Joe Biden backed the Federal Reserve’s shift towards tighter monetary policy to fight inflation, using his first formal press conference in months to defend his handling of the economy and reboot his presidency after a string of setbacks.
Responding to reporters for nearly two hours in the Roosevelt Room of the White House, Biden tried to project confidence that he could still address the concerns of the American public in the face of aggressive Republican resistance and divisions within his own Democratic party.
But he also acknowledged that his $1.75tn flagship “Build Back Better” legislation would probably have to be broken up into pieces in order to pass Congress, and noted the widespread concern among people about the enduring pandemic and the messy economic recovery.
Biden repeatedly cited high prices as one of the country’s biggest problems, and pointed to Fed action as the primary solution, even though he noted the central bank’s independence. Under chair Jay Powell, the Fed has already moved to wind down its bond-buying more rapidly than planned and officials are predicting the start of interest rate increases later this year.
A growing number of Fed officials and Wall Street economists have signalled recently that more than three interest rate increases may be appropriate in 2022 in order to temper the pace of US consumer price growth, with “lift-off” occurring in March.
“The critical job of making sure that the elevated prices don’t become entrenched rests with the Federal Reserve,” Biden said. “Given the strength of our economy and the pace of recent price increases, it is appropriate . . . to recalibrate the support that is now necessary.”
Biden showed flashes of both defiance and empathy, but little contrition, as he tried to sell his accomplishments and battle declining public approval ratings on the eve of the first anniversary of his inauguration.
“For all this progress, I know there’s a lot of frustration and fatigue in this country,” Biden acknowledged. For many, the enduring pandemic was “too much to bear”, the president said. But he added that the White House was doing its best to tackle the problem, rebutting accusations that his administration had underestimated the surge of the Omicron variant.
“Should we have done more testing earlier? Yes. We’re doing more now,” he said. “We’re not going back to lockdowns, we’re not going back to closing schools.”
In addition to nudging the Fed on the high prices, Biden also said the White House’s economic plans and a more aggressive approach to competition policy would help rein in the problem, with the consumer price index increasing at its highest annual rate since 1982.
Biden said he was confident that he could get “big chunks” of his $1.75tn Build Back Better spending package through Congress. However, in a notable admission, he said that it would probably have to be broken up into individual components after facing opposition from pivotal centrist Democratic legislators Joe Manchin and Kyrsten Sinema.
“It’s clear to me that we’re going to have to probably break it up,” Biden said.
Biden also suggested that the administration would work to reduce crude oil prices, which hit a seven-year high this week, adding to concerns about further inflation in petrol prices.
“It’s going to be hard. That’s the place where most middle-class people get hit the most. They pull up at the pump and all of sudden instead of paying $2.40 a gallon [of petrol], they’re paying $4 a gallon,” said Biden.
The latest Gallup polling shows that 40 per cent of Americans approve of the job Biden is doing, with 56 per cent disapproving. That compares to a 38 per cent approval rating for Donald Trump one year into his presidency, and a 49 per cent approval for Barack Obama at the same point in his tenure.
Democrats fret that the low approval ratings could spell disaster for their party in this year’s midterms, when control of both the House of Representatives and the Senate will be up for grabs. Biden’s party at present controls both chambers of Congress by the slimmest of margins.
The press conference marks one of his first big appeals to the American public in 2022. The president’s State of the Union address has been scheduled for the relatively late date of March 1, and Biden said he would start travelling more to take his message across the country.
Biden began his presidency with broad public support, but his approval rating started slipping over the summer amid a chaotic withdrawal of troops from Afghanistan that tested the country’s alliances abroad and cast doubt in the eyes of many Americans.
Meanwhile, many Democrats have been disappointed at Biden’s inability to persuade Congress to pass legislation to protect voting rights in the face of new restrictions being imposed in many Republican-led states. The press conference took place as Senate Democrats sought to advance new voting rights measures in a procedural vote on Wednesday evening that was set to fail.
“It’s going to be difficult. I make no bones about that. It’s going to be difficult, but we’re not there yet,” Biden said. “We’ve not run out of options yet.”
Source: Economy - ft.com
