Can Joe Biden Protect Himself from Inflation?

Joe Biden discussing his vaccine mandate plan last month. Source: The Japan Times

Joe Biden’s presidency is facing its strongest headwinds so far. His approval ratings cratered in August and September and are just now starting to tick upwards. The Afghanistan failure has drifted away from headlines, but the COVID-19 pandemic remains a burden to the hopes of Democrats in next year’s midterm elections. According to a recent poll, Joe Biden’s approval rating has dropped below 45% and remains underwater on every major issue, from the economy to Afghanistan and COVID-19.

Along with notable failures in Afghanistan and the resurgent pandemic of the late summer, another anchor weighing down the president’s party has been persistent inflation. Costs are high and continue to rise. They have been connected to supply chain shocks and a number of well-publicized product shortages. Labor shortages have resulted in higher wages, higher costs, and poorer services in a phenomenon economists call “shadow inflation.” Some economists fear that these shocks will not be resolved anytime in the near future.

Inflation has the possibility of tanking Biden’s presidency both in 2022 and 2024. The president is not a central bank leader and cannot overcome established fiscal trends by fiat. However, a few actions he is taking right now can combat the economic forces working against his popularity and start the process of returning the American economy back to normal.

Many of the economic forces fueling this latest round of inflation are far outside of the realm of presidential decision-making. The president cannot effectively control what companies charge for products. He cannot fix supply chains through executive order or force companies to allocate their wage structures differently. Furthermore, some economists suggest that a leading factor in debilitating inflationary periods is not just the inflation itself but the perception of inflation and the fear that it will grow. This fear pushes wages and prices higher and changes consumer behavior for the worse. There is certainly no way that a president can make a few speeches or sign a few orders and change the feelings of hundreds of millions of Americans in a predictable way.

But there are certain concrete steps that the president can take to reduce the problem of inflation and help his own popularity as well as his party’s midterm chances next year. Some of these are targeted improvements of supply chains. Making specific areas of the economy run more smoothly can help supply meet up with high levels of demand once again. There are also emergency-related measures that the president can take in certain industries by making investments in semiconductor and rare earth processing companies. While Donald Trump ignored or abused these powers, Joe Biden has proven himself much more capable of using the executive branch to facilitate certain supply lines and consequently reduce inflation.

The most important step that Biden has taken to improve the problem of inflation has been his focus on vaccine mandates. Nearly every story that discusses the country’s inflationary spiral includes a laundry list of the reasons for higher prices, from labor shortages to more disposable income and plants that were shuttered at the heights of the pandemic. One of these factors is almost always the impact of the coronavirus on shipping and logistics functions. Vaccine mandates can help directly with this important issue.

The nodes of shipping networks depend on people coming into work at scheduled times, which they cannot do if they are out sick with COVID-19. Vaccine mandates reduce lost work from serious cases of the coronavirus and help shipping run more smoothly. While Biden’s vaccine mandates do not cover every American, many companies in shipping networks are either large or have contracts with the federal government. They are some of the companies most likely to be directly affected by a vaccine mandate. Over time, lower inflation and economic success could potentially boost the president and the party which he leads, which could be helpful in next year’s midterm elections.

Stopping inflation takes time. It is not the kind of economic problem that can be overcome overnight. The world-stopping impact of the pandemic still has not worked its way through the economy of the United States or any other country. But vaccine mandates are one of the best tools the government has to promote smooth economic operations, reduce bottlenecks, and control inflationary pressures without reducing economic activity. Joe Biden may not save his party in the midterms. But his vaccine policy may be able to lessen the damage as much as anything else he will be able to accomplish in the next year.