President Joe Biden and his administration officials are touring the Fourth Estate wasteland and celebrating on Twitter. The White House is euphoric over supposed zero inflation and a string of perceived economic and legislative victories. With the Oval Office on a sugar rush, Biden’s team is now also promising no new audits for middle-class households. The next pledge? Sunshine, lollipops, and rainbows everywhere à la Lesley Gore. If that is the case, let’s whip out some ‘60s wigs.
Zero Inflation Has Arrived
The president fiddled around with the English language again, announcing during a White House address that the US economy had zero inflation in July. Naturally, the conservative Twitterati and Republicans in Congress were apoplectic over this statement, pointing to the 8.5% annual inflation rate and higher prices for everything from food to shelter to electricity. But this did not stop Biden and his comrades in Washington from boasting over an absence of inflation.
“I just want to say a number: zero,” Biden said. “Today, we received news that our economy had 0% inflation in the month of July — 0%. Here’s what that means: while the price of some things go up — went up last month, the price of other things went down by the same amount. The result? Zero inflation last month.”
From Vice President Kamala Harris to Press Secretary Karine Jean-Pierre, many at 1600 Pennsylvania Avenue touting this figure were, according to pollster and political analyst Frank Luntz, engaging in “Orwellian” language. Indeed, that’s been the norm during this presidency, whether it is redefining the word “woman” or changing the conventional definition of a recession.
The July consumer price index (CPI) report highlighted many critical developments. The first is that energy prices are coming down due to demand destruction (the “cure for higher prices is higher prices” mantra) and recession fears. The second is that the administration is concentrating on month-over-month readings, which are still abysmal for Biden as many crucial products have risen from June: bread (+2.8%), chicken (+1.4%), eggs (+4.3%), milk (+0.1%), coffee (+3.5%), and fruits and vegetables (+0.1%). Even most goods and services in the core CPI – eliminating the volatile food and energy sectors – climbed on a monthly basis, be it household cleaning supplies (+1.3%) or health insurance (+2.2%).
It is comparable to raising your home’s temperature to 91 degrees Fahrenheit and leaving it there for you to sizzle and scream “I’m melting!” like the witch from The Wizard of Oz.
No New Middle-Class Audits?
Be prepared to laugh as you have never laughed before. The White House says that anyone earning less than $400,000 per year will not be victims of the dreaded, arduous, and tedious IRS audits. According to Jean-Pierre and Treasury Secretary Janet Yellen, despite this administration hiring tens of thousands of new agents and spending tens of billions of dollars, low- and middle-income Americans will not face higher audit rates.
Karine Jean-Pierre (Photo by Win McNamee/Getty Images)
When Fox News reporter Peter Doocy asked the press secretary if there would be no “new audits on anybody making under $400,000 a year,” she firmly responded: “No. Very clear, no.”
In a letter to IRS Commissioner Charles Rettig, Yellen requested that any new IRS personnel “shall not be used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels.” She added: “Contrary to the misinformation from opponents of this legislation, small business or households earning $400,000 per year or less will not see an increase in the chances that they are audited.” Republicans have accused the Democrats of using the Inflation Reduction Act to target not only affluent Americans but also middle-class households.
The 2019 IRS data show that audit rate estimates have doubled for incomes above $50,000. They have also increased for Americans with “no total positive income” from 0.8% to 1.1%. However, according to the Government Accountability Office (GAO), audit trends have risen for taxpayers earning less than $25,000 (0.4%) and making more than $500,000 (3.9%).
Reality Bites in Washington
Joe Biden (Photo by Chip Somodevilla/Getty Images)
President Biden and perhaps the rest of the Washington establishment operate in a different reality than most people. The administration claimed that Russia’s invasion of Ukraine was the sole contributor to surging gasoline prices, although the military conflict persists amid a fall in gas costs. A recession is no longer two straight quarters of negative GDP growth, despite National Economic Council (NEC) advisor Brian Deese making this distinction years ago. The White House blamed Republicans for inflation, even though the Democrats possess the trifecta of power. The Inflation Reduction Act is needed to bust 40-year high inflation, but the left avers that there is zero inflation, so what would be the point of the legislation?
The first economic principle of Bidenomics is to blame everyone and everything else for the failure of the president’s doctrine. The second rule is to take credit when conditions trend in the right direction. This appears to be working as the latest polls suggest a dead heat between the two parties heading into the mid-term elections in November. Of course, voters will hear and see what they want to hear and see, but that does not alter reality: recession fears and higher prices are driving these developments, not anything the White House is doing.
