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Jimmy Carter’s former treasury secretary urges Biden to scrap economic agenda and focus on national debt reduction to fight inflation

United States Treasury Secretary W. Michael Blumenthal in Washington, DC, June 7, 1978.Photo AP/CWH

  • A former Carter-era official is calling on Biden to abandon any effort to revive Build Back Better.

  • W. Michael Blumenthal told The Times that the president would have to take “painful steps” to fight inflation.

  • Democrats aim to relaunch a scaled-down version of the bill in the coming weeks.

A Carter administration official offers President Joe Biden advice for fighting inflation: He should abandon what remains of his economic program and focus on bringing the national debt under control instead of driving down prices.

“Fighting inflation comes first,” W. Michael Blumenthal, former Treasury secretary to President Jimmy Carter in the late 1970s, told The New York Times in an interview published Tuesday. “He needs to show the public that he recognizes that inflation has lasting deleterious effects on the economy and that by trying to take half measures now you are only prolonging the pain of those effects.”

“President Biden faces this dilemma, and I certainly hope he will choose clearly, choose decisively and be very clear not only that he recognizes that inflation needs to be dealt with, but that he is truly willing to support the painful steps to do so,” Blumenthal said.

It comes as Democrats struggle to tackle inflation, now at its highest level in four decades. Carter’s tenure – which lasted from 1976 to 1980 – was marked by a similar spike in gas prices resulting from the Arab oil embargo and the Iranian revolution.

The current spike in energy prices is the result of Western sanctions eliminating Russian oil from world markets, coupled with huge demand exceeding available oil supply. Biden and Democrats blame Russian President Vladimir Putin for driving up inflation, as well as oil companies that are currently restricting domestic production.

Democrats proposed a series of measures aimed at providing financial relief, but they died upon arriving in Congress due to internal divisions and Republican resistance. Biden endorsed a proposal to suspend federal gasoline taxes last month, but Democratic leaders have not committed to it.

The main pillar of the Democratic agenda remains a scaled-down version of the party’s Build Back Better legislation from last year that looks likely to focus on clean energy tax credits and federal deficit reduction. Democrats hope to convince holdout Sen. Joe Manchin of West Virginia to support a smaller package by early August. Republicans are fiercely against it.

“They’re still playing with BBB,” Senate Minority Leader Mitch McConnell said Tuesday in Paducah, Ky., referring to the stalled Build Back Better plan carrying the bulk of the Democratic agenda. “If they bring this back, it’s only going to make it all much worse.”

An analysis of the University of Pennsylvania’s Penn Wharton budget model late last year indicated that the House-approved bill – which Manchin killed in December citing rising inflation – would not worsen significantly rising prices.

Read the original article on Business Insider

source: news.yahoo.com

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