Inflation, now running at more than 6%, is the number one concern for many Americans as prices rise, from the gas pumps to the grocery shelves. It’s also a looming threat to President Joe Biden’s administration. A complex mix of factors—oil production cutbacks, a choked supply chain, and strong consumer spending—all contribute. But what can a president actually do about inflation? Special Correspondent Jeff Greenfield joins for a historical perspective.
They’ve tried a lot of different things. John Kennedy went to war with the steel industry when they raised prices because he feared that would generate higher inflation, even though inflation wasn’t that high. Lyndon Johnson liked to browbeat business and labor to urge them, ‘keep your wages and prices down’. Nixon, a free-market conservative, imposed national wage and price controls in 1971 as inflation was raging, but it’s like stopping a leak with a rag when you pull the rug out, the leak continues. And Gerald Ford in 1974 decided on a PR campaign to quote “Whip Inflation Now,” complete with wind buttons. But no, the OPEC oil embargo kept going and inflation kept moving. So those different tactics didn’t really do much at all.
Absolutely. Paul Volcker, who Jimmy Carter appointed as chair of the Federal Reserve Board, looked at the inflation rate that was out of sight, double digits, and said, I’ve got to take drastic action. And he basically dried up credit, pushed interest rates up to more than 20 percent. That resulted in the worst recession since the Great Depression, four million people out of work. And it was one of the reasons Jimmy Carter went down to a landslide defeat in 1980. Four years later, when inflation had been curbed and the economy was rebounding, President Reagan was the beneficiary, winning 49 states, and we haven’t seen really high inflation since then. That’s 40 years.
Oh boy. First of all, because if you’re not 60 years old or older, you don’t ever remember inflation as an issue. So six percent inflation, which would have been a dream in 1980, seems very high. And when you pay that cost at the pump, at the supermarket checkout counter, it doesn’t come with an explanation saying, by the way, there are huge macroeconomic forces at stake here. There’s a supply chain choke going on. The voters tend to look at Washington and say, what are you going to do about this? And there’s another political impact, which is the House on Friday passed Biden’s Build Back Better bill. But the specter of inflation is causing a Democrat like Joe Manchin who’s critical to get this thing passed, saying, maybe we should wait a year. So you can see how big a political impact inflation is because at this point, any spending proposal, even if in the long term it’s supposed to help, is going to be attacked as an inflation accelerator.
