WASHINGTON (AP) – In the face of rising political costs, President Joe Biden exaggerated his role in reducing the federal deficit and exceeded responsibility by arguing that a stream of public spending in the economy has no bearing on higher prices at all. It actually does.
Congress Republicans, meanwhile, went too far in imposing the blame rising gasoline prices at Biden.
A look at the rhetoric and reality:
BIDEN: “Last year, the deficit fell for the first time since 2015. It fell by $ 360 billion last year, and this year it’s about to fall by more than $ 1 trillion after four years in a row with rising deficits before I joined. We are now on the verge of seeing the biggest drop in a deficit ever in US history. “- notes Tuesday.
FACTS: It’s not as big as it sounds.
While it is true that the deficit may end up falling by more than $ 1 trillion, the decline mostly reflects the improved economy as the pandemic has faded, not tax and spending decisions by the Biden White House or Congress. The government no longer issues stimulus checks and extra unemployment benefits, as it has done for the past two years. And tax revenues have risen as millions of Americans have found jobs and received pay raises. As a result, the Committee on a Responsible Federal Budget predicts that the federal government’s annual deficit will fall to $ 1.2 trillion this year, from $ 2.8 trillion in 2021 and a record high of $ 3 trillion in 2020.
Even with that fall, the deficit would still be at one of the highest levels in history.
Some of the decline is also due to a policy change from the COVID era that basically postponed some tax collection. The government is now charging far more payroll taxes, which fund Social Security and Medicare, after allowing companies to defer them during the pandemic.
In February, for example, government tax revenue rose by 17%, while spending fell 9% compared to a year ago. Expenditure on unemployment benefits fell $ 41 billion last month compared to February 2021, after an additional $ 300 in weekly unemployment benefits ended in September.
BIDEN, who addresses political rhetoric about rising prices: “So I’m tired of this. We need to talk about it because the American people think the reason for inflation is that the government is spending more money. Simply not. true.” – remarks Friday at House Democratic Conference in Philadelphia.
REPUBLICAN NATIONAL COMMITTEE: “Prices are rising and Americans are paying the bill. No spring road trips because of #Bidenflation.” – tweet Tuesday.
FACTS: The bite bypasses reality. Public spending has been a clear factor behind rising consumer prices, though it is not the only one.
Biden last year signed one $ 1.9 trillion emergency aid package for coronavirus known as the US bailout plan – and many economists say it caused inflation to run higher than it would otherwise. There are several sources of inflation, including global supply chain problemspandemic, stimulus from the Federal Reserve and now Russian war in Ukraine.
But the problem is that Biden pumped more money into the economy than it could handle. Administration officials said before the emergency package was adopted that the greater risk was doing too little to help the economy than doing too much. The implicit risk was inflation, although the trade-off was faster employment and stronger growth. Biden got all three: employment, growth and inflation.
Harvard University economists Jason Furman and Larry Summers – both officials in former Democratic administrations – warned of rising inflation due to the size of the relief package. Many conservative economists joined them, including Michael Strain of the American Enterprise Institute.
Republicans now estimate rising consumer prices as a direct and only result of “Bidenflation.” It is wrong. But Biden is wrong when he says that public spending has had nothing to do with it.
SENAT REPUBLICAN LEADER MITCH MCCONNELL: “No one is buying the Democrats’ efforts to blame 14 months of failed policies on a three-week crisis in Europe. Inflation and gasoline prices rose and hurt families long before the end of last month. The White House must stop denying their mistakes and start correcting them. “- tweet Tuesday.
HOUSE REPUBLICAN LEADER KEVIN MCCARTHY: “Democrats want to blame rising prices on Russia. But the truth is, their out-of-touch policies are why we’re here in the first place. Do you remember what happened? on day 1 with the one-party rule? The President canceled the Keystone pipelineand then he stopped new oil and gas leases on federal lands and waters. “- March 8 remarks.
FACTS: Republican leaders of Congress overestimate Biden’s ability to influence energy prices and the impact of the canceled Keystone pipeline.
Gasoline prices have risen in line with oil prices since the spring of 2020, as demand has grown faster than worldwide production, while economies are trying to shake off the pandemic. More people are driving and flying, and companies are returning to pre-pandemic activity levels, leading to more energy consumption, pushing up prices.
The oil price is set on the world market. Even the leading producers – the United States, Saudi Arabia and Russia – are not allowed to set the price, even though they may be trying to adjust production up or down, a process that takes time, even when it works. U.S. production fell sharply in 2020, but that was not because of anything that then-President Donald Trump did; it was due to the pandemic shattering demand, prompting manufacturers to idle some of their wells instead of selling their oil too cheaply. U.S. oil production has doubled since 2011, but that did not stop oil from hitting $ 100 a barrel. barrel.
U.S. oil production fell about 1% from 2020 to 2021, not the dramatic drop that some of Biden’s critics describe. The nationwide average gasoline price has risen by about 80 cents from a month ago, and analysts attribute almost all of this to the prospect of limiting Russia’s oil exports. McConnell and many other Republicans pushed for a ban on U.S. imports of Russian oil, even before Biden acted.
The Keystone XL pipeline was designed to transport up to 830,000 barrels of oil a day from Canada and North Dakota to refineries along the Gulf Coast. The United States consumed nearly 20 million barrels of oil a day last year, and global consumption was close to 100 million barrels, so the pipeline – which was far from finished when Biden revoked a permit Would have contributed less than 1% to the world supply of oil.
Asked whether the Keystone XL cancellation is the cause of high gas prices, Tom Kloza, an analyst for the Oil Price Information Service, said: “A political point of discussion. Has nothing to do with 2022 price increase.”
Biden has announced decisions to release more oil from one strategic reservebut these releases have been too small to have any effect on pump prices.
Koenig reported from Dallas. Associated Press writers Fatima Hussein and Hope Yen in Washington contributed to this report.
EDITOR’S NOTE – A look at the truth of allegations from political figures.
Find AP Fact Checks at http://apnews.com/APFactCheck
Follow @APFactCheck on Twitter: https://twitter.com/APFactCheck