President Joe Biden reacted to the June inflation report saying that while inflation is still unacceptably high, the report is out-of-date, failing to take into account that gas prices – which accounts for a significant amount of the inflation rate – have gone down for nearly 30 days, reducing the price at the pump by 40 cents since mid-June. Still, he said, “inflation is our most pressing economic challenge,” just as it is around the world. Here is his statement the June CPI Inflation report as provided by the White House:
While today’s headline inflation reading is unacceptably high, it is also out-of-date. Energy alone comprised nearly half of the monthly increase in inflation. Today’s data does not reflect the full impact of nearly 30 days of decreases in gas prices, that have reduced the price at the pump by about 40 cents since mid-June. Those savings are providing important breathing room for American families. And, other commodities like wheat have fallen sharply since this report.
Importantly, today’s report shows that what economists call annual “core inflation” came down for the third month in a row, and is the first month since last year where the annual “core” inflation rate is below six percent. Inflation is our most pressing economic challenge. It is hitting almost every country in the world. It is little comfort to Americans to know that inflation is also high in Europe, and higher in many countries there than in America. But it is a reminder that all major economies are battling this COVID-related challenge, made worse by Putin’s unconscionable aggression.
Tackling inflation is my top priority – we need to make more progress, more quickly, in getting price increases under control. Here is what I will do:
First, I will continue to do everything I can to bring down the price of gas. I will continue my historic release of oil from our strategic petroleum reserve. I will continue working with our European allies to put a price cap on Russian oil – sapping Putin of oil revenue. And, I will continue to work with the U.S. oil and gas industry to increase production responsibly — already, the U.S. is producing 12.1 million barrels of oil per day and is on track to break records.
But I will also continue to insist – as I have with urgency recently – that reductions in the price of oil must produce lower gas prices for consumers at the pump. The price of oil is down about 20% since mid-June, but the price of gas has so far only fallen half as much. Oil and gas companies must not use this moment as an excuse for profiting by not passing along savings at the pump.
Second, I will urge Congress to act, this month, on legislation to reduce the cost of everyday expenses that are hitting American families, from prescription drugs to utility bills to health insurance premiums and to make more in America.
Third, I will continue to oppose any efforts by Republicans – as they have proposed during this campaign year — to make things worse by raising taxes on working people, or putting Social Security and Medicare on the chopping block every five years.
Finally, I will continue to give the Federal Reserve the room it needs to help it combat inflation.
The White House has published a memo outlining President Biden’s plan to tackle inflation:
As our economy begins to transition to more stable growth, President Biden has made combatting inflation and lowering costs for families his top economic priority. President Biden’s plan to tackle inflation has three key pillars:
1. Reducing costs on everyday items
2. Lowering the deficit
3. Giving the Federal Reserve the independence it needs to act
The biggest single driver of inflation now is Putin’s war against Ukraine –increases in food and energy prices account for around 50% of this month’s CPI. Putin’s Price Hike hit hard in May: gas pump prices are up by $2 a gallon in many places since Russian troops began to threaten Ukraine. President Biden has taken action to blunt the impact of Putin’s Price Hike for families:
The President announced the release of a record 1 million barrels per day from our Strategic Petroleum Reserve.
He rallied our Allies and partners to join us, releasing a combined 240 million additional barrels of oil on the market.
He expanded access to biofuels like E15, which will lower prices at thousands of gas stations in the across the country.
While oil production is increasing and projected to reach a historic level next year, oil companies are sitting on 9,000 unused permits to drill more and pocketing the largest profits in years.
80% of a typical family’s monthly budget is spent on items other than food and energy. That means that even as we work to address energy and food prices in the near-term, making other necessities more affordable for working families can give families more breathing room at the end of the month.
President Biden announced that tens of millions of households – or nearly 40% of all households in America – will be able to save $50 per month or more on high-speed internet, which is now an economic necessity for American families.
President Biden took action to save hundreds of thousands of families hundreds of dollars a month by fixing the Affordable Care Act’s “family glitch.” Nearly 1 million Americans would see their coverage become more affordable.
President Biden has cut the deficit by $1.7 trillion – more this year than any President in history, reducing inflationary pressures.
