How Democrats Should Talk About the Economy

As the 2022 midterms enter their final stretch, there is already broad agreement that the Democratic candidates have lost ground on economic issues, and have never come up with a steady and coherent plan to regain it. For the most part, this line of argument has become a counterproductive zero-sum dispute in Democratic policy and campaign circles, pitting “economic” issues against campaigners’ views on abortion rights in the post-Roe era or the fate of democracy in Trump is still wrong.

Lost in this regression of ex post facto priority-setting is the bigger question: Just what should the Democrats have said about the specter of inflation and other economic ills? And how such an appeal can stick among voters, given that Federal Reserve Jerome Powell has embraced it overt policy of wage suppression and economic contraction in his crusade to tame inflation? For President Joe Biden to persuasively campaign for a Democratic congressional majority on the basis of his suite of non-essential pro-worker policy achievements, he will need to make a political nemesis Trump appointee Powell, a former senior partner at the multibillion-dollar private equity fund The Carlyle Group, which has been reformed by Biden at the beginning of his term.

Biden and other Democratic leaders clearly calculated that Powell’s campaign season sweep of Fed policy would be out of bounds, but the recent history of the Fed’s fortunes in Washington suggests that may not always be the case. “There’s a spectrum of presidential pressure on the Fed, from doing nothing to things like Nixon did and [then–Fed Chair] Arthur Burns, leaked the minutes of the Fed meeting directly to the press,” said Tim Barker, a fellow with the Jain Family Institute. “And Biden has been on the ‘no’ end of that spectrum. He’s one of the executives least given to pressuring the Fed a bit, like actively emphasizing in his messaging that his policy goals are at odds with Powell’s. There’s no open acknowledgment that Fed policy has been counterproductive for purposes of the Inflation Reduction Act, or stimulus and infrastructure legislation. [then–Fed Chair Paul] Volcker in October 1980. Biden has done less than Carter, which is remarkable.

Powell’s recent austerian rule at the Fed has also benefited from a hands-off attitude among ground-level economic forces on the left, although for different reasons. “As far as the economic message of the progressive left is focused on macroeconomic policy, its leaders are not united in the way that people who work on antitrust,” said Marshall Steinbaum, associate professor of economics at the University of Utah and former director of research and fellow at the Roosevelt Institute. “There is a whole fight about macro policy from 2015 to 2019, where people like [former Obama Council of Economic Advisers Chair] Jason Furman said at the end of the Obama administration that we’re at full employment, we don’t need to continue expanding. The criticism of the left then was, no, we should expand, because wages are stagnant. They are right—but they blame themselves by thinking, ‘Well, we are right about the fact that we are defeating our enemies.’… It doesn’t really matter what the ideology is; So what if Powell becomes a Trump appointee? “

Leave a Reply

Your email address will not be published. Required fields are marked *