Joshua Roberts/Reuters; Jonathan Ernst/Reuters
- Two famous Democrats, Sen. Joe Manchin and Larry Summers, agree on inflation and disagree on Biden's agenda.
- Manchin thinks Build Back Better will worsen inflation, but Summers thinks the costs of not doing it are huge.
- While Democrats squabble, Americans are getting angrier and angrier about the economy.
Take your standard center-left Democrat.
He's in his 60s or 70s, and he remembers when inflation was terrible in the 1970s – he's been warning about it ever since Joe Biden was elected president.
So far, that describes both Sen. Joe Manchin and former Treasury Secretary Larry Summers. Manchin, the West Virginia senator, ripped into the White House and Federal Reserve on Wednesday, saying they misjudged how bad inflation would get after a print that showed prices rising at the fastest rate in 31 years.
Summers, the Harvard economist, has sounded the alarm on inflation so much that Republicans have cited him when warning about the perils of rampant price growth.
Both have been right so far that inflation is getting worse. The Consumer Price Index – a popular measure of US inflation – rose 0.9% in October, exceeding the 0.6% forecast and marking the largest one-month jump since the Great Recession. The price index rose 6.2% on a year-over-year basis, marking the strongest inflation since 1990.
Where they disagree is on what to do next.
Manchin continues to withhold his support for Biden's Build Back Better plan, and said Wednesday the latest inflation data showed price growth "getting worse." Manchin has already called on Congress to hit pause on the spending package, and he cited the latest inflation data in doubling down on his stance.
Summers told The Washington Post that his fellow centrist is just wrong.
"Together, they are smaller over 10 years than this past year's stimulus was over a single year, and in addition, they are substantially paid for," the prominent Democratic economist said.
Progressive and centrist Democrats alike are pushing for the spending to be approved by the West Virginia senator, who is increasingly alone in his opposition. The recent November elections were a warning sign that voters are poised to turn against Democrats in the 2022 midterms, as a burgeoning red wave swept a Republican into the Virginia governor's office and nearly took out New Jersey's Democratic governor. The question Democrats have to answer is: who's right, Manchin or Summers?
Manchin and Summers did not respond to requests for comment.
The clock is ticking on Democrats' spending ambitions
The inflation report was bad enough to make President Joe Biden change his tone. Instead of repeating the outlook that inflation will soon fade, the president said in a Wednesday speech the White House is prioritizing "getting prices down" and regarding inflation as "one of the most pressing economic concerns of the American people."
The White House has even viewed the inflation print as a strong argument for its spending push. Parts of the social-spending plan like child care funding could help "push back on inflationary pressures," Jared Bernstein, a member of Biden's Council of Economic Advisors, told The New York Times.
Others doubt Biden's spending packages could dampen inflation. The packages won't "stoke inflation to any measurable extent," but neither "will they help reduce it," Arindrajit Dube, a professor of economics at the University of Massachusetts Amherst, said.
"As a friend of the White House who will always shoot straight, [the Bipartisan Infrastructure Framework and Build Back Better plan] aren't about inflation," Dube wrote in a Thursday tweet. "It'd be good for the WH to be very clear about this point."
Either way, Americans are growing impatient with the Biden administration's inflation playbook. Consumer sentiment plunged to a decade low in November due to surging inflation and pessimism around the government's policy approach, according to the University of Michigan's Surveys of Consumers.
So far, Summers and Manchin both have credit for predicting historic inflation. But who's right on the next step is going to help determine both the path of Biden's presidency and the economy.