The President calls on Congress to act urgently as well.
The President has called on Congress to pass a bill to crack down on ocean shippers to lower the price of goods. In the last year, shipping prices have gone up by as much as 1,000% driving higher prices for families on items from appliances to apparel.
The President calls on Congress to pass legislation to cut costs for families like energy bills and prescription drugs. According to an independent analysis, the clean energy tax credits and investments the President has proposed would save families $500 per year on their energy costs by 2030, and transition our economy away from relying on energy produced by autocrats like Putin. And the President believes that Congress should give Medicare the power to negotiate with pharmaceutical companies, and that Congress should cap the cost of insulin at $35 per month. These reforms wouldn’t just lower costs for consumers; they would also reduce federal spending.
Congress could lower the deficit even more by asking the super wealthy and profitable corporations to pay their fair share. According to an outside analysis, 55 companies paid no money in taxes last year. It’s wrong for the super wealthy and profitable corporations to pay a lower tax rate than a teacher or firefighter.
Congressional Republicans’ only plan to tackle inflation increases taxes for working families. And, their attacks on gas prices are incoherent and dishonest.
Senator Rick Scott, a member of Senate Republican Leadership changed his words on his agenda to raise taxes on millions of working and middle class Americans by $1,500, but still said “We need them pulling the wagon and paying taxes” and that he “apologizes to absolutely nobody.” He also stood by his Congressional Republican plan to put Social Security and Medicare on the chopping block every 5 years.
Congressional Republicans blame President Biden for gas prices, but the truth is that gas pump prices are up by $2 a gallon in many places since Russian troops began to threaten Ukraine. This is Putin’s price hike. A majority of Republicans in Congress support Ukraine in their fight for their democracy and our alliance to strengthen theirposition, and now cynically blame the President for Putin’s actions that have raised prices around the world. That’s not economics, that’s politics.
Congressional Republicans blame the administration for decreased oil production. The truth is oil production is projected to reach a historic level next year. When oil companies produce less, the cost goes up. In 2020, Americans stayed home more and drove less, so oil companies cut back on oil production and refining. Now, demand has returned, but oil production is still 10% below where it was pre-pandemic. Oil companies are sitting on 9,000 unused permits to drill more and pocketing the largest profits in years. The President has called for — and Congressional Democrats have voted for — a “use it or lose it” policy for permits on federal lands, and Congressional Republicans opposed it.
The five biggest oil companies made $35 billion in the first quarter of this year—that’s four times what they made in the same quarter last year. Congressional Republicans oppose making these companies pay their fair share in taxes.
This memo, highlighting five key points of America’s transition to sustainable growth, the role the American Rescue Plan played in that growth, and how the Administration is turning its focus to address a range of global economic challenges with inflation chief among them, was provided by the White House:
Earlier this week, the President noted that our economy is in a moment of transition: from what has been an historic economic recovery to what can be a period of stable, steady growth that works for working families. The President understands that Americans are dealing with the challenge of elevated inflation. And addressing inflation is his top economic priority.
This is a moment when we can build on the unique strengths of our recovery to bring down inflation and ensure that we don’t give up the historic economic gains of the last year. It also means building on the recovery to deliver growth that actually works for working families – unlike the growth that we saw too often in the years before the pandemic, when we were promised that gains for those at the top would trickle down to working families. President Biden’s approach is to build the economy from the bottom up and the middle out.
As we look ahead and aim to achieve stable, steady growth, here are five key points about how we arrived at our current economic moment. In short, the Administration passed the American Rescue Plan in a moment of significant economic uncertainty and, because of the Administration’s decisive action, we now face a range of global economic challenges – with inflation chief among them – from a position of strength.
The American Rescue Plan helped deliver one of the strongest job markets in American history.
When President Biden took office, the unemployment rate was 6.4% and around 20 million Americans were on unemployment insurance. Since then, the unemployment rate has come down to 3.6 % — with only three times in the last 50 years when the rate has been lower – and fewer than 1.5 million Americans are receiving unemployment insurance. Before the Rescue Plan passed, the nonpartisan Congressional Budget Office (CBO) projected the unemployment rate would be 5% right now, and would not drop below 4% until 2026. In addition, the number of Americans between the ages of 25 and 54 who are working or looking for work is higher today than it was before the pandemic began. In the wake of the Great Recession, that recovery took 12 years. As the Washington Post noted this weekend, we are in the midst of a “great return to work.” While it “took more than six years to recover from the Great Recession … this jobs recovery is on track to take about 2.5 years. That’s worth celebrating.”
