The NPR Politics Podcast - Prices Are Rising. Who's To Blame?

Episode Date: August 5, 2021

People agree: prices are up on everything from gasoline to used cars. But both experts and voters disagree on the cause and whether inflation is here to stay. That uncertainty makes the economy a potent messaging tool ahead of the 2022 race for control of Congress. This episode: White House correspondent Scott Detrow and White House correspondent Asma Khalid.Connect:Subscribe to the NPR Politics Podcast here.Email the show at [e-mail] the NPR Politics Podcast Facebook Group.Listen to our playlist The NPR Politics Daily Workout.Subscribe to the NPR Politics Newsletter.Find and support your local public radio station.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

This is Scott from St. Simons Island, Georgia. I'm in the office this week after a great vacation to the coast of Maine with my wife of 38 years. We were supposed to go there in 2020, but had to reschedule because of the pandemic. This podcast was recorded at... It is 1.47 Eastern on Thursday, August 5th. Things may have changed by the time you hear this, but I'll still be thinking about the beautiful scenery, the tasty lobsters, and the wonderful memories I made last week with my BFF.

Okay, here's the show. Asma, this strikes a chord because I am about 48 hours from going on a vacation that was canceled last year, and I've been thinking a lot of the same thoughts. So good for him. Delayed vacations. Hey there, it's the NPR Politics Podcast. I'm Scott Detrow. I cover the White House. And I'm Asma Khalid. I also cover the White House. And actually, that's like a really good way to get into today's episode, because this is all about the economy springing back to life after the worst of the pandemic,

the economic worst of the pandemic, that is. And just like the recession that began at the beginning of the pandemic was pretty strange, the recovery has been pretty strange, too. And one big part of that is a big rise in prices. Everything from groceries to used cars, prices are going up. It is the highest rate of inflation in a decade. And President Biden addressed this a couple of weeks ago. We've seen some price increases.

Some folks have raised worries that this could be a sign of persistent inflation. But that's not our view. But Asma, you, first of all, you went back out into the real world and did what you do best, and that is talk to actual voters. Congratulations on doing that. But, like, they're really worried about inflation. That's right. You see this in polls. You hear it in focus groups.

I mean, it is pretty factually accurate to say. I would say there's really no qualms and debate about the fact that prices have been going up. And I will say that, as you suggested, this is happening in a lot of different ways in a lot of different sectors. When I started speaking to people up in Northampton County, Pennsylvania, which is this kind of key swing county, I'm sure, you know, Scott, you are very familiar with Pennsylvania. It's a very important part of the state. And in talking to people, whether they were Democrats, Republicans, independents, it felt like there was pretty unanimous concern over prices. I met Lori LaPena in a Walmart parking lot. She was putting groceries in her car when we started speaking. Everything is so expensive. I'm trying to cut back on everything.

Like groceries, do you mean? Or what do you mean? Oh, yeah. This is like, I go through a lot of groceries, but I try to shop for the best bargain and stuff. Okay. Every penny counts, even though I've never stopped working. I go through a lot of groceries, but I try to shop for the best bargain and stuff. Every penny counts, even though I've never stopped working. And when did you begin to notice the prices were going up? When Biden became president. Are you political? Do you consider yourself a Democrat or Republican?

I am not a Democrat. I am 100% Republican. And I think everything's going downhill now that he's in charge. And you feel that the most, you would say, with price increases? Oh, absolutely. We're going to be absorbing all the costs for everything that he wants to do. There's a lot to talk about politically there. And first of all, something that, you know, Domenico Montanaro talks about all the time that we view like almost everything in the world through the prism of where we are politically. And I think that's a good example of that. But let's just talk about price increases, though, because she's not wrong. Prices have gone up in a lot of dramatic ways, and pretty quickly, too. That's right. And you know, you speak to economists, and they'll talk about the fact that this is a supply and demand issue. I spoke to Larry Summers about this. His

