The Memo: Biden plays a weak hand on inflation

President Biden’s biggest political problem has him in a bind.

Inflation is bogging down the president’s approval rating more than any other issue, but there is not a whole lot he can do about it.

Biden extoled some of the actions he has taken in a White House speech Tuesday. But the key lever to bring the inflation rate down — the power to increase interest rates — is held by the Federal Reserve.

This leaves Biden trying to put a dramatic gloss on some moves that are likely to have only a modest impact.

The president outlined how his administration is releasing millions of barrels of oil from the Strategic Petroleum Reserve, broadening the availability of an ethanol-blend gasoline and attempting to ease supply-chain constraints.

Biden also sought to empathize with the problems Americans are facing as prices spiral upwards.

“Families all across America are hurting,” he acknowledged, asserting that “all of my plan is focused on lowering costs for the average family in America.”

But Biden’s limited leverage over inflation will be cast into stark relief again Wednesday morning when the Department of Labor releases new figures for April.

Economists expect price hikes to come in around 8 percent over the previous 12 months, slightly lower than March’s 8.5 percent, but still shockingly high.

The March inflation rate was the highest figure recorded since 1981.

Biden’s moves might make some difference around the edges, economic experts say — but the real power will inevitably lie with the Fed.

“I appreciate what the federal government is trying to do — there are a lot of people hurting — but the Fed is the guardian of stable prices, and it is their job to do it,” said Beth Ann Bovino, the chief U.S. economist for Standard & Poor’s.

And the central bank, led by Jerome Powell, is taking action. Last week, it announced a half-point increase in its baseline interest rate. The Fed has signaled that there are almost certainly more half-point rises to come.

Biden, in his White House remarks Tuesday, reiterated his pledge to “never interfere” with the Fed’s independence. But he also noted, “I believe inflation is our top economic challenge right now, and I think they do, too.”

Powell, who was first tapped for the Fed’s board by former President Obama but nominated for chairman by fromer President Trump, has come in for his share of criticism after he insisted last year that inflation was “transitory” — only to later change course.

One intriguing question in the months ahead is whether Biden might seek to avert a grim-looking fate for Democrats in the midterm elections by pinning some of the blame for inflation on Powell.

Doing so would seem to go against Biden’s general demeanor and would also raise questions about why the president renominated Powell for the top job in November.

But such matters of decorum did not bother Trump, who blasted Powell and the Fed while he was in office for having “no sense, no vision” and for being “derelict in its duties.”

“The Federal Reserve put itself in a bind, saying that inflation was ‘transitory’ and then ‘largely transitory.’ Then the Fed realized it was starting to look persistent,” Bovino said. “They were late to the game, and that’s where we are today.”

None of this, for now, is easing the political damage to Biden.

In a CBS News-YouGov poll last month, 66 percent of Americans said that higher prices had been “difficult or a hardship” for their family, while an additional 26 percent said they were “inconvenient.”

The same poll found Biden’s handling of inflation winning the approval of just 31 percent of adults, while 69 percent disapproved.

Biden on Tuesday insisted that recent inflationary pressures were rooted in two factors — the nation’s reemergence from the COVID-19 pandemic and the ripple effects of Russia’s invasion of Ukraine.

Those are unquestionably huge forces, but Republicans and conservatives charge that Biden’s spending while in office — especially the $1.9 trillion COVID-19 relief deal officially known as the American Rescue Plan — has also upped inflationary pressures.

Asked by a reporter whether Biden would “take responsibility” for policies that may have contributed to inflation, White House press secretary Jen Psaki responded that the pandemic “has been the major driver of inflation over the past year-plus.”

Brendan Steinhauser, a GOP strategist who is also chief strategy officer for Young Americans for Liberty, accepted that inflation is “mostly” the province of the Fed. But, he added, “I think presidents and the Congress can certainly have an indirect impact upon it.”

Steinhauser added that the right prescription is “to pursue conservative, free market policies that increase wealth, lift people out of poverty and so at least help ease the impact of inflation.”

Biden, for his part, is increasingly seeking to draw a contrast with Republicans, blasting a proposal put forward by Sen. Rick Scott (Fla.), the head of the GOP Senate’s campaign arm, in his Tuesday remarks. Scott’s plan calls for all adults to pay some level of income tax, among other things, and it was quickly disavowed by Senate Minority Leader Mitch McConnell (R-Ky.).

Biden cast the plan as part of the GOP’s “ultra-MAGA agenda.”

Those kinds of attacks might have some effect with the midterms now less than six months away.

But independent experts caution they will be of limited usefulness for Biden and his party unless the Fed can work some magic on inflation.

“With all the problems they face, [the Biden administration] might think that the best bet is to remind voters why they elected him and make a case that the other party is not viable,” said Julian Zelizer, a professor of history and public affairs at Princeton University.

“The problem is that midterms tend to be a referendum on the president,” he said.

The Memo is a reported column by Niall Stanage.