As the hours roll by until the first presidential debate of 2024 between former President Donald Trump and current President Joe Biden, Republicans and Democrats are worried about the same top issue – but they blame it on different things.
That issue is inflation, according to YouGov/The Economist poll results released this week. Along with that, the latest Axios Vibes survey by The Harris Poll revealed that Republicans blame the government (under the guidance of Democrat President Joe Biden) and Democrats blame corporate greed.
Both parties were twice as likely to blame their respective villains for inflated prices, said Axios.
What is inflation again, and why is it high?
“Inflation, the change in price of goods and services over time, is often confused with the cost of things,” according to the Brookings Institution. “Inflation is not about how much things cost, but rather how prices are changing in a given month or year.”
Inflation is something that typically happens over time – things didn’t cost the same in 2014 as they did in 2004. That’s because gradually increasing prices over time are actually a sign of a healthy economy.
With the COVID-19 pandemic came shocks to the economy that caused everything from business closures and layoffs to supply chain snags. These shocks also contributed to out-of-the ordinary-inflation.
According to Brookings, there has been “no single culprit” that contributed to record-high inflation in the wake of the pandemic. Lingering inflation in particular has been tied to the cost of buying or renting a home.
“This is due to entirely different reasons, mainly that new homebuilding has been slow and older Americans are not moving out of their homes as frequently,” said Brookings.
While most prices remained flat in May, according to the U.S. Bureau of Labor Statistics, they are still elevated from a long inflationary period. In an effort to reduce inflation, the Federal Reserve Bank also increased interest rates (this makes it more expensive to borrow money, and the Fed hoped it would slow spending), another factor that has put pressure on American consumers.
Even though inflation seems to be easing, CNBC noted that “there’s an important difference between inflation increasing more slowly – a phenomenon called disinflation – and inflation reversing itself, which would lead to prices coming down. Economists call the latter deflation, which is typically associated with a shrinking economy and potential recessions.”
This means that prices often don’t come down after they’ve gone up, they just stop getting higher as fast as they were. For consumers, this can still be a strain, especially as wage increases often haven’t matched the rate of increasing prices.
Bankrate said even the “mere expectation of higher prices,” can make prices higher all on its own.
“If people think inflation will be high, prices are going to continue to rise,” said Jordan van Rijn, who teaches agricultural and applied economics at the University of Wisconsin’s Center for Financial Security. “If you’re an executive setting wages at your company, that depends a little bit on your expectations for how much prices are going to increase next year. As wages go up, then the same thing happens with businesses – they’re going to start raising their prices.”
What do Republicans think?
Senate Committee on Banking, Housing, and Urban Affairs Ranking Member Tim Scott (R-S.C.) pretty much summed the GOP perspective up this May.
“President Biden and Bidenomics has devastated our economy and devastated people working paycheck to paycheck. The highest percentage of Americans with the fewest dollars in their savings account for an emergency is now because of President Biden and Democrats’ reckless spending,” he said.
According to the Axios Vibes Survey, 56% of Republicans blame the government for inflation.
What do Democrats think?
Last week, National Economic Advisor Lael Brainard offered remarks on lowering costs for American households.
“I have talked about a price-price spiral where companies capitalize on their pricing power to expand their margins when input prices go up,” he said. “Now, we are seeing some companies with pricing power keep their margins high rather than pass along savings to consumers when input prices go down. In fact, 2023 saw the highest after-tax profit rate for corporations outside of the financial sector since at least 1947.”
According to the Axios Vibes Survey, 54% of Democrats blame inflation on businesses.
How about the other voters?
Independent voters are apparently split on the issue, with 41% who said the government is to blame and 41% said business is to blame. When assessed overall, slightly more people (41%) blamed the government than those who blamed business (39%).
“On the surface, the survey’s findings offer some comfort to Biden. They suggest most Democrats and half of independents still give him the benefit of the doubt,” said Axios. However, it also said that “if one in four Democrats sees the current government as the biggest driver of high prices, that could be decisive in a close election.”
This may come as a surprise, but younger voters also appear to be more aligned with the GOP on this issue. Millennials and Gen Z were more likely to blame the government for inflation, while Gen X and boomers are more likely to blame corporate greed.
“Biden, having limited room to maneuver on inflation, will try to keep hammering corporations, especially credit cards and the airlines, for hidden fees; anything to deflect,” said John Gerzema, CEO of The Harris Poll, per Axios. However, he noted that going too far with this tactic might be trouble for his campaign’s fundraising efforts.