Fact-checking Biden’s Inflation Remarks

On October 21^st, 2022, President Biden made an address in the Roosevelt Room regarding his administration’s historic deficit reduction.  

“THE PRESIDENT: Good morning. I ran for President to rebuild the backbone of the middle class — this country — that’s the backbone — to build an economy from the bottom up and the middle out and for — make sure the economy was stronger than it was before the pandemic. 

“Since I came to office, that’s what we’ve done: historic vaccination efforts that saved lives, helped our economy recover from the lost jobs during the pandemic; 10 million jobs created — a record for any administration at this point in a presidency; 3.5 percent unemployment — 50-year low — a 50-year low; 700,000 — nearly 700,000 manufacturing jobs created with companies investing billions of dollars to build industries of the future here in America, proving — proving — that “Made in America” is no longer just a slogan.” 

President Biden allowed the enhanced unemployment benefits to expire, kicking millions of Americans off of unemployment. President Biden personally supported this expiration of benefits, and this is what led to the “50-year low” Biden mentions in his remarks. According to “The COVID Tracking Project”, on the day of Biden’s inauguration, the United States had lost 400,715 lives to COVID-19. According to “Statista”, the United States had lost 1,065,152 people as of the day Biden made these remarks (October 21^st, 2022). This means that despite the widely available vaccines and federal vaccination push under Biden’s administration, President Biden’s overall federal COVID policies have led to more deaths than the time period under Trump’s administration, where there weren’t widely available vaccines. Trump oversaw roughly 400,000 lost lives to COVID and federal inaction, Biden has stewarded nearly 700,000 lives lost to the same virus, and similar federal inaction.  

Biden’s address continues: 

“We’re rebuilding our roads, our bridges, our ports, our airports. We’re delivering clean water, high-speed Internet to every American.” 

Flint, Michigan still has no clean water. Despite the Flint Water Crisis starting under the Obama-Biden administration, the Biden-Harris administration is the third administration in a row to ignore the suffering of Flint residents. In other words, Biden’s administration is not “delivering clean water… to every American”. As for the high-speed internet claim, the Bipartisan Infrastructure Law signed by President Biden earlier this year does provide a $30 a month subsidy to high-speed internet plans purchased by American consumers through the major internet carriers. However, each plan subscriber must apply and prove their income is below 200% of the federal poverty level in order to qualify. Another aspect of the $55 billion provided through the Bipartisan Infrastructure Law for internet access is the “Broadband Equity Access and Deployment”, or “BEAD” program, which sets up federal assistance for infrastructure projects to expand internet access to households that currently don’t have access to certain internet speeds.  

Biden’s address continues: 

“And the price of gas at the pump is coming down. It’s down $1.20 since this summer, and just this week — last week, it’s fallen another 10 cents. 

And today, we have further proof that we’re rebuilding the economy in a responsible way. 

Today, my administration announced that this year the deficit fell by $1.4 trillion — the largest one-year drop in American history — $1.4 trillion decline in the deficit. 

Let me repeat that: the largest-ever decline in the federal deficit. 

Let me be clear: This record deficit reduction includes the cost of my student loan plan and everything else we’re paying for. The deficit is down $1.4 trillion this year, even after accounting for 30 years of debt relief paid in advance. 

You know, this — this follows last year’s drop of $350 billion in the deficit.” 

An MMT-informed analysis tells us that, under the currency paradigm- that is, how federal finance in the United States currently works, the deficit is every untaxed dollar in existence. President Biden’s deficit reductions have burned 1,400,000,000,000 dollars out of circulation. In other words, that’s 1.4 trillion less dollars for everyone in the United States to use or circulate. To put that into context, the Biden administration has destroyed roughly 4.204 dollars per counted resident of the United States. If you’ve been feeling the effects of corporate greed masking itself as inflation harder than usual, this currency elimination is why.  

Biden’s address continues: 

“And because we’re making sure the largest corporations pay their ma- — their fair share; cracking down on billionaire tax cheats; and giving Medicare the power to negotiate lower drug prices in the future beginning — just getting underway, which lowers one of the biggest costs that government and families have to pay, we’ll reduce, because of that, the deficit another $250 billion over the next 10 years. 

You know, we’re going from a historically strong economic recovery to a steady and stable growth while reducing the deficit, building an economy where everyone does well, where the poor have a ladder up, the middle class does well, and the wealthy do very well. They’re not hurt by it. 

And this is the economic vision I’ve had for America and the reason I ran — one of the reasons. 

Republicans in Congress have a very different vision. 

Now, listen to me closely: Congressional Republicans love to call Democrats “big spenders,” and they always claim to be for less federal spending. But let’s look at the facts.” 

Ask yourself: Are working families doing well right now? Are Biden’s claims so far about the economy reflected in the facts for the working class?  

Biden’s address continues: 

“The federal deficit went up every single year in the Trump administration, every single year he was President. It went up before the pandemic. It went up during the pandemic. It went up every single year on his watch, the Republican watch. 

In fact, in three years before COVID hit, the deficit ballooned by another $400 billion. 

