Biden’s Failed Inflation Strategies Are Now Hurting National Security.

Readers don’t need a tutorial on inflation. Inflation was up 8.6% according to the most recent report and has been running around 7% to 8% all year.

Inflation for the full-year 2021 was over 7%. All of those numbers were the highest in forty years at the time they were announced (new numbers keep breaking the old records). People see inflation every day when they’re at the gas pump, in the grocery store, or shopping online.

Gas prices have more than doubled in the past year. Other prices are up as much or higher, including prices for meat, poultry, dairy, eggs, airfares, and other necessities.

The Fed is raising interest rates at the fastest pace since Paul Volcker. It’s possible that may tame inflation by late this year, but it will come at the cost of a recession. Not only is a recession likely to come soon, but we may also already be in one.

U.S. GDP growth in the first quarter of 2022 was negative. The best estimates for growth in the second quarter are zero. Those combined results would give us negative growth in the first half and leave us dangerously close to two consecutive quarters of declining growth, which is the technical definition of a recession.

What is Joe Biden doing about this? His plans are mostly talk.

The White House is considering reducing tariffs on China after the G7 meeting in late July. That won’t help the Democrats in the mid-term elections because of complex supply chains. A tariff reduction in August won’t show up on store shelves in terms of lower prices until next winter at the earliest, if at all.

The most immediate impact is likely to be shutting down U.S. firms and destroying U.S. jobs as Chinese competitors get a second wind. And who says lower tariffs will result in lower prices?

Producers may just pocket the savings as profits and keep their prices unchanged. One idea that Biden actually has implemented is to release oil from the Strategic Petroleum Reserve (SPR) to fight higher energy prices.

This will also not reduce prices in the short run. The problem with energy in the U.S. today is not a shortage of oil; it’s a shortage of refining capacity.

The refiners are operating at about 90% of capacity (which is unsustainable; some slack in capacity is always needed for maintenance and repair). Still, as described in this article, the drawdown of the SPR is having a dangerous effect on U.S. national security.

The SPR was never intended to be a price control mechanism or a swing producer. It was intended to help the U.S. economy through a national emergency or natural disaster. The SPR is on track to hit a forty-year low in terms of capacity.

Biden has been fighting a losing war against inflation all year. Now, he’s jeopardizing national security by depleting the SPR in the process.

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