How Republicans Saw Inflation Coming

If Democrats lose control of Congress in November, it seems safe to say that inflation will be a major reason for their defeat.

Consumer prices have risen by 7.5 percent over the last year — the fastest rate in 40 years. President Biden’s approval rating is just 41 percent, according to the latest CNN poll, and it’s doubtful those two numbers are a coincidence. Food and gas are more expensive, and voters are upset about it. Rocket science it’s not.

While Democrats have struggled to deliver a consistent message on the economy, Republicans have been disciplined. Dating back to the spring, they’ve made inflation the centerpiece of their re-election pitch to voters. And that didn’t happen by accident.

It began, to no small degree, at the grocery store.

Early last year, Representative Elise Stefanik of New York, who was then campaigning to become the No. 3 Republican in the House, began to notice that the prices of fruit, bacon, milk and eggs were creeping up. At the time, economists were still debating whether Biden’s rescue plan would set off an inflationary spiral. The White House and the Federal Reserve pushed back, insisting that inflation was a “transitory” phenomenon. But Stefanik had a hunch.

“I’m the grocery shopper in my family, so I go by my gut,” Stefanik told us. As a new mother, she also saw diapers and formula growing more expensive.

“And I’ll tell you,” she added, “babies use a lot of diapers.”

Stefanik had stumbled on a potent issue, and not just at the ballot box. She rallied her colleagues around a new economic message as she sought to oust Representative Liz Cheney from the leadership role. She said Cheney was “leaving these issues on the table” as chair of the House Republican conference. In a May 12 letter to her colleagues, Stefanik promised to go “on offense” every day.

Three days later, by a vote of 134-46, House Republicans elected her to succeed Cheney. Soon thereafter, her staff began breaking out the prices of various goods — used cars, frozen chicken, canned vegetables — and emailing them to members each week.

In meetings, she would hammer home the importance of talking to voters about the rising prices. “Every time we talked about inflation, I could see the heads nodding,” Stefanik said.

As for Democrats, “they are losing the working class,” Stefanik said. “I feel that in my district. And their dismissiveness will be devastating in November.”

Painful inflation memories

One Democrat who is not dismissive is William Galston, a senior fellow at the Brookings Institution who served as a domestic policy adviser to Bill Clinton. Now 76, he lived through a time of high inflation in the late 1970s and early 1980s.

“It was vividly etched in my memory,” Galston said, sounding over the phone as if he was wincing while recalling it all. “It seized the center of domestic politics and wouldn’t let go for years.”

Galston watched inflation wreck the re-election hopes of Jimmy Carter in 1980. Then, when he was policy director for Senator Walter Mondale of Minnesota, the Federal Reserve crushed inflation in the early part of Ronald Reagan’s first term, causing a severe recession. In 1983, Reagan’s approval rating was 35 percent, and Mondale, the expected Democratic nominee, was leading him in hypothetical matchups by nine percentage points.

Then the economy rebounded, setting Reagan on course for “Morning in America” and the comeback narrative that got him re-elected in the greatest landslide in history.

The lesson, Galston says, is that inflation can be beaten. “The question,” he said, “is whether you’re willing to endure the pain.”

‘You have to be caught trying’

There are signs that some Democrats are beginning to panic.

This week, a group of Democratic senators, led by Mark Kelly of Arizona and Maggie Hassan of New Hampshire, called for suspending the federal gas tax, which is 18.4 cents per gallon.

The move likely wouldn’t have much impact, said Joshua Linn, an economist at the University of Maryland who studies the relationship between energy consumption and climate change. At most, he said, suspending the tax would save families a few hundred dollars a year.

The federal gas tax, which goes to the Highway Trust Fund, hasn’t risen since 1993. That has forced Congress to bail it out repeatedly, because the fund doles out more in spending than it takes in from taxes. Last year, the Congressional Budget Office estimated that it would run up shortfalls of $195 billion over the next decade.

But the political calculus for these endangered Democrats is pretty obvious: They want to signal that they’re doing something about inflation, even if the amount is mostly symbolic. As senators, there’s not much else they can do.