name is probably familiar to a lot of folks because he is a longtime former government official. He was a top advisor to former President Barack Obama. And, you know, he is a somewhat, you know, controversial figure, even when he speaks about inflation these days, because he has been sounding the alarms about inflation, about the health of the economy much more loudly than most Democrats. My concerns about inflation come from a sense of collision between very large efforts to promote demand by the Federal Reserve, by fiscal policy, and as a consequence of the overhang of savings that has been built up with an economy that is limited in its supply capacity and perhaps further constrained by the legacy of COVID. And when you have large amounts of demand encountering limited amounts of supply, the result is inevitably rising prices. I mean, that sounds like something that was going to happen no matter who was president due to the, you know, the skidding stop on a dime that the economy made to begin with

last year and everything that's happened this year. You know, that's right, Scott. And so even if Democrats and Republicans and independents agree on the fact that certain parts of the economy are seeing price increases, I think the interesting follow-up question to me then is, well, then who do you blame for this? Yeah. You know, I ask this question to a lot of different people, and I will say it's not entirely clear who they're blaming. Of course, Republicans tend to blame Biden. Democrats tend to defend him. But I will say there are some people who have

sort of more ambiguous answers. That's what I heard when I spoke to this woman, Brenda Peters. I met her and her daughter as they were going into this nearby target. I blame the pandemic because last year nobody could make no money. Right. I feel that if more if we can get more stuff again, the supply of stuff, I feel that the prices might go down because now they're going to sell more. Versus now it's like people, if you want it, you have to pay the price for it, just like houses. I don't know if you all are very political or not, which I know is a touchy subject. But some people, if they are Democrats, have been saying, oh, it's not Joe Biden's fault. You know, it's.

They can only do so much. Yes. The president can only do so much with Congress, with the House, whatever. You know, he's I absolutely so much. Yes. President can only do so much with Congress, with the House, whatever. You know, he doesn't make the rules. He doesn't set the economy. If you don't blame anybody, you feel like naturally these things just happen in the economy, like prices go up, prices go down. And they do absolutely natural, especially gas. Gas goes up every year, then it goes down. Then it goes up. I mean, the big question hanging over all of these conversations as we think about what this means for politics and for the Biden administration, especially, you know, they're trying to spend trillions and trillions of dollars right now.

And if inflation is a real long term thing that could affect that, like the big question of is the short term or is this long term seems to be hanging over everything. And, you know, as as as you're hearing, it's what what people are thinking about, too, is they kind of try to make sense of these price increases. You know, Scott, it's definitely true that this is on a lot of people's minds. I was speaking to a Democratic pollster, Celinda Lake, about this. She's, you know, advised the Biden White House. And she told me that in the last month or so, she's begun to hear more and more from voters across the board, regardless of their party affiliation, about how expensive things have become, about the rising cost of living. It's really rising cost of living that is emerging as a major economic issue. It hasn't really impacted anyone yet, Democrats or Republicans, but voters want

everybody to be aware of it and on top of it. And I think it's a real opportunity for Democrats to broaden and solidify their advantage on the economy, which has been precarious for over a decade. And I know you might be wondering, like, opportunity for Democrats. What exactly does she mean by that, right? Because these price increases are happening at a moment in time when the president in office is a Democrat. But I will say the Democrats that I talk to feel like this is a really complicated story and they need to figure out a way to explain to voters,

which, you know, we can talk more about later, how this actually and how Biden's big economic plans, they they feel will actually help reduce prices in the long run. Yeah. And I mean, that's, I think that's something we've talked about, too. Like, the White House is focusing on these economic policies that they're trying to say, like, this is a clear example of the government helping you, right? The stimulus checks, the child tax credits, things like that. And I feel like there's this thinking that like, if that doesn't break through to independent voters, like what will? Like here, I am giving you money. Like what else can a Democrat do? Yeah. And to your point, what you were saying earlier though, Scott, like

partisanship and the economy, they track so closely together. I was looking at these polls of just how Democrats and Republicans felt in terms of their confidence about the economy. And they're basically the flip-flopped positions in January of 2021, when Joe Biden was inaugurated. And I frankly do not think that the economy drastically changed between December of 2020 and January of 2021. All right, we're going to take a quick break. And when we come back, we're going to talk more about the politics of this and what comes next and also how the White House and Republicans are trying to message around what is going on right now with prices. NPR's Planet Money Summer School is now in session. Everything you want to know about investing from expert guest professors.

