Former Obama official: Biden dishonest to blame supply chain for inflation

A former Treasury Department official who served in the Obama administration on Thursday shot back at President Biden’s stated reasons for the extreme rise in inflation in an op-ed published in The New York Times.

Steven Rattner, who served as counselor to the Treasury secretary, wrote in an op-ed for the Times that Biden was mischaracterizing the cause of the extreme inflation the U.S. is currently experiencing

When interviewing Biden last week, NBC News anchor Lester Holt pressed the president on the ongoing rise in inflation, noting that he had said last year that the heightened inflation would be temporary. This line of questioning appeared to vex Biden somewhat as he responded by calling Holt a “wise guy.”

“The reason for the inflation is the supply chains were cut off, meaning that the products, for example, automobiles — the lack of computer chips to be able to build those automobiles so they could function; they need those computer chips. They were not available,” Biden said.

Rattner, in his op-ed, pushed back against this reasoning, saying it was “simplistic and misleading.”

“For starters, the supply chains have not been ‘cut off,’ just stretched. And supply issues are by no means the root cause of our inflation. Blaming inflation on supply lines is like complaining about your sweater keeping you too warm after you’ve added several logs to the fireplace,” wrote Rattner.

According to the former Treasury staffer, the current supply issues are a result of an overstimulated economy.

“Sure, there have been some Covid-related challenges, such as health-related worker shortages in factories and among transportation workers,” he wrote. “But most of our supply problems have been homegrown: Americans have resumed spending freely, and along the way, they have been creating shortages akin to those in a shopping mall on Black Friday.”

This rise in spending was brought on by “vast amounts of government rescue aid” as well as underspending during the COVID-19 crisis, according to Rattner. Along with these factors, Rattner also noted the rise in resignations also contributing to a labor shortage in the U.S., leading to an inflation of service costs.

“The real solution is more complicated. Some shortages will ebb naturally on their own, as consumers, having sated their thirst for adding that extra room on their house, return to more normal spending patterns. Other shortages will take longer to moderate and will require robust action, particularly by the Federal Reserve,” Rattner wrote.