The American Rescue Plan has meant the U.S. recovery has been the envy of the world.
According to the latest World Economic Outlook from the International Monetary Fund, the U.S. economy will be larger at the end of this year—relative to its pre-pandemic size—than any other Group of 7 economy. The U.S. economy may grow faster this year than China’s economy for the first time since 1976, according to a projection by Bloomberg Economics. CBO recently projected that U.S. economic growth would continue in 2022 and 2023, albeit at a slower rate than in 2021, with unemployment remaining low and inflation falling throughout this year and next. The CBO forecast was roughly in line with the consensus of private sector forecasters.
The American Rescue Plan has meant economic security for millions of families.
Since President Biden took office, incomes are up 5.1% overall and by 11.9% for the bottom 50% of the income distribution – even after accounting for inflation – due to job creation and higher earnings. Self-reported financial well-being at the end of 2021 reached its highest level on record, with 78% of adults reporting that they are financially comfortable. In the same survey, 68% of Americans said they could cover a $400 emergency cash expenses – the highest level in the history of the survey and up 18 percentage points since 2013. Bankruptcy filings also remained below pre-pandemic levels, eviction filings have remained 30% below pre-pandemic levels across the eight months since the eviction moratorium ended, and foreclosures hit an all-time low in 2021.
The Rescue Plan didn’t just improve our economic position; it improved our fiscal position too.
The CBO projected that the deficit will fall by $1.7 trillion this year. This is the largest nominal reduction in the federal deficit in history. According to their projections, the deficit as a share of the economy this year will be at a lower level than in 2019, before the pandemic. It is also a lower level than CBO projected for this year before the American Rescue Plan passed, showing that the strong economic recovery resulting from President Biden’s economic and vaccination plans were not just good for our economy but also for our fiscal position. Public debt as a percent of the economy is also projected to be lower this year than was projected before the Rescue Plan passed – further reflecting the degree to which our strong economic recovery has improved our fiscal position. This progress on deficits and debt was not pre-ordained. In addition to responsibly winding down emergency programs, around half of the reduction in the deficit this year is projected to be driven by an increase in revenues, as household and business earnings have increased given the strong economic recovery.
Inflation is a global challenge, with many causes, but the Rescue Plan is not its predominant cause.
Inflation is elevated around the world, particularly in light of Putin’s invasion into Ukraine, which has driven global food and energy prices higher. Inflation is at its highest level on record in the Euro Area and in Germany, the highest level in 40 years in the U.K., and the highest level in more than 30 years in Canada. Consumer prices have risen by 8.2% in the United States in the last year, 8.1% in the Euro Area, and 9% in the United Kingdom.
Putin’s actions in Ukraine have driven inflation higher in recent months, with gas prices up $1.51 since Putin began amassing troops on the border of Ukraine. It is of course not plausible that disruptions in global energy and food markets are the result of the American Rescue Plan.
And even before disruptions to global energy and food markets have driven inflation higher, many other factors boosted demand, shifted its composition, and constrained supply, which led to higher prices. The pandemic meant that American consumers shifted their consumption from services to durable goods. Businesses were unprepared for demand returning quickly, and we saw an inward shift in supply capacity – from auto production to domestic energy production to rental cars. And supply chain pressures meant bottlenecks and thinner inventories that also drove up prices.
That’s why we know that even without the Rescue Plan – or with a smaller Rescue Plan – inflation would have still been elevated. In fact, according to one independent analysis, keeping inflation close to 2% would have required an unemployment rate in the double digits – instead of today’s 3.6% unemployment rate. Moreover, without the Rescue Plan, another independent analysis shows that we would have had less growth, less job creation, and more human suffering.
