opinion | Democrats need a lot more love for their misguided economic policies

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Non-populist and “neo-liberal” economists are not exactly known for their political instincts. But looking back, they were more insightful into the politics of the Democrats’ economic agenda than the politicians realized.

Let’s admit this up front: President Biden and his advisers face tough jobs. They want to implement sound and equitable economic policies. They also face political constraints that run counter to those goals.

Policies usually recommended by economists – more free tradeAnd More immigration, pays for (most) new spending – Surveying isn’t always done well. Conversely, things that are voted well (for example, policies promoting “made in America” goods) are things that economists do not like.

With Biden approval ratings painfully lowAnd the more fires that had to be put out daily, the more it might not be worth listening to the economists, and the more unnecessary political risks were taken.

But recently, the administration and Democratic lawmakers have given so much weight to these short-term policy considerations that they may themselves sleepwalk toward disastrous long-term political outcomes from their poor economic choices.

Take, for example, the near-universal stimulus of $1,400 that was passed as part of last year America’s rescue plan.

Many economists of the time (some in public, others more forcefully in private) argued that the payments were poorly targeted. A lot of the money went to people who didn’t need financial help – and who may have gotten out of COVID-19 in a better Financial position because they kept their jobs, had some quarantined savings and enjoyed increased asset values.

Economists just didn’t expect that 422 billion dollars Its distribution was wasted through checks; They also realized that the software (and other poorly designed parts of the bill) could be inflationary. Why give wealthy consumers more money to spend while supply chains remain sluggish?

But the suggestion was very popular, favored 78 percent from the Americans. Promises of more controls likely helped Democrats win two Senate seats in Georgia. So Biden and Democratic lawmakers ignored these vulgar economists and decided to make it rain anyway.

Were the voters grateful? no. Soon after the checks came out, the Americans seemed to have completely forgotten about it.

There was a brief period in the spring of 2021 when money was being deposited for the first time into bank accounts, when people assessed their financial conditions more favorably, according to University of Michigan Consumer Survey. Then the numbers returned to their previous levels after a few months.

that was before Inflation is really starting to take its toll, which has made Americans even more passive.

There are complex reasons behind the four-decade-old high inflation levels, including supply chain issues related to the pandemic and the most recent A series of unlucky shocks. But generous fiscal (and monetary) policy, including last year’s “popular” checks, played a role.

This high inflation and the resulting political backlash eventually helped killing Negotiations about rebuilding better. Inflation is now the biggest threat to Democrats in the midterm elections. It’s the most It is often cited Trouble with recent polls, and (limited) research on how inflation affects voting behavior suggest Existing governments usually pay a high price for higher prices.

There is not much Democrats can do to curb inflation now. This is mostly up to the Federal Reserve. But there are some modest tools available, which economists have championed.

Biden can roll back Tariffs in the Trump eraThat made steel, solar panels, bicycles, breast pumps and other commodities more expensive. Likewise, Democrats can speed up legal immigration procedures. The United States has a large labor shortage and almost 2 million people Shortage of working-age migrants relative to pre-pandemic trends.

Biden late is over Some Who is this. But not enough, and some may be too late to help. It is unclear why the administration has slowed down.

From my private conversations with senior officials, the answer appears to include perceived short-term political commitments. Politicians worried about how Republicans might portray measures like eliminating tariffs (soft on China!). Democrats also feared alienating important groups, such as organized labor.

Instead, the Democrats spent a lot of energy lives up to their populist messages. They argue that the real villain is not a mismatch between supply and demand (which can implicate democratic politics); rather, that it Corporate greed. They are now following up on the logical policy conclusions of this demagogic discourse, some of which are May exacerbate inflation.

Some Democrats are true believers in the theory of global greed inflation. But many, including White House aides, tell me these things are just better polls.

Unfortunately, improving what is rated well today It could lead to much worse polls in November, if that keeps prices high.

“People ask me all the time how to send messages about inflation, but you really need to do everything you can to bring inflation down,” says David Shore, a data scientist who polls for Democrats and progressive groups.

Some left-leaning economists and even political activists are privately critical of the Democrats’ approach to inflation, but are more subdued in public. Perhaps this is because they want to be good allies. A reminder to those in the coalition: Do your friends no favors by withholding good advice, and sometimes tough love.

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