Jared Bernstein, a member of the Council of Economic Advisers under President Joe Biden, on Monday claimed that the White House has successfully led the charge against inflation and cut the budget deficit.
Price levels between August 2021 and August 2022 rose 8.3%, according to data from the Bureau of Labor Statistics. Bernstein argued during an interview with Fox Business that the administration has recently seen progress in its attempts to quell rising prices and reduce the deficit.
“One issue is, is the government stepping on the fiscal accelerator? That is, is government fiscal policy contributing to inflation, say, this year? And the answer, based on over $1 trillion of deficit reduction, is no,” Bernstein told Fox Business host Martha MacCallum. “That doesn’t negate the point that inflation is too high, which it is, and we’re doing everything we can to help… the last couple of months have been a respite. And, of course, gas prices have been a real bit of breathing room for American consumers.”
The White House has repeatedly argued that its first budget proposal “cut the federal deficit” — the difference between government spending and government revenue — by $350 billion, and has projected that the second budget proposal will shave $1.3 trillion from the deficit. The administration has failed to note that deficit spending reached record highs in 2020 and 2021 because of various stimulus packages meant to combat the lockdown-induced recession.
“You said a lot of that is just the spending falling off. That’s definitely part of it,” Bernstein acknowledged to MacCallum. “You’re not wrong.”
The $350 billion improvement would represent a decrease from $3.1 trillion to $2.8 trillion, according to data from the Office of Management and Budget. After the federal government saves another $1.3 trillion, a figure calculated before the passage of the Inflation Reduction Act and President Biden’s executive action on student loan cancellation, the United States will be left with a $1.5 trillion deficit — a level far higher than any deficit seen before 2020 or during the second term of President Barack Obama.
The most recent inflation reading marked a decline from the 8.5% rate seen in July 2022 and the 9.1% rate seen in June 2022, although core inflation — which factors out food and energy prices — continued to increase. Regardless of the negative surprises, President Joe Biden claimed victory in the “essentially flat” prices.
“It will take more time and resolve to bring inflation down, which is why we passed the Inflation Reduction Act to lower the cost of healthcare, prescription drugs and energy,” the commander-in-chief said. “And my economic plan is showing that, as we bring prices down, we are creating good paying jobs and bringing manufacturing back to America.”
Meanwhile, a recent poll from Bankrate showed that Americans are receiving wage increases that fail to keep pace with inflation. While 48% of American workers enjoyed a pay raise in the past year, 21% found a higher-paying job, and 8% received both, as many as 39% of workers received neither — the lowest level in any prior iteration of the survey.
However, only 39% of respondents who received a raise or a better-paying job reported income that allowed them to cope with rising consumer prices. A scant 33% of overall workers said their income has exceeded or kept pace with inflation over the past year.