Americans are recoiling at rising prices at the pump, failing to appreciate that Europeans are seeing prices rise 45%, and despite the fact our supplies are not impacted by the embargo on Russian oil. Rather, Big Oil continues to record record profits, use windfall profits to buy back stock, reward shareholders and pay bonuses to CEOs. President Biden is appealing to the companies’ “patriotism” by pumping more supply and not pocketing quite as much, and also warning against price-gouging. He is also pushing the oil companies to utilize unused leases. Here is a fact sheet from the White House of how President Biden is responding to what he has dubbed “Putin’s Price Hike” at the pump: –Karen Rubin/news-photos-features.com
Americans face rising prices at the pump because of Putin’s Price Hike. Since Putin accelerated his military build-up around Ukraine, gas prices have increased by nearly a dollar per gallon. Because of Putin’s war of choice, less oil is getting to market, and the reduction in supply is raising prices at the pump for Americans. President Biden is committed to doing everything in his power to help American families who are paying more out of pocket as a result. That is why President Biden announced a two-part plan to ease the pain that families are feeling by increasing the supply of oil starting immediately and achieving lasting American energy independence that reduces demand for oil and bolsters our clean energy economy.
Immediately Increasing Supply
At the start of this year, gas was about $3.30 a gallon. Today, it’s over $4.20, an increase of nearly $1. And now, a significant amount of Russian oil is not making it to market. The President banned the import of Russian oil – which Republicans and Democrats in Congress called for and supported. It was the right thing to do. But, as the President said, Russian oil coming off the global market would come with a cost, and Americans are seeing that at the pump.
The first part of the President’s plan is to immediately increase supply by doing everything we can to encourage domestic production now and through a historic release from the Strategic Petroleum Reserve to serve as a bridge to greater supply in the months ahead.
Increasing Domestic Production
The fact is that there is nothing standing in the way of domestic oil production. The United States is already approaching record levels of oil and natural gas production. There are oil companies that are doing the right thing and committing to ramp up production now. Right now, domestic production is expected to increase by 1 million barrels per day this year and nearly 700,000 barrels per day next year.
Still, too many companies aren’t doing their part and are choosing to make extraordinary profits and without making additional investment to help with supply. One CEO even acknowledged that, even if the price goes to $200 a barrel, they’re not going to step up production.
Right now, the oil and gas industry is sitting on more than 12 million acres of non-producing Federal land with 9,000 unused but already-approved permits for production. Today, President Biden is calling on Congress to make companies pay fees on wells from their leases that they haven’t used in years and on acres of public lands that they are hoarding without producing. Companies that are producing from their leased acres and existing wells will not face higher fees. But companies that continue to sit on non-producing acres will have to choose whether to start producing or pay a fee for each idled well and unused acre.
Historic Release from the Strategic Petroleum Reserve as a Bridge Through the Crisis
After consultation with allies and partners, the President will announce the largest release of oil reserves in history, putting one million additional barrels on the market per day on average – every day – for the next six months. The scale of this release is unprecedented: the world has never had a release of oil reserves at this 1 million per day rate for this length of time. This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up.
The Department of Energy will use the revenue from the release to restock the Strategic Petroleum Reserve in future years. This will provide a signal of future demand and help encourage domestic production today, and will ensure the continued readiness of the Strategic Petroleum Reserve to respond to future emergencies.
President Biden is coordinating this action with allies and partners around the world, and other countries are expected to join in this action, bringing the total release to well over an average 1 million barrels per day.
Achieving Real American Energy Independence
The United States is the largest oil producer in the world and is a net energy exporter. Despite that, the actions of a dictator half a world away can still impact American families’ pocketbooks. The President will announce his commitment to achieving real energy independence – which centers on reducing our dependence on oil altogether.
The President will call on Congress to pass his plan to speed the transition to clean energy that is made in America. His plan will help ensure that America creates millions of good-paying union jobs in clean, cutting-edge industries for generations to come. And it will save American families money in the immediate future – including more than $950 a year in gas savings from taking advantage of electric vehicles, and an additional $500 a year from using clean electricity like solar and heat pumps to power their homes.
