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Brian: Brian Lehrer on WNYC. We're almost at the end of our 30 Issues in 30 Days election series. This is your money week in the 30 Issues, our final segment tomorrow will be on Affordable Health Care as an issue in these elections. Today, issue 29 is there's a Democratic and Republican way to fight inflation. Inflation, as you all know, is one of the biggest issues for voters this year. Republican candidates are running on it much more than Democrats, indicating both parties believe the issue gives Republicans an edge. Who listening right now can name the specific Republican approaches that they're running on to fight inflation?

I'm looking. I'm looking. I don't think I see a lot of hands going up or raised-hand emojis. Democrats, how about you? Can you say what your party's anti-inflation policies actually are, or will be? Maybe the only thing most Americans know is that the Federal Reserve Board raised interest rates another three-quarter of a point yesterday with the goal of cooling off high-price increases that way. Let's take a closer look. Is there a Democratic and Republican way to fight inflation and how do credible experts evaluate the two? With me now is Jim Tankersley, New York Times White House Correspondent specializing in economic policy. Jim, thanks for coming on for this. Welcome back to WNYC.

Jim: Thanks for having me. It's a real pleasure.

Brian: Listeners, if you're a partisan of either party, you can dive in here on the phones. Is there a democratic way to reduce inflation? 212-433-WNYC Democrats. Republicans, is there a republican way to reduce inflation? 212-433-9692 or tweet @Brian Lehrer. Jim, you have an article called "Democrats spend $2 trillion to save the economy, they don't want to talk about it." What signature policy is that that you're referring to?

Jim: That is the American Rescue Plan that President Biden pushed quickly to Congress right after taking office in 2021. If you remember, we were still in coming out of the depths of the pandemic recession. The economy had started to wobble a little bit at the start of the year. There were still obviously a lot of concerns across the country at the virus, and so the president passed this bill that include-- did all sorts of things, large amounts of money for state and local governments, more money for businesses to afford their way through the difficulties, direct payments to Americans up to $1,400 each and expanded child tax credit, so a lot of money. A lot of direct aid to the economy and a lot of thought by Democrats at the time that it would be a big political winner, which has not turned out to be.

Brian: Yes, you note that Republicans are framing that as one of the causes of inflation. How much do independent economists agree?

Jim: I generally agree that the fiscal stimulus of the United States did, which started under President Trump but really continued under President Biden has contributed to inflation. It's not all of it, and the ranges certainly vary by a lot. The FED had a lot to do with it as well. Supply chain challenges have had a lot to do with it. What we've seen over the last year has included inflation in oil prices, for example, related to the war in Ukraine.

It's certainly not the only factor, and economists don't have a consensus on how much of a factor it is. Politically, that's not how Republicans are playing it. Republicans are playing it as if this particular bill is the point of the spear on government spending increases that they say have driven all of the inflation surge in the United States under President Biden, which does not match with how most economists would look at it.

Brian: What do Democrats say cause the inflation we have so far?

Jim: Democrats have leaned much more into the supply chains globally, the pandemic effects, a lot of factors outside of the President's control. They point to, in particular, the fact that Europe and other wealthy nations have also experienced high inflation, especially over the last year. A lot of Democrats talk about the war in Ukraine and its effect on oil prices. The spike in gas prices over the last year has probably been the most economically detrimental thing to President Biden. Voters tend to punish presidents for high gas prices.

Democrats have really leaned on that. A few Democrats-- I should be very clear, some democratic economists veterans of the Obama Administration do blame the president's stimulus bill for some of the inflation that we've seen, but Democrats are leaning much more on this these outside forces, then they're trying to talk about the things that President Biden and their party have done to attempt to resolve those.

Brian: Right. We spent a few minutes on the blame side for inflation past, which is a lot of the Republican argument and why Democrats don't want to talk about the stimulus bill even though it did so much to save people from poverty really. Our segment yesterday included how various emergency economic measures during the height of the pandemic reduce poverty in the United States, especially child poverty, so maybe it'd have those multiple effects.

Jim: Correct.

Brian: Let's look at Democratic and Republican approaches going forward, Biden and the Democratic Congress also passed this year what they call the Inflation Reduction Act. You report that Republicans are running on repealing the Inflation Reduction Act. What do the Democrats claim the Inflation Reduction Act will do to slow inflation? I think the first thing that comes to people's minds is that this is a climate bill. Why do the Republicans want to come?

