Two centers of power in Washington on Wednesday will reveal the politically toxic dynamics of the key economic issue threatening President Joe Biden’s congressional majorities with midterm elections less than a week away.
The Fed is likely to trigger another historic rate hike, and Biden will host an event about a half-mile away at the White House to highlight the administration’s extensive efforts to expand the workforce in critical areas like broadband and construction. A policy decision is expected to spill over markets, media and politics alike, putting a direct spotlight on an issue Democrat officials say has done significant harm to their political prospects. The other will describe an intense administrative effort aimed at reshaping the pipeline to enter professions over time.
The difference between the two events in the compressed political timeline that the Democrats are now trying to reset is stark.
The federal program, which aims to educate Americans and create a robust pipeline of skilled workers who can work in specialized fields, is part of a long-term solution to address the labor shortage — one of the many drivers of inflation that has persisted for nearly four decades, according to officials -Highs.
The Fed will continue its months-long acceleration to slow an economy that is running at full speed.
Biden’s White House event and speech is sandwiched between campaign trips – he was in Florida on Tuesday and will be heading west to New Mexico on Thursday.
A feature of Biden’s blunt speech is his efforts to fight inflation, both through major legislation and a series of executive branch measures aimed at lowering the cost of living.
“Democrats are cutting your everyday expenses like prescription drugs, health premiums, energy bills and gas prices,” Biden said in a remark at Democratic National Committee headquarters last month.
The government’s unprecedented moves to cut gas prices, which have focused on the release of 180 million barrels of oil from the Strategic Petroleum Reserve over the past seven months, also feature prominently.
But implicit in Biden’s pitch is the difficulty that poses the overarching issue as the clock ticks down to the day when the votes are counted. The magnitude of the problem has been made increasingly clear by the Fed’s dovish approach, but perhaps even more critical by the aggressive tone of its Chair Jerome Powell.
“We want to act aggressively now and get this job done and stick with it until it’s done,” Powell said at his September news conference.
Biden and his top advisers have made a conscious effort to reframe the debate as an election between the two parties rather than a referendum on Democratic control of Washington.
“That’s not your father’s Republican Party, that’s a different deal right now,” Biden said at an event in Florida on Tuesday. “And there are a lot of good Republicans out there, but they’re under a lot of pressure.”
But while Republicans pound the economy with millions of dollars worth of campaign advertising, the roots of the political problem remain.
Biden faces Russia’s war in Ukraine, which has pushed up energy market prices. The global economy also faces the ongoing challenge of Covid infections, supply chain restrictions, labor unrest and political instability. Still, US consumers have shown little sign of slowing down spending – and the US labor market remains resilient.
When Biden broke from his prepared remarks at an event last week, he alluded to an issue White House officials have long considered to be paramount: exhaustion.
“I just think one of the things that I think frustrates the American people is that they know the world is a little messed up,” Biden said while directly pointing to the uncertainty this year , caused by the Russian invasion. “And you want to know what we’re doing? And there’s a lot going on what we’re doing.”
Heralded by the White House as the “Infrastructure Talent Pipeline Challenge,” Biden will showcase efforts by both the private and public sectors to train workers in three sectors in particular: broadband, construction and electrification. Union staff will make presentations on how they are training staff in these areas and the President is expected to speak on both new and existing efforts to train additional staff.
White House officials see this as the tangible result of three cornerstones of legislation that have laid the groundwork for a dramatic shift in the long-term infrastructure of the US economy. All three — the bipartisan infrastructure bill, along with a bill boosting America’s semiconductor chip manufacturing and a $750 billion sweeping health, tax and climate bill — will be highlighted during Wednesday’s event and remarks.
Still, Biden’s economic team has worked tirelessly for months to find policy options to ease the burden of rising prices, even as hopes of a steady decline ahead of the election have been dashed.
While extremely cautious about not making economic forecasts, spring officials saw a path to a significant price slowdown by fall — something that would have been a crucial part of their economic pitch in the final weeks of the campaign.
Instead, they’re staring at the rapid acceleration of the Fed effort that has roiled markets and some companies’ hiring plans, inflation that remains stubbornly high and little bouncing, and an American electorate that, in large majorities, is utterly frustrated.
That Biden’s major policy victories were designed to address many of the pandemic-era drivers of the current inflationary moment — yet will all take time to implement — only serves to expose the frustration many advisors are feeling at the moment with which they are now confronted.
The Biden White House legislative accomplishments are concrete and significant — and the future they foreshadow, officials said, aligns in many ways with the proposals Biden campaigned for. The tens of billions of dollars in private sector investment flowing into the US only serve to bolster the value behind the effort, officials note.
Yet less than a week after the midterm vote was counted, Biden — and his party — remain at the mercy of an issue they cannot immediately control.
In the meantime, the Fed — and its dramatic and now relentless month-long attempt to get inflation under control — will remain in the spotlight while undecided Americans make their final voting decisions.