And, the President will issue a directive, authorizing the use of the Defense Production Act to secure American production of critical materials to bolster our clean energy economy by reducing our reliance on China and other countries for the minerals and materials that will power our clean energy future. Specifically, the DPA will be authorized to support the production and processing of minerals and materials used for large capacity batteries–such as lithium, nickel, cobalt, graphite, and manganese—and the Department of Defense will implement this authority using strong environmental, labor, community, and tribal consultation standards. The sectors supported by these large capacity batteries—transportation and the power sector—account for more than half of our nation’s carbon emissions. The President is also reviewing potential further uses of DPA – in addition to minerals and materials – to secure safer, cleaner, and more resilient energy for America.
This week alone, President Biden announced historic efforts to increase energy efficiency and lower costs for consumers. The Department of Energy opened applications for more than $3 billion in new Bipartisan Infrastructure Law funding—ten times the historical funding levels of the Weatherization Assistance Program—for energy efficiency and electrification upgrades in thousands of homesthat will save families hundreds of dollars on utility bills. The Administration also advanced smart standards that will lower consumer costs, including a roadmap of 100 actions this year that will save families $100 annually through more efficient home appliances and equipment, as well as new fuel economy standards for cars and trucksto save drivers money at the pump. And the Administration is seeking additional opportunities to ramp up the deployment of heat pumps to displace fuel burned in buildings, as well as programs to drive efficiency, electrification, and use of clean fuels in the industrial sector.
This is a memo from Kate Bedingfield, White House Communications Director, on what President Biden and his administration is doing to relieve inflation pressure hitting America’s families and why, though a President has limited tools to push back against inflation, his Build Back Better agenda, which would relieve cost-pressure of health care, child and elder care, prescription drug costs, and even gasoline prices by moving toward a clean, renewable energy economy, would be just the prescription needed now:
President Biden grew up in Scranton around a kitchen table just like the ones all over this country. He knows that any increase in prices can squeeze a family’s budget. No family should ever have to feel like they face a choice between paying their bills to keep the lights on or putting food on the table for their families.
Price increases have been a real challenge here at home and around the world as we exit this once-in-a-pandemic and as the economy reboots from a historic shutdown. Even as we see signs that our economic recovery is making process, addressing high prices are the President’s top priority. That’s why this summer, the President began highlighting the cost cutting benefits of the Build Back Better Act.
The memo below outlines where we are in our recovery, what the President is doing in the short- and long-term to address price increases, and the opposition that Congressional Republicans are presenting.
STATE OF PLAY
Since taking office at the time of the worst global economic crisis in decades, President Biden has made beating the pandemic and building a strong economic recovery his top priority. There are two indicators that signal the state of play with the progress of our recovery: jobs and prices.
This past week, we got additional proof that our jobs recovery is on track, setting records, and outpacing other countries. Unemployment insurance claims fell to their lowest level in 50 years. Nearly six million Americas are back to work. And, Americans have more money in their pockets than this time last year — $100 more each month than last year.
But even as America’s economic growth is stronger than virtually any other nation, the President believes that we have to decrease prices for consumer to feel confident in our recovery. While we are starting to see prices decrease and supply chain blockages ease, we know that higher prices are top-of-mind for Americans – and that’s why the President is laser-focused on taking action.
SWIFT ACTION & PROGRESS TO DATE
President Biden is taking swift and decisive action to combat high prices, ease inflationary pressures, and make sure America’s families can put food on the table. In recent weeks and days, President Biden has:
Address Supply Chain Challenges: President Biden is bringing together public and private partners to ease bottlenecks at America’s ports – making sure we can move goods from ship to shelf faster and lower the costs of goods. The President announced that the Ports of Los Angeles and Long Beach are operating 24/7, the Department of Transportation provided $8 million to the Port of Savannah to set up container yards in Georgia and North Carolina, freeing up dock space and speeding up the flow of goods in and out of the port; and yesterday DOT awarded $12.6 million to marine highway projects to help move agricultural goods to market faster.
As a result of the President’s aggressive action, new data yesterday confirms the cost of shipping a container between Asia and the West Coast is more than 25 percent lower than it was three months ago. And this holiday season, America’s major retailers and small businesses – including Target, Walmart, and Esty – have said their shelves will be stocked.
And, as a result of the work of the Biden Administration’s effort to ensure U.S. auto companies received fair allocation of the global supply of chips and to minimize pandemic-related disruptions to semiconductor production in SE Asia, companies like Ford and GM have hailed progress and said they expect car supply will increase.
