The Wall Street Journal has issued a scathing postmortem analysis of how the Biden administration completely botched the economy and supercharged inflation.
President Biden hadn’t even been inaugurated when he and his senior advisers made a monumental gamble in January 2021 that would reverberate through his presidency. Fresh on the heels of a $900 billion Covid-relief bill that Congress had approved weeks earlier, Biden proposed a $1.9 trillion stimulus bill.
Biden and his team, many of whom had served in the Obama administration, claimed they were correcting their mistakes from 2009: spending too little to combat a major economic crisis. Instead, they overcorrected, flooding an already fragile economy with cash and setting the stage for soaring inflation that has burdened millions of Americans ever since.
Key among their policies was the American Rescue Plan (ARP) - a package which boosted the child tax credit, showered Americans with $1,400 per person, and directed $350 billion to state and local governments. The plan was passed against a backdrop of already unprecedented government spending. Americans were awash in federal aid from bipartisan measures under Trump, supply chains were breaking down, and businesses were struggling to rehire workers. The administration dismissed these concerns, prioritizing speed over prudence.
The plan, of course, totally backfired.
"If inflation had been less severe in that first year, if it had peaked at a lower level, could Vice President Harris have survived that? My intuition is yes," said Michael Strain, head of economic-policy studies at the right-leaning American Enterprise Institute.
On election day, approximately 40% of voters polled said the economy was their top issue - with those voters backing Donald Trump by a 22% margin.
The White House is unrepentant, of course.
"Any scenario that envisions less inflation from a reduced ARP also has to wrestle with slower growth, higher unemployment and more child poverty," said White House Council of Economic Advisors chair, Jared Bernstein.
White House and Democratic officials have argued that overall U.S. economic outcomes were better than those achieved in nearly every other advanced economy. But politically, those arguments fell flat and gave Trump his opening.
“It comes off as cold comfort to say that people have it worse in Germany, the U.K., France,” said Rep. Brendan Boyle (D., Pa.). “People naturally compare their experiences today to what things were like prepandemic.” -WSJ
Senator Joe Manchin, a critical swing vote in the Senate, had warned Biden directly that the plan was excessive - telling the president that it didn’t make sense to throw another $2 trillion on top of the stimulus approved just weeks earlier. Biden, unmoved, forged ahead. "I’ve got to do it, Joe," he reportedly said.
Manchin ultimately gave his reluctant support, but inflation surged almost immediately. By the end of 2021, prices were climbing at their fastest rate in 40 years, fueled in part by fiscal stimulus that Biden’s own administration championed.
Inflation and Voter Backlash
Rather than earning credit for economic recovery, Biden faced a political firestorm as inflation eroded household purchasing power. Consumer prices rose by 20% during Biden’s term - compared to just 8% under Trump -leaving voters furious.
Meanwhile, the Biden administration fed the American public an ongoing stream of bullshit as inflation surged - describing rising prices as "transitory," a term that became a symbol of their detachment from reality. Even as inflation broadened and worsened, White House advisers clung to the narrative, stalling action that might have mitigated the damage.
"They kept insisting it was transitory because they were trying to shove Build Back Better down my throat," Manchin said, referring to Biden’s separate $3.5 trillion spending plan, which he eventually torpedoed.
In short, the White House treated inflation as a public relations problem, attempting to spin temporary drops in price growth as evidence that the problem was under control. Behind the scenes, Biden’s economic advisers proposed measures like rolling back Trump-era tariffs on Chinese imports to reduce costs. Yet these ideas were shelved under pressure from labor groups and foreign-policy hawks. Biden sided with political advisers over economic pragmatists, a decision that critics say reflected his administration’s misplaced priorities.
“President Biden said inflation was his No. 1 priority, and I don’t think he acted like it was his No. 1 priority,” said Michael Strain of the American Enterprise Institute.
Economic Success, Political Failure
The ARP undoubtedly accelerated job growth and contributed to a faster recovery compared to many other advanced economies. But these accomplishments meant little to voters dealing with higher grocery bills and gas prices. Democrats’ assurances that Americans were better off than their counterparts in Europe or Canada came across as tone-deaf and dismissive.
"It comes off as cold comfort to say that people have it worse in Germany, the U.K., France," said Rep. Brendan Doyle (D-PA). "People naturally compare their experiences today to what things were like prepandemic."
Meanwhile, the administration’s insistence on pressing forward with its broader spending agenda compounded its political missteps. By the time the Inflation Reduction Act passed in 2022, many Americans had already soured on Biden’s economic stewardship. Critics argued that the White House could have done more to cut deficits and curb inflation, instead of leaving the Federal Reserve to bear the brunt of cooling the economy.
Critics say the White House could have done more to cut deficits that were unprecedented for a peacetime economy with low unemployment. Instead, the administration passed several pieces of legislation that boosted spending on infrastructure and clean-energy investments, including the Inflation Reduction Act in 2022.
“The whole job of fighting inflation shouldn’t just be up to the Fed. I’d prefer a whole-of-government approach,” said Robert Kaplan, a former Dallas Fed president, in a June interview. Kaplan at the time argued for hitting the pause button on some of the spending from the IRA out of concern that subsidies to encourage new factory construction were working against efforts to lower inflation.
The spending blitz of 2020-21 revealed that “these things have a momentum of their own,” said Raghuram Rajan, a former governor of India’s central bank. “It is hard to reverse on a dime, and then it goes further than you want.” -WSJ
Ultimately, the Biden administration's actions coming out o f the pandemic will likely be remembered as a gamble that backfired and most likely cost them the election (Kamala Harris' obvious limitations aside). It showcased a willingness to prioritize progressive ambitions over economic caution, leaving voters to shoulder the consequences. While the administration points to strong job growth and relative economic stability, the costs of its missteps - both in inflation and political fallout - are undeniable.
