The Biden-Harris administration, in its ongoing and questionable handling of America’s economy, continues to face criticism over its inflation record. This unfortunate state of affairs can be traced back to certain pivotal decisions made by these two leaders, especially Vice President Kamala Harris, in their ongoing tenure. One such decision in particular, a tie-breaking vote cast by Harris, has been cited as a key contributing factor. But was it the worst inflation in American history, as claimed by former President Donald Trump’s in his attempt to regain the White House?
The vote in question happened to be integral to the passage of the American Rescue Plan Act, which was President Biden’s response, in law form, to the ongoing coronavirus pandemic. This complex piece of legislation, supported solely by Democrats, brought into reality a significant $1.9 trillion of spending, distributed among a number of key sectors and causes. This spending included, among other things, direct payments to a substantial majority of Americans, significant funding for state and local governments, and expanded unemployment benefits. Even before it passed, some economic analysts warned of its potential to trigger inflation, but these warnings went unheeded.
Biden’s legislation, achieved thanks to Harris’s tie-breaking vote, did eventually lead to a rise in inflation, as warned by economists. Now, with the benefit of hindsight, it is widely recognized that the American Rescue Plan put an excessive amount of money into the pockets of the American people. What was overlooked was the reality that global supply chains had been seriously hampered by the pandemic. This, of course, was coupled with the law placing more money in circulation, which set up a dangerous combination of high demand and limited supply.
While the American Rescue Plan has certainly aggravated inflationary pressures, it was not the sole culprit. Another key component can be traced to the supply chain issues that resulted from the pandemic-related disruptions. An added layer of complexity came with Russia’s 2022 invasion of Ukraine, which spurred an abrupt increase in oil prices and other trade interruptions. Each of these factors, either alone or combined together, played a significant role in magnifying the effects of inflation following the legislation’s enactment.
In their defense, not every economist places the blame solely on this legislation. There have been other factors, such as similar inflation trends among advanced economies in Europe, which suggest that there’s more into play than Biden’s policy. Regardless, these factors do little to absolve the Biden-Harris administration of their reckless policy decisions that have led to the highest inflation rate seen in 40 years, a staggering 9%, observed in the summer of 2022.
In terms of how this has impacted the average American, it’s necessary to look at the data from a broader perspective. During Biden’s tenure, prices have ostensibly risen by an alarming 19.4%. Over a span of three and a half years, the annual inflation rate turns out to be roughly 5.5%. When compared to historical data, these figures are still substantially high, rivaling the inflation rates experienced during the late 1970s and early 80s, when price increases sometimes ranged from 12% to 15%.
Digging deeper into history, we can find an example of even more severe inflation. In 1946, the year following the end of World War II, the overall year-over-year inflation rate exceeded 18%. However, this historical context does not in any way mollify the harsh reality of the inflation experienced under Biden’s watch. The most recent figures, for instance, show a year-over-year inflation rate of 2.9% in July 2024, a decline from the record heights seen in 2022.
Trump, in his critique of the administration’s inflation record, cited a figure of a $28,000 cost increase for typical American families since the beginning of the Biden-Harris era. This figure, it turns out, was taken from an inflation tracker formulated by the Republican staff of the Joint Economic Committee. This tracker evaluates the additional spending for items such as food, shelter, transportation, and energy for an average American household, relative to the state of things in January 2021, when Biden and Harris inaugurated their tenure.
There’s no doubt that higher prices have claimed a larger portion of American household income since the beginnings of the inflationary spike. To put things into perspective, consider the savings rate prior to the pandemic — the personal income after taxes minus personal consumption, divided by personal income after taxes, which typically ranged from 7% to 9%. This rate has been slashed since the beginning of 2022, with more recent values ranging between a mere 3% and 5%.
This grim situation did not unfold without some context. It’s important to acknowledge that there were also rising wages that, to some degree, helped mitigate the impact of these price increases. What remains frustrating is that these wage rises haven’t kept pace with the price increases. Over the course of the Biden-Harris administration, while prices jumped by 19.4%, wages only rose by 17.7%, demonstrating a clear lag in wage growth relative to price inflation.
Looking solely at these numbers, some might argue that the situation is less dire when considering a different timeframe. Restricting the view to since February 2020, prior to the pandemic, prices rose by 20.9% while wages increased by 23.3%. At first glance, this might sound like a win, with American spending power outpacing inflation. But remember, these figures are heavily influenced by the pre-pandemic economic state. The reality today, under the Biden-Harris administration, is far less rosy.
Let’s retrace: Vice President Harris did cast the decisive vote on the American Rescue Plan Act, which was an attempt to respond to the coronavirus pandemic crisis. An attempt that, as agreed upon by a range of economists, has consequently added fuel to the inflation fire. But this isn’t the entire picture. Other factors, such as the disruptions in the global supply chain caused by the pandemic and the geopolitical fallout from Russia’s invasion of Ukraine, also share a chunk of the blame.
The highest annual inflation rate under the Biden-Harris administration clocked in at about 9% in 2022 — the worst seen in 40 years. This substantial figure echoes the dire state of the economic climate, even if it isn’t technically the absolute highest rate in American history. Regardless, it’s clear that the Biden-Harris administration’s mishandling of the economy has had drastic repercussions for American households.
The aforementioned increased costs of $28,000 for a typical American household since the start of the Biden-Harris administration is indeed a glaring sign of how households have suffered. However, proponents of the administration might argue that wage growth somewhat balances out these higher costs. This argument is essentially a deflection, attempting to divert attention away from the fact that wages have simply not kept pace with the surge in prices.
The political narrative around the American Rescue Plan act and its subsequent impact on inflation does contain a modicum of truth. However, to say that households are bearing higher costs under the Biden-Harris administration is an understatement. This fact, despite all attempts at obfuscations and half-truths, stands undisputed.
In conclusion, the Biden-Harris administration could certainly be deemed responsible for escalating inflation rates, and the American people are caught in the crossfire of their inadequate economic policies. The costs to ordinary households under this administration are undeniable, and wage growth lagging behind price increases only exacerbates the issue. Despite attempts at downplaying the matter, these harsh economic realities have firmly debunked any claims that the Biden-Harris administration has been beneficial to the average American.