In an economy that’s seeing both surging growth and debilitating inflation, Democrats and Republicans are telling very different stories about the overall economic picture ahead of midterm elections later this year.
For Republicans, the message is simple: inflation, inflation, inflation.
Consumer prices have risen 8.5 percent since last year, with wholesale prices climbing more than 11 percent, and Republicans are hammering the point home.
Data released this week by analytics company Quorum shows that in nearly 10,000 mentions of inflation in official statements from lawmakers since the beginning of this year, Republicans used the term nearly eight times as often as Democrats.
It also shows that the ten lawmakers who use the term most frequently are all from the GOP. Leading the pack are Reps. Elise Stefanik (R-N.Y.) with 148 mentions, Kevin McCarthy (R-Calif.) with 118 mentions and Jason Smith (R-Mo.) with 113 mentions.
The ten Republicans who have used the term most frequently have mentioned it an average of 101 times in statements since January, the data shows, while the top ten Democrats have mentioned it only 32 times.
“Inflation is accelerating,” House Ways and Means Committee ranking member Kevin Brady (R-Texas) said in an interview. “Prices right now are growing three times faster than paychecks, so it’s an annual, at this point, 5,000-dollar-a-year burden, a pay cut, for most American families, and it is unfortunately accelerating.”
He added: “Americans are bracing for even higher prices ahead, small businesses certainly are. I’m convinced we are already in a very damaging wage-price spiral.”
Democrats, meanwhile, are focused on the red-hot rebound of the economy following the onset of the pandemic, which has led to an increase in nominal wages and some of the highest levels of employment since the late 1960s.
“Our nation’s hiring spree continues, with March marking the eleventh straight month with over 400,000 jobs added back,” House Ways and Means Committee Chair Richard Neal (D-Mass.) said earlier this month. “Over 90 percent of American jobs lost to the pandemic during the Trump Administration have been recovered, and the unemployment rate dropped to the lowest level since the pandemic began. The health and pace of our recovery is extraordinary.”
The employment rate is especially strong in Texas, where it’s almost doubled since before the pandemic, adding more than 40,000 jobs to the labor force every month this year. It’s a trend that Rep. Lloyd Doggett (D-Texas) attributes to one of the Biden administration’s signature economic stimulus packages.
“The remarkably low unemployment rates for Texans right now are the direct result of our work through the American Rescue Plan to fuel our fast recovery, get folks back to work, and build economic resilience,” Doggett said in a statement to The Hill.
Rep. Sylvia Garcia (D-Texas) offered a similar assessment: “Texas Democrats have worked alongside President Biden to secure a strong economy and labor market across the Lone Star State.”
“I think voters will keep this in mind when the polls open,” she wrote in a statement to The Hill. “With the American people’s backing, we delivered results. Texas’ unemployment rate is down, good-paying jobs are plentiful, and Texans are back at work.”
The Biden administration has also drawn on employment data to paint a picture of a robust and speedy recovery following the near-total private-sector shutdown caused by COVID-19.
“At the end of 2021, our economy had created more than 6 million jobs, the largest number ever in 1 year, and we experienced the fastest drop on record for the unemployment rate,” the White House’s annual Economic Report of the President, sent to Congress last week, says. “The United States saw the strongest economic growth since 1984, with [Gross Domestic Product] GDP expanding by almost 6 percent.”
Surging profits have complemented the booming GDP, with net corporate earnings climbing to $2.7 trillion, a 40 percent increase over the pre-pandemic level of $1.9 trillion in the fourth quarter of 2019, according to an analysis by the St. Louis Federal Reserve using data compiled by the Department of Commerce.
Democrats haven’t exactly taken up the profitability narrative, however, as key Democratic lawmakers have sought to pin at least part of the blame for inflation on private-sector market concentration and corporate price gouging.
House lawmakers earlier this month introduced legislation aimed at stopping price hikes on consumer goods and supplies. The bill targets “merchants, small and large, taking advantage of the current crisis to prey on consumers by charging outrageous prices for what are usually affordable household staples,” according to a write-up by Rep. Joe Neguse (D-Colo.).
A different bill introduced in March by Democratic Sen. Elizabeth Warren (Mass.) and Sheldon Whitehouse (R.I.) proposed a windfall profits tax on big oil, an industry with profits that have more than doubled from the first quarter of 2021 to the first quarter of 2022.
Despite high levels of employment and good conditions for workers and job seekers, Republicans are quick to point out that inflation is eating into wages.
While nominal wages increased more than 4 percent over the course of 2021 due to high employment, inflation-adjusted wages have been decreasing. From March of 2021 to March of 2022, so-called real wages have declined nearly three percent.
“President Biden simply paid no attention to the worker shortage,” Brady said. “He was fixated on wages, but absolutely puzzled about why and how rising prices are wiping out those wage gains and in fact creating pay cuts.”
Political rhetoric aside, the relationship between fiscal policy and inflation is a subject of debate among economists.
While some economists have pointed to the trillions in fiscal stimulus packages, which went out to Americans under both presidents Trump and Biden, as a contributor to inflation, most say the core reason is supply chain disruptions and high demand for goods and services resulting from the pandemic.
“The scope of fiscal policy for fighting inflation is very limited,” economist Ben Page of the Tax Policy Center, a Washington think tank, said in an interview. “There just isn’t a whole lot that an administration can do. It’s the Fed now that’s really in the driver’s seat, as far as fighting inflation goes.”