How Biden and Inflation Set Harris Up for Defeat: Election 2024. By Matthew Yglesias

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Kamala Harris is now suffering the indignity that attaches to any defeated candidate who does the right thing and concedes defeat: She is the target for massive recriminations within her party.1 The arguments are predictable, with moderate Democrats saying that she should have been more moderate and progressives saying she should have been more progressive.

But the most important data point for understanding last week’s election is completely separate from this intraparty debate — and it indicates that Harris’s loss may have had more to do with decisions President Joe Biden made years ago than with anything the vice president’s campaign did or failed to do in the last few months.

The data concerns developed countries that have held elections since the big inflationary wave that started in 2022. In 16 OECD countries, incumbent parties have lost 7% of their vote share on average. Typical is Portugal, where an incumbent center-left party suffered a 13-point swing, or Lithuania, where an incumbent center-right party lost 7.8% of the vote. Swings have been especially large in the Anglosphere, with Conservatives in the UK losing 19.9% of their vote share and New Zealand’s Labour losing 23.1%. Canada hasn’t had an election yet, but Prime Minister Justin Trudeau’s Liberals are poised for a catastrophic defeat much larger than what happened to Harris.

In other words: In the grand scheme of things, the Democrats made out pretty well.

None of this entirely exonerates Harris or her decision-making, however. Her campaign maintained that it was an underdog effort. But its actual behavior was risk-averse and conservative, consistently choosing low-variance plays that minimized controversy. It’s the kind of choice you make if you’re confident you have a lead. A better-informed campaign, or one with sounder epistemic practices, would have made some different choices — and the obvious one would have been to show far more concern than Biden ever did about inflation.

In one important way, Biden does bear more responsibility for inflation than other world leaders. Incumbent politicians who lost in other countries, such as Estonia and the Netherlands, were essentially victims of global macroeconomic forces beyond their control. Biden, by contrast, is the president of a country large and powerful enough country to meaningfully influence the entire global economy.

Of course, the Covid-19 pandemic was not his fault. It’s doubtful the world could have emerged from the pandemic without some kind of inflation, as demand surged and supply chains buckled. Then came Russia’s invasion of Ukraine, a further shock with unavoidable consequences. And the American Rescue Plan, which Biden signed into law in 2021, helped the US economy recover far more quickly than those in Europe.

But the ARP, at $1.9 trillion, was far bigger than it needed to be — and people said so at the time. The Committee for a Responsible Federal Budget, the epitome of sober-minded bipartisanship, warned before the bill’s passage that it contained enough spending “to close the output gap two to three times over.” Two years later, in June 2023, the Federal Reserve Bank of San Francisco issued a report on the sources of inflation, estimating that only about 60% of it was due to supply-chain issues. The rest can be attributed to excessive fiscal stimulus or insufficient monetary tightening.

Biden had his reasons for focusing on spending and rejecting a decent Republican offer of a smaller bill — notably the hope that a one-year expansion of the child tax credit would prove so popular that Congress would extend it. But that didn’t work out, so instead of a permanent legacy item, Biden was left with a needless expansionary bit of extra spending. This was a calculated risk with significant upside, and I supported it at the time, but in retrospect it was a mistake.

Less forgivable is Biden’s response once the rate of inflation began to spike: He simply never fully pivoted into inflation-fighting mode. Granted, there wasn’t a whole lot he could have done. He did repackage what was primarily a climate and energy bill into something called the Inflation Reduction Act, which reduced the budget deficit (my idea, by the way!). But as written, it included very little deficit reduction because Democrats wanted to maximize spending on climate programs.

Then a funny thing happened: Within a year of passage, the cost estimates were soaring and the bill was no longer reducing the deficit. Biden showed no interest in going back to Congress to trim the price tag or in any other form of deficit reduction.

In fact, instead of taking every opportunity — however small — to show he cared about fighting inflation, Biden did pretty much the opposite. He continued to push student loan-forgiveness programs through executive action that increased inflationary pressure. He raised the cost of drilling for oil and gas, raised the cost of clean energy through union labor requirements, and raised the cost of lumber while saying he was worried about housing costs. In general, he exerted frighteningly little discipline over progressive interest group demands.

Again, it’s not clear exactly how much substantive difference any of these policy choices could have made. But the answer is not zero. And from a political standpoint, an administration that was seen as doing everything it could to fight inflation would have had a very different profile from the actual Biden administration, which was addicted to everything-bagel liberalism.

Could a different approach have made the difference electorally? There’s no way to know for sure. But it couldn’t have hurt.