Democrats see glimmers of hope for the midterms as recent Republican “victories” on guns and abortion — on top of the leadership’s astounding attacks on the democracy — continue appall the broader public. Yet prominent Democrats continue to commit unforced errors that hurt their cause.
Democratic voters tend to be more educated and economically sophisticated than their Republican counterparts. That makes Democrats’ trips into economic boobery so counterproductive.
Let’s start at the top, with President Joe Biden.
Yes, inflation fears are running high, but blaming a major cause, steep gasoline prices, on the moms and pops running gas stations is worse than unfair. It is dumb. (Also, would Democrats kindly stop applying the word “greed” to anyone trying to make a buck?)
Biden recently tweeted the following demand to gas stations: “Bring down the price you are charging at the pump to reflect the cost you’re paying for the product. And do it now.”
Jeff Bezos, Amazon founder and owner of The Washington Post, called that statement a “straight ahead misdirection or a deep misunderstanding of basic market dynamics.” He’s correct.
Gas stations make most of their profits on food and drink. And they have competitors, so charging more for their gas than the guy down the road costs them sales of KitKats and beef jerky. Furthermore, these enterprises are run by local business people, not execs at multinational oil companies.
Biden’s suggestion of a federal gas-tax holiday, meanwhile, was rightly met with bipartisan shrugs. The federal tax on gasoline is 18 cents a gallon, a fraction of a $5 price. And the money goes to pay for highways and mass transit.
Now move on to Massachusetts Sen. Elizabeth Warren. Recall her performance in the “contentious” (CNN’s word) hearing with Federal Reserve Chairman Jerome Powell.
“You know what’s worse than high inflation and low unemployment?” Warren said, rhetorically jabbing her finger into Powell’s chest. “It’s high inflation and a recession with millions of people out of work — and I hope you’ll reconsider that as you drive this … before you drive this economy off a cliff.”
Let us agree that high unemployment is worse than low unemployment. But Warren’s assumption that the Fed is already driving the economy to ruin by raising interest rates is premature, to say the least.
The Fed actually has two mandates. One is to support stable prices. The other is sustaining employment. Joblessness is now near a 50-year low, and Main Street remains desperate for help. So Warren’s charge that Fed policies will “put more people out of work” and thus “make a lot of people poorer” seems a bit hasty.
In a post-hearing interview, Warren continued the populist bluster: “Raising interest rates is not going to cause Vladimir Putin to turn the tanks around and suddenly restart the flow of oil from Russia around the world,” she said. “It’s not going to keep these giant corporations from price-gouging. It’s not going to unkink supply chains.”
That’s right. And raising interest rates won’t keep the rabbits out of my lettuce patch or fix the dishwasher. But those aren’t the Fed’s jobs.
The Fed has a tough balancing act, and interest rates are the main tool at its disposal. By cooling off a hot economy, rate hikes could indeed cool off inflation, which, by the way, also makes people poorer.
Warren concludes that “we’ve got a mismatch” between Fed policy and the economic challenges.
And Democrats thus continue to mismatch the intelligence of the voters and their economic messaging. Accusing the Fed of a crime it has yet to commit — or gas stations of price-gouging — is dumb politics, and doubly so as their prospects improve.