They’re the facts. 

And one big reason for that is Republicans voted for $2 trillion tax cut — a Trump tax cut — which overwhelmingly benefitted the wealthy and the biggest corporations. And that racked up the deficit sig- — significantly. 

On my watch, things have been different. The deficit has come down both years that I’ve been in office. And I just signed legislation that’s going to relu- — going to reduce it even more in the decades to come. 

Now Republicans in Congress are doubling down on their commitment to explode the deficit again.” 

Biden’s deficit reductions have the effect of reducing the amount of currency available for Americans to use. This is true of any deficit reduction, regardless of who’s in charge of the federal government. While Republicans don’t generally use congressional appropriation in a way that directly benefits the working class, it would be unfair to say that Democrats do. Whichever party is in power, the facts remain that congressional appropriation is the birth, the creation of US dollars and federal taxation is the mechanism by which those dollars are destroyed.  

Biden’s address continues: 

“Just this week — it’s hard to make this stuff up. Just this week, Republican leaders said if they get their way, they’re going to extend the tax — the Trump tax cuts, which are due to expire in a couple years — extend them. 

They said they’ll repeal the corporate minimum tax of just 15 percent that I just signed into law — 15 percent. 

They’d allow the largest and most prosperous corporations in America to go back to paying zero in federal income tax, which 55 of them did in 2020. 

They said they’ll repeal the lower prescription drug costs and it will take effect next year, which that’s — and they don’t — these major reductions in drug costs don’t really kick in until next year. 

If the Republicans repeal it, it’s going to raise costs onto millions of seniors, and the cost of federal government — to the federal government will be billions of dollars.” 

With an MMT-backed analysis, we can understand that the federal government isn’t currency constrained, it is resource constrained. The federal government can and does – through congressional appropriation – create our currency (which is the US dollar) whenever it spends. The only real limits on currency creation are the real resources – that is, labor, materials, technology, and everything else materially required to do whatever is involved in any federal program.  

Biden’s address continues: 

“Put it all together and the Republican plan would add about $3 trillion to the deficit — $3 trillion. That’s their plan. That’s what they did under my predecessor, and that’s what they intend to do again. Adding another $3 trillion to the deficit is reckless, it’s irresponsible, and it would make inflation worse.” 

Deficit spending is not the cause of inflation. All federal spending is deficit spending. Because dollars received by the government through federal taxes are destroyed, deleted upon receipt, federal tax dollars don’t exist to be used to fund any federal spending. Under current economic constraints, raising the deficit would likely help with inflation. Many economists agree that the cause of current “inflation” is actually corporate greed through extreme price gouging.  

Biden’s address continues: 

“For Americans, the deficit could not be clearer. We don’t have to take their — my word for it, what they’re for. They’ve laid out a plan that — out — and they laid it out very clearly. Congressional Republicans say — and you all know this — their number-one priority is to repeal the Inflation Reduction Act. 

Now, here’s what that means: 

If they get their way, the power we just gave Medicare to begin to negotiate lower prescriptions drugs goes away. Gone. 

If they get their way, the $2,000 cap on prescription drug costs, which takes effect next year — maximum any senior would have to pay, no matter what their drug costs are, would be $2,000. It goes away. Gone. 

The $35-a-month cap on insulin, which takes effect next year for folks on Medicare — gone. 

The savings on healthcare premiums of $800 a year for millions of Americans under the Affordable Care Act — gone. 

And of — and, of course, they’re still determined to repea- — repeal the Affordable Care Act, which means an end to the protections for tens of millions of people who cannot afford health insurance because they have a preexisting condition. Let’s remember that we’re talking about millions of people who will lose their health insurance because they do not have a way to get it because they have a preexisting condition. That’s gone as well.” 

Biden and the Democrats did pass legislation allowing Medicare to negotiate prices on certain medications. That is true. However, the legislation only allows for negotiation of 10 drugs, provided they meet very specific criteria.  

From “Health Affairs”: “Ten drugs in Part D will be negotiated in the first year, increasing over time to 20 drugs in Parts B and D. The first set of 10 drugs will be listed for negotiation in September 2023, with prices going into effect in 2026. Drugs covered under Part B can be listed for negotiation in 2026 with prices going into effect in 2028.”  

For emphasis, the drug negotiations don’t begin until 2025 under this legislation. The $2,000 out of pocket cost cap on prescription medication for seniors on Medicare was also passed but does not take effect until 2025. The $35 dollars a month insulin cost cap, only for people on Medicare, doesn’t take effect until 2023.  

Of course, Biden’s remarks also obfuscate that, under the Affordable Care Act, inspired by right-wing Heritage Foundation, healthcare premiums have only skyrocketed.  

(Forbes: “Yes, It Was The ‘Affordable’ Care Act That Increased Premiums”) 

Biden’s address continues: 

“And they’re doing everything they can to get gas pri- — we’re doing everything we can to keep gas prices down, and the Republicans are against it all. And it’s all part of the trickle-down mentality that says, “It doesn’t matter what’s happening on Main Street as long as Wall Street is feeling good.” 