Jim: It is a climate bill. It's also a healthcare bill, and it's a tax bill. [clears throat] I think there's an interesting distinction in the Inflation Reduction Act as that gets conflated on the campaign trail. There's a difference between reducing the inflation rate and reducing some costs Americans pay in hopes of helping them deal with higher inflation. A lot of the arguments Democrats are making about the Inflation Reduction Act really boil down to that second one.

The big one is the reduction in prescription drug costs for seniors on medicare, especially insulin is the insulin cap for payments is a thing that Democrats have really leaned into on the campaign trail that this would do. The climate measures include a lot of measures to help utility transition to lower carbon sources of electricity in ways that Democrats say will help make electric bills less expensive going forward. They talk about paying less for health care.

They talk about paying less for prescription drugs. They talk about paying less for electricity as part of this bill, and then there's also the fact that the bill reduces the federal budget deficit slightly, which economists find over time will have depending on the economist, a small or a very small effect on inflation by pulling some consumer spending power out of the economy. The way it does that basically is by raising taxes on corporations.

Brian: It sounds like there are some long-term inflation-fighting measures in this bill or at least ones that are intended to work long-term. Short-term maybe the most concrete thing I heard in your answer there was capping the cost of insulin for people with diabetes on medicare. Other things that you would target really short-term like inflation now is 8%. This might make it less for certain groups of people right away.

Jim: Well. The thing that President Biden has just started leaning into that progressives have been trying to get him to do for a long time that could conceivably under Democrats' theory of the economy have some effect on inflation pretty soon is attempting to pressure corporations, including big oil companies, which are the ones that Biden has really gone after in the last week or so to reduce their profit margins basically. It's an argument that inflation is coming in large part because corporations are taking advantage of the economic environment right now to raise prices higher than they otherwise would be in a competitive market.

The president is basically saying, "Hey, oil companies. You need to pass on some of these huge record profits you're reporting. You need to pass those back to consumers in the form of lower gas prices. You're artificially keeping gas prices up." If somehow that job owning were to work, and if that was the thing whether through government rhetorical pressure or some other pressure the president's proposal to withdraw tax if that were to work, could conceivably start bringing prices down right away.

Most of what's in the Inflation Reduction Act, if you look at the analysis of it, is not going to bring down that inflation rate anytime soon. The problem with everybody's inflation promises right now is that everybody says they're committed to it. Hardly anybody is running on a real get that rate down right now platform. In large part because most economists think that's the FED's job and not the president's.

Brian: Well, when the Republicans run saying they want to repeal the Inflation Reduction Act that the Democrats in Congress passed, what's their arguments for that? Even if the Inflation Reduction Act is targeted at more longer-term inflation for the most part, why do the Republicans argue that we shouldn't even have that?

Jim: Republicans are arguing in part that the corporate tax increases, which are largely focused on big multinationals like Amazon that pay relatively low tax rates in the United States right now. They're arguing that when you raise taxes like the Inflation Reduction Act does on those companies, those companies are going to respond by raising prices. That, in fact, contributes to inflation. That's not how most economists see the relationship between taxes and inflation.

They see it as the opposite if you're raising money whether it's from raising taxes or you're keeping more money by cutting spending, that the government reducing its budget deficit they think is likely to be better over time for inflation. Republicans are arguing the opposite basically just that on the tax side that if you tax corporations more they're going to raise prices more and therefore it's going to be inflationary. That's a big part of their argument for why it would help inflation to repeal the Inflation Reduction Act.

Brian: This is WNYC FM HD NAM, New York, WNJT-FM 88.1, Trenton, WNJP 88.5 Sussex, WNJY 89.3 Netcong, WNJO 90.3 Toms River. We are New York and New Jersey Public Radio and live streaming at wnyc.org. We're in issue 29 of our 30 Issues in 30 Days election series with Jim Tankersley, White House correspondent who specializes in economic policy for the New York Times. On question 29, is there a democratic and Republican way to fight inflation? Shelvin in Forest Hills has a basic 101 question I think, Shelvin you are on WNYC. Hello.

Shelvin: I don't mean to be a smart guy. Jim has summarized it pretty clearly, but I've got a basic question. What is inflation? Many economists such as Adam Tooze and others like Brad Long think that maybe we're not in this hellish wage spiral that was such a fearsome problem in the 80s and 90s. That we've got a situation here that has clearly been brought on by the pandemic, the war in Ukraine, supply chains and it's a worldwide problem.