New classes every Wednesday to Labor Day in the Planet Money podcast feed. Okay, we're back. And Asma, you were in eastern Pennsylvania. That is a place that played a key role in flipping the house from Republican to Democrat in 2018. It obviously was the key state for the presidential race last year. You know, we talked about the fact that prices going up on a Democrat's watch is obviously a political vulnerability. How have Republicans been talking about this? I mean, Republicans have been eager to try to weaponize inflation and been eager to try to point to the fact that prices have been increasing as a fault, say, of Democrats and a fault of President Biden. And, you know, what their main argument is, is that prices are already going

up. And then you have a president who has been trying to introduce massive government spending plans, right? These are trillions of dollars of plans that he has around infrastructure and jobs. And the messaging that they have put out is that these things will inevitably lead, they feel, to even higher prices in the long run. You know, this is a complicated argument. I will say that the Democrats in the White House point out that these plans are paid for, and they strongly disagree with that assessment. But, you know, it's a complicated argument either way. And I will say that, like, the most tangible thing that I hear from people is just like when they're walking out of a grocery store, they look down at their grocery bill. And when it is, like, higher than what they used to pay, that feels very tangible, regardless of who's messaging.

So you talked to some economists in President Biden's orbit. What are they saying about this? You know, I asked Jared Bernstein, he's a top economic advisor to President Biden, about some of the concerns I had heard from voters in Pennsylvania. So we're seeing a very strong, robust recovery with the rescue plans, fingerprints all over it. At the same time, that very robust demand is occurring at a time when supply chains are still coming back to where they were before. And that interaction, which both ourselves and others have described as temporary, that is creating price pressures in the near term. But we are already seeing some easing in that regard.

And the president himself has called for patience. That sometimes is a hard thing to get across, but that is consistent with how we see things unfolding. Asma, I think I'm an acute enough of a political observer to say that I know it's bad right now, but have patience is not like usually a really winning political argument. The midterms are getting closer and closer, especially when it comes to like the mindsets of voters sinking in. You, you, you know, we heard from Larry Summers earlier, he's kind of become this like contrarian democratic voice. I'm curious what he thinks about all of this. Yeah, well, you know, the the idea that inflation is temporary is something that Larry Summers has been questioning for a while now. And I asked him to essentially kind of predict what he sees the economy look like over the near

horizon. I don't think history suggests that inflation is a self-limiting condition. Self-limiting meaning I don't think it will go away of its own accord. There may well be downticks in the statistics as used car prices start to return to normal. But the greater probability is that the underlying rate of inflation, given what we're seeing in particular in the labor market and the housing market will be ominous. Ominous. Ominous does not sound good. It doesn't, right? And to your point, though, Scott, you know, he is a contrarian voice. There are lots of economists who disagree with him, who feel like, you know, this will sort itself out. But what I will say, Scott, is whoever is correct,

right, in the the economics world of this, I also just think there's a political part of this equation. And when you talk about messaging, and you talk about President Biden's agenda, big, you know, economic agenda at this point that he has that he wants to get passed in Congress, I think part of the the future and the fate of that economic agenda depends on whose messaging argument wins out, right, Republicans or Democrats, and whether or not voters believe that these big spending plans will, as Democrats argue, reduce prices over the long run. Well, another big factor in all of this is the new jobs report that will come out tomorrow. Give us another clue about how things are trending.

And of course, will be another opportunity for Democrats and Republicans to say wildly different things about the same set of information. All right. That's it for today. I'm Scott Detrow. I cover the White House. And I'm Asma Khalid. I also cover the White House.

Thank you for listening to the NPR Politics Podcast.