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Biden’s spending stokes inflation fears among some economists, Democrats

16 May 2021
 Dan Ackermann
President Biden looks at his notes as he speaks on his American Jobs Plan in Lake Charles, La., on May 6. Photo: Jonathan Ernst/Reuters

Some Democrats and economistshave begun to worry that President Biden, intent on FDR-like transformation of a wounded America, is doing too much, too fast.

Why it matters: Some economists fear that all this spending will crank up inflation, and put Biden’s economic legacy at risk.

  • You see this in complaints by employers— along with some early data, and loads of anecdotal evidence —that people aren't taking jobs because of the boost to unemployment payments.
  • You see this in the news that budget deficits in states weren't nearly as bad as expected. "Let the good times roll!" says an L.A. Times headline this weekend. "Gusher of stimulus funds a gift for governors like Gavin Newsom."
  • Yet Biden still wants to spend more.

Larry Summers — who was Treasury Secretary under President Bill Clinton, and started warning about inflation in February — told Axios he's more concerned than he was several months ago.

  • "Data are pointing more towards higher inflation than I expected, and sooner."

The other side: The White House contends that more Americans will join the labor force when the country is fully vaccinated and everyone feels safe going back to work.

  • The White House also is banking on schools reopening in the fall, allowing working parents to look for jobs instead of looking after their kids, Zooming away in virtual class.
  • As for inflation, White House officials insist that it'll be temporary. They don’t buy the view that enhanced unemployment insurance is encouraging workers to stay at home. But they hint that higher wages might be needed to convince some Americans to look for work.

Some Democrats have begun arguing behind the scenes that Biden needs to show Americans credible evidence that tax increases will be timed with the spending.

  • "If the spending is coming up front, and the taxes are coming down the road, then on net, that's going to add fuel to the fire," Summers said.
  • But Summers mostly blames the Fed for rising prices: "I think it is bizarre to be buying $40 billion a month of mortgage securities, when the housing market is on fire."

Transcripts show George Floyd told police "I can't breathe" over 20 times

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Newly released transcripts of bodycam footage from the Minneapolis Police Department show that George Floyd told officers he could not breathe more than 20 times in the moments leading up to his death.

Why it matters: Floyd's killing sparked a national wave of Black Lives Matter protests and an ongoing reckoning over systemic racism in the United States. The transcripts "offer one the most thorough and dramatic accounts" before Floyd's death, The New York Times writes.

The state of play: The transcripts were released as former officer Thomas Lane seeks to have the charges that he aided in Floyd's death thrown out in court, per the Times. He is one of four officers who have been charged.

  • The filings also include a 60-page transcript of an interview with Lane. He said he "felt maybe that something was going on" when asked if he believed that Floyd was having a medical emergency at the time.

What the transcripts say:

  • Floyd told the officers he was claustrophobic as they tried to get him into the squad car.
  • The transcripts also show Floyd saying, "Momma, I love you. Tell my kids I love them. I'm dead."
  • Former officer Derek Chauvin, who had his knee on Floyd's neck for over eight minutes, told Floyd, "Then stop talking, stop yelling, it takes a heck of a lot of oxygen to talk."

Read the transcripts via DocumentCloud.