What is inflation? Classically it's too much money chasing too few goods. If you're going to in introduce austerity, then you are going to clamp down and which is what the Fed is doing, you're going to clamp down on the ability to increase supply. That's counterproductive. That's one of the things that Adam Tooze, who's a distinguished professor at NYU worries about, that there will be a worldwide synchronization of austerity which will bring on a depression or severe recession to outpace what happened in 2007, 2008.

Brian: Shelvin. Thank you very much. Interesting call. Do you know that economist Tooze or what else would you say to Shelvin about the global context here?

Jim: First off I would say that that is a really articulate summary of a possibility here and really well put. One of the things we worry about with inflation is the idea that it will become entrenched. That is companies are raising prices so workers will then demand higher wages and then people will just raise their expectations and start to think prices are going to go up 10% every year and perpetuity and they can become what economists call a spiral which would be very bad.

The caller is right. There's not great evidence still that that is happening yet in the United States, wages have gone up but not in the way that you would see from a spiral. There are still real questions about whether American workers even have the bargaining power to demand those kind of wages right now in the economy.

Most importantly as a caller suggests, there are all these other factors. This is not a normal time in the economy there's been this huge shift in spending from services to goods around the world as a result of the pandemic, but still massive supply chain problems in getting those goods to people.

Anybody who's tried to order a car or a sofa or anything in the last couple of years can attest that it just still takes a lot longer than you might expect. It's true that governments are working really hard to try to expand to smooth supply chains, expand capacity, get more people back into the workforce, all the things that could help with the supply side of this problem. I do think that there is this thought among some economists though, many economists that you have to work both sides of this that.

Yes, you can do so much about supply but you have to pull some demand out of the economy because in particular fiscal and monetary stimulus throughout the pandemic has left a lot of people with a lot of money to spend and you have to find some way to cool that spending down or you're going to have a hard time getting inflation under control. That's the other side of the caller's argument.

Brian: Again, thank you for great call Shelvin. To our theme of if there's a democratic and Republican way to fight inflation, are people in either party running against these Federal Reserve Board interest rate hikes citing that kind of risk of a global slowdown calling it austerity as Shelvin did, or citing a risk of a severe global economic slowdown because there's going to be too much austerity. They're going to put the breaks on too hard in this country and everywhere.

Jim: There are some Democrats. Progressive Democrats are increasingly and labor unions starting to sound that exact argument. They're basically saying the Fed is risking a debilitating global recession, and they're going to throw millions of people out of work for no reason. This is corporate profits of the problem and not interest rates and you need to stop. That's a group that includes Senator Elizabeth Warren. It has broadened in Bernie Sanders it has broadened to include even some folks you might not consider the warning of the party like Senator John Hickenlooper of Colorado.

Democrats are starting to say this increasingly with the big and notable exception of the President who keeps saying, "I respect the Fed's independence and I think that it's a good thing that they're raising rates because it's going to help get inflation under control." There's a divide among Democrats right now. Not a lot of Republicans are running against the Fed that I have seen. They're more saying that "Hey these interest rate heights are necessary to curb the inflation that is Biden's fault." That's their way of looking at it. The Fed has not become a huge campaign trail issue, but I absolutely think it will be an enormous issue in Washington in the next year.

Brian: Yes, interesting. I think for a little bit of context, and we get amnesia so quickly, didn't Donald Trump when he was President rail against the Fed for raising interest rates even a little bit when the economy was heating up under his watch?

Jim: Absolutely. He did. Yes. That is a big reason why President Biden has not pressured the Fed, is that they've made such a point of saying he was going to treat the Fed differently than President Trump did.

Brian: David in Frere Hall, you are WNYC. Hi David, thanks for calling in.

David: Hi, good morning. Thanks for taking my call. I'm a Republican and I think the way the Republicans would-by the way, I love this whole series. It's very interesting to compare the issues. I think the way the Republicans would deal with it is, Jim just alluded earlier that the basic cause of inflation was there was so much lockdown. People came out of lockdown, they immediately wanted to spend and the supply chain was messed up because of all the lockdown.

People wanted to spend and they were spending so much wasn't enough supply, the shutdown, the excessive and crazy shutdowns, if someone has cancer we don't tell them don't ever go out of your house [unintelligible 00:18:48] die starvation if you can't get to the grocery store. There has to be a balance. We closed down the economy for three months, we understood, it kept on going and going and going all in the name of science. You have to have a holistic approach. The same thing happened in Ukraine.

