to reduce delays, to ensure that we are addressing bottlenecks in the system, including ports and the need for them to be open longer hours so that goods can arrive,” she added.

The supply and logistics challenges are ones where the federal government has limited power, potentially vexing the White House for months and into an election year.

Earlier on Wednesday, Biden convened a private meeting of leaders from major retailers and transportation companies, unions and industry groups to discuss their plans. 

Ellen Hughes-Cromwick, a senior resident fellow at the Democratic think tank Third Way who was chief economist at the Commerce Department under Obama, said it is clear that the White House has taken a “methodical” approach to addressing the supply chain issue from the beginning of Biden’s presidency.

“They are not interested in just blowing smoke on this. They don’t want to go out with something that really isn’t going to have the right positive impact,” Hughes-Cromwick said. “I have a significant amount of confidence that they are bringing science and experts to the table to make sure that they approach this judiciously.”

The supply chain shortages are part of the broader problem of persistent inflation that accelerated when the economy began opening up after the depths of the coronavirus pandemic and Americans started spending more.

Data released Wednesday showed that consumer prices rose 0.4 percent in September from the previous month and 5.4 percent compared to September 2020, driven mainly by increases in energy, food and shelter costs.

Republicans have been hammering Biden on inflation for months now, saying his policies are to blame.

“In President Biden’s economy, Americans pay more for less,” Sen. Roger Wicker (Miss.), the top Republican on the Senate Commerce Committee, tweeted Wednesday. “Rising prices for products like cars, gas, and even Christmas gifts are making it harder to make ends meet. Yet the President and Democrats are forging ahead with reckless spending and plans to raise taxes.”

Furman said there is “some merit” to the argument that Biden’s $1.9 trillion coronavirus relief law from March contributed to inflation, but he disagreed with assertions that Biden’s economic proposals — a bipartisan infrastructure bill and a larger package addressing climate change and providing support to families — would add to inflation.

“Republicans haven’t offered their own plan for what they would do to bring inflation down,” Furman said.