And once again, Republicans are already ahead of them. Last year in the Virginia governor’s race, Glenn Youngkin ran an entire ad to call for cutting the state’s tax on groceries, which is 2.5 percent. He also proposed rolling back the gas tax by 5 cents a gallon.

And it worked. “We saw that in our polling when we tested those messages and we saw it in real time once those ads went up,” said Chris Wilson, the chief pollster for the Youngkin campaign.

Governors elsewhere took notice. In Florida, Gov. Ron DeSantis has asked lawmakers to “zero out” the state’s 26.5 cents-per-gallon gas tax. In Oklahoma, Gov. Kevin Stitt has called for eliminating the state’s 4.5 percent sales tax on groceries.

It’s not really clear, now that his legislative agenda has stalled, that Biden has a plan of his own. In November, he released 50 million barrels of oil from the Strategic Petroleum Reserve, but gas prices have gone up since then.

Asked if the president supported suspending the gas tax, a White House spokeswoman, Emilie Simons, gave a two-sentence response.

“President Biden is using every tool available to reduce prices,” she said, pointing to the petroleum release. “All options remain on the table looking ahead.”

Economists say there’s not much Biden can do to stop inflation at this point, short of calling on the Fed to raise rates. Regardless, Galston said that Biden needs to be much more active in showing he’s working on it.

“Presidents are supposed to wield these godlike powers over the economy,” Galston said. And even if that’s not really true, voters believe it to be true.

He recalled a lesson that his former boss, Bill Clinton, once imparted about politics: “Look, you may not be able to fix the problem right away, but you have to be caught trying.”

What to read

• The tension in the Republican Party this week — sparked by the party’s resolution to censure two Republican members of the House — was “only a preview of the battles ahead,” report Reid J. Epstein and Shane Goldmacher.

• On the latest episode of The Daily, Lisa Lerer discusses why Democratic governors are rolling back mask mandates.

• House investigators found gaps in the White House telephone logs from the day of the Jan. 6 attack on the Capitol, report Luke Broadwater, Jonathan Martin, Maggie Haberman and Michael S. Schmidt.

Framework

New mood, new ad

Senator Raphael Warnock of Georgia started his last campaign with a funny ad. This time, running for re-election for a full-term, he went with something else: something far more somber.

Warnock, whose Senate race could determine whether Democrats keep their majority, declares at the start of the ad, “People are hurting.” He describes the ways they’re hurting as the camera pans over images of families and others, all looking stonily at the camera. The music is cheerless, and there’s no sunlight. The scene then shifts to Warnock speaking to the camera, saying, “At my heart, I am and always will be a pastor.”

After a brief montage of him talking to constituents, the camera pans back to Warnock: “What I want voters to know is I see you, I hear you, I am you,” he said.

In 2020, Warnock ran as a political newcomer who took issue with the leadership of Senate Republicans. His message was centered around mismanagement of the pandemic and the need for leaders who care about their constituents.

That year, facing Republican Senator Kelly Loeffler, Warnock used his first ad to mock the attacks he’d soon be facing.

That spot opened with clips of Warnock engaging in evil behavior, such as eating pizza with a fork and hating puppies. It was so over the top — ominous music and all — that it was clear Warnock was in on the joke. Then, it shifted to a brighter shot, with Warnock sitting on a stoop, talking directly to the camera. He warned that his opponent is about to unleash campaign attacks against him to distract from her own shortcomings, and that he, in fact, loves puppies. (A beagle named Alvin became a motif throughout his campaign.)

The shift in tone in his new ad captures Democrats’ new challenge since the last election. No longer the party in the Senate minority, Democrats are figuring out how to take ownership of the pandemic without being punished for persisting problems.

“To get rehired in the midterms, Democrats don’t have to show that we’re better off than four years ago, just that we’re back up off the mat and facing the right direction,” Jesse Ferguson, a Democratic strategist, told us. “This ad starts to do that.”

Is there anything you think we’re missing? Anything you want to see more of? We’d love to hear from you. Email us at [email protected].