If in the name of global warming you shut down all the oil production in Europe but you still need oil, then you have oil from Russia then they have levered and they attack Ukraine. The war in Ukraine is Angela Merkel's war in Ukraine. You have to be balanced.

Brian: Putting a lot of issues on the table but let me ask you to focus, people can have all kinds of responses to you but we're not going to go there. I think you're arguing that there's an effective Republican way to fight inflation going forward. You want to get to that point, David?

David: You can't undo what was done in the past but the way forward is to definitely cut government spending, especially in the food stamp and WIC area which has gone up tremendously because it makes ghost food prices shoot up in the future to really balance our safety and our economy. The economy is also important, but that was what I wanted to say.

[crosstalk]

Brian: Thank you very much. Call us again. Is anybody else saying that food stamps are driving up inflation and the WIC program, for low-income women, infants and children, that's what WIC stands for?

Jim: Republicans are definitely talking-- the caller I think another great distillation of a way that Republicans are talking about the economy that the caller is correct that the Republicans are saying, "Hey, a lot of things that happened in the past are including Biden spending and government shutdowns--" "Lockdown," Sorry, "are responsible for inflation," but Republicans are saying, "We will cut spending going forward." That's going to reduce inflation by a lot.

Some conservative Republicans have talked about needing to very much scale back safety net spending like food stamps, like Medicaid, other things as a way to reduce government spending. I think that the big problem with the Republican spending proposal so far, according to the economists and analysts I've talked to is that actually to have a meaningful impact on inflation they would need to be much more aggressive than they're talking about. There's a reason why.

It's unpopular to cut huge amounts of government spending. That's why it's so difficult for candidates who campaign on it to actually get into office and deliver it, but in this case, what economists say in particular is, "Look, in order to pull an enormous amount of demand out of the economy and bring inflation down, you'd have to cut hundreds of billions of dollars of spending per year," and Republican candidates have not campaigned on that. They're mostly talking about waste, fraud, and abuse and rolling back a few spending programs the Democrats passed.

Brian: One more call before we run out of time. Mike in Merrick, you're on WNYC. Hi Mike.

Mike: Hey, good morning Brian. Thanks for having me. Thanks for what you do. I feel like the Democrats the have a horrible messaging. They always do, and republicans always beat them on messaging. We don't talk about the big Trump-Republican tax cut. We don't talk about COVID, how that affects the supply chain, all of that stuff. I know it's in dribs and drafts, but it doesn't resonate to voters. Unfortunately, nothing gets done in Washington because it's all politics. Everyone's just fighting back and forth.

You want to solve something, how about we get rid of, just like the Republican caller just said before, they're all worried about food stamps and all that. Why don't we just get rid of food stamps and WIC, and just have a child tax credit, that'll help four people will help [unintelligible 00:22:46] and there you go. Now the Republicans can fight that. Now they can't say, "Oh, you're giving free food to people. Now you're giving them a child tax credit," which actually helped me and my wife during the pandemic.

[crosstalk]

Brian: Money to put food in their mouths. Do the Democrats ever consider anything that changes the policy to have the same effect but without the Republican attack points? Mike, articulates at the beginning of this call a very common refrain that we're hearing from Democratic party supporters these days which is, "You're not running on your economic accomplishments which are real, start doing it." I think you wrote an article the other day about Biden's starting to do that more. Talk about how they've pivoted in this end game of the campaign season. We got to go in about 30 seconds.

Jim: Sure. Joe Biden has talked a lot about the economy. He's really tried to stress in particular the job market and the fact that the economy has bounced back much faster than it did from the last enormous recession. He's talked about his infrastructure bill, the Democrats are really leaning into his semiconductor chips advanced manufacturing bill that he signed. Then they really are trying to stress the accomplishments, particularly on the insulin and prescription drug side of the Inflation Reduction Act.

The president's trying to make that the case over and over and over again. It's not driving the message may be in the way that a lot of Democrats would like it to be, but as we head into the elections, his closing argument is, "I've done all these things and Republicans want to roll them back, and also they're going to threaten Social Security and Medicare." That's what the president said.

Brian: Jim Tankersley, White House correspondent focusing on economic policy for The New York Times. Jim, thanks so much.

Jim: It's a real pleasure. Thanks for having me.

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