Tackling Gas Prices: President Biden sent a letter to the Federal Trade Commission (FTC) expressing concern around oil and gas companies manipulating the marketing and asking the commission to examine any anti-competitive or illegal conduct. He also announced the largest-ever release from the U.S. Strategic Petroleum Reserve with other nations, helping bring down gas prices in the near-term.
Since the President raised the prospect of taking action to address energy prices, oil prices are down 10% on average over the last month versus the month before. Retail gas prices are down 7 cents over the last month and whole sale gas prices are down by 15% from their October peak. Pump prices in 20 states are now lower than the 20 year average, adjusted for inflation. Natural gas prices have fallen 25% from their November average.
Encouraged Competition: President Biden issued an executive order to lower prices for American consumers by increasing competition in various industries. Just a few examples of the President’s executive actions on competition include: investing in smaller meat processors to give farmers and ranchers more affordable options, lowering the cost of hearing aids by making them more accessible, and lowering the cost of broadband.
The meat price increases we are seeing are not just the natural consequences of supply and demand in a free market — they are also the result of corporate decisions that take advantage of consumers, farmers and ranchers, and our economy. Gross profit margins for big meat processors are up 50% and net margins are up over 300%. That’s why the President is investing hundreds of millions of dollars to create more competition in meat-processing and over a billion dollars in relief to small businesses and agricultural workers hurt by COVID. Just yesterday, USDA announced investments in small meat processors to give producers more options, help bring competition to the meat-processing industry, and close vulnerabilities in the food supply chain.
THE NEXT STEP: BUILD BACK BETTER
There is more work to do in order to lower prices for American families and maintain a strong economic recovery for years to come.
The average American family spends 60% of their monthly income on health care, housing, child care, and transportation. These are costs that have held back too many American families for too long. If you are concerned about costs facing American families, passing BBB is the most immediate and direct step we can take to deliver.
Three key pieces of the Build Back Better Act that will cut costs for America’s families:
Lower Health Care & Prescription Drug Costs: This isn’t a partisan issue: outrageous drug prices affect everyone across the board, spanning every kind of condition and disease. BBB will cap insulin costs, expand health care coverage, extend ACA tax credits, empower Medicare to negotiate down costs, limit seniors’ expenses, and hold drug companies accountable.
Lower Child Care Costs: Preschool and child care are prohibitively expensive for middle class families. BBB delivers two years of free preschool and affordable child care in the setting of a parent’s choice, enabling more middle class families to work and succeed in our economy while educating the next generation – so other countries don’t out-educate and out-compete us.
Lower Elder Care Costs: Caring for older loved ones is costing working families and preventing them from fully participating in our workforce and economy. BBB expands access through Medicaid to high-quality, affordable care for older Americans and people with disabilities in their homes – while supporting the workers who care for them.
And, the Build Back Better Act will also cut other costs American families also struggle with – from high housing costs to the costs of climate change impacts.
Congressional Republicans are unified in their opposition to the President’s plans to address price increases.
As President Biden works in tandem with Congress to lower costs for consumers, ease inflationary pressures, and strengthen our economic recovery, Congressional Republicans have no plan to address any of the issues that working families are grappling with right now. Instead of working with the President to fight inflation, Republicans are playing politics with higher prices – one leading Republican even called it a political ‘gold mine’ for them.
The plan Congressional Democrats are supporting:
Lowering prices and costs for the American people as the economy recovers from a global pandemic.
Extending tax cuts for working families that put money in pockets.
Easing inflationary pressures on the economy, as affirmed by 17 Nobel Prize winners in economics.
Meanwhile, Congressional Republicans have no plan to lower prices for working families. Congressional Republicans are only focused on:
Fighting against common sense measures to put the pandemic in retreat.
Voting against lowering core costs for Americans – prescription drugs, child care, elder care, and housing.
Standing united against easing inflationary pressures.
The historic Build Back Better Act will cut costs that American families have struggled with for years. The President and Congressional Democrats are actively working to lower prices and costs for the American people. On the other hand, Republican Members of Congress have no plan, while supporting raising taxes and increasing the biggest costs families deal with.