One more thing. If you’re worried about the economy, you need to know this: The Republican leadership in Congress has made it clear they will crash the economy next year by threatening the full faith and credit of the United States for the first time in our history, putting the United States in default unless — unless we yield to their demand to cut Social Security and Medicare. You heard that one, right? You all heard them say that. That’s what they’re saying. 

Let me be really clear: I will not yield. I will not cut Social Security. I will not cut Medicare, no matter how hard they work at it.”  

Biden’s current remarks on Social Security and Medicare are in conflict with his decades long career and record in federal government. 

In addition, the regular gas price averages this year, 2022, are the highest they’ve ever been, not accounting for inflation. 

Biden’s address continues: 

“Folks, we know what the Republicans in Congress will do if they regain power. They’re telling us. They’re being straight up about it. They’re going to repeal lower prescription drug prices I just signed into law and raise drug prices. 

They’re going to cut Social Security and Medicare. 

They’ll pass massive tax cuts for the wealthy, make them permanent — which they’re not now — the individual tax cuts. 

They’ll threaten the very foundations of the American economy if we don’t meet their demands. 

And they talk about inflation. Everything they proposed — are proposing will make inflation worse. Everything they’re proposing would make inflation worse.” 

With VP Kamala Harris serving as tiebreaker in the Senate, the Democrats could remove the filibuster and pass anything they wanted via simple majority. Their current power, the seats they hold, are sufficient to pass any legislation federally. Biden’s argument that Republicans will make inflation worse if they regain power rests on the idea that increased deficits lead to inflation, which is patently false. 

Biden’s address continues: 

“Let me close with this: Over the last few years, we’ve faced some of the most difficult challenges in our history both at home and abroad, but we’re making real progress. We just have to keep going. I know we can. 

For everything we’ve been through, I’ve never been more optimistic about our — America’s future. We just have to remember who we are. We’re the United States of America, and there’s nothing beyond our capacity. 

And we’re better positioned than any other country in the world to get through this difficult period. Inflation is worse all around the world. 

So keep the faith. Keep the faith. 

And God bless you. And may God protect our troops. 

And I want to say one more thing actually. You know, I know — and I don’t blame you — you want to ask me about the midterms. (Laughs.) 

And here’s what I think: It’s been back and forth with them ahead, us ahead, them ahead. Back and forth. And the polls have been all over the place. I think that we’re going to see one more shift back to our side in the closing days. 

And let me tell you why I think that. We’re starting to see some of the good news on the economy. Gas prices are down sharply in 46 of the 50 states because of what I’ve been doing. We’re moving in the right direction, and there’s more to come. 

State unemployment today — state unemployment was all-time lows in 11 states, and 17 states have unemployment rates under 3 percent. The new deficit numbers: There’s a — it’s a record — a record decrease. It’s never happened before. 

The election is not a referendum, it’s a choice. It’s a choice. And the Republicans criticized my economic record, but look at what I’ve inherited and what I’ve done.” 

Every election is a referendum. Shouldn’t we always evaluate what politicians do with their power, as honestly and effectively as possible? Biden has removed nearly two trillion dollars of our currency from circulation in less than two years. That currency deletion is a large part of why things are so incredibly hard for working-class households right now. 

Biden’s address continues: 

“And look at what they’re offering. They want to double down on the Trump tax cuts for the wealthy, make them permanent because they’re going to expire in 2025. They want to send jobs overseas where big corporations can, in fact, pay lower wages, increase their profits. And these are tax cuts that give most benefits to billionaires and wealthy corporations. 

And let’s get specific. They want to abolish the 15 percent — 15 percent; what a terrible thing to ask a corporation to pay — 15 percent tax that I insisted that those 55 corporations who made $40 billion and didn’t pay a red cent. They now — my God, they got to pay 15 percent. 

If Republicans get their way, the deficit is going to soar, the tax burden is going to fall on the middle class. And Republicans are working really hard.” 

There is no reason for tax cuts on the wealthy to necessitate higher taxes on anyone else. That is not how federal finance works. The federal government can and should tax the billionaires and the wealthy, not because it needs their money, but rather to reduce their influence and ability to corrupt our institutions. 

Biden’s address finishes: 

“This is — this one comes — I have to admit: Every once in a while, they surprise me. They have three — not one, not two — three plans to cut Social Security benefits. Three plans. And they’re not going to stop there. 

They’re going to do Big Pharma’s bidding to repeal my plan to allow Medicare to negotiate prescription drugs prices. And we pay the highest in the world. And doing so, it’s going to raise drug prices, and they’re going to raise Big Pharma’s profits. They’re doing fine, Big Pharma. They’re not hurting at all. And they’re going to raise your health insurance premiums. 

Its mega MAGA trickle-down. Mega MAGA trickle-down — the kind of policies that have failed the country before and will fail it again. It’ll mean more wealth to the very wealthy, higher inflation for the middle class. That’s the choice we’re facing. That’s why I think that we’re going to do just fine. 

Thank you.”