Like the Overton Window, the Economic Expectations Window is the range of acceptable ideas about economics. Here’s my answer to the question of what I would do about inflation if I had been debating with Trump and Biden:
Folks, these two clowns (and one is more clownish than the other…you be the judge) are not divulging the truth about inflation. Here it is: the best guess by economists about our recent spat of inflation is that it was caused by two factors. First, consumer patterns shifted during COVID and that put demand stress on certain areas of the economy. Money chased after home offices and accessory dwelling units, and it stopped flowing to travel and tourism and eating out. Second, the payments and benefits to people—payments that were needed to head off greater suffering and possibly an economic depression—enhanced the effect. You had more money and lots of time on your hands.
There is no Biden or Trump economy. It’s a myth for fools and children, at least insofar as neither of them does anything dumbly radical (ahem, crazy tariffs).
The primary tool our government uses to manage inflation is the independent Federal Reserve changing certain government interest rates and attempting to slow spending. They have a hard task—a difficult balance—because they don’t want to force the economy into a recession. Raised interest rates ripple out and also impact the affordability of homes and cars. But the president doesn’t control how the Fed sets interest rates. They are independent and for good cause: to avoid creating an economic mess for political reasons like juicing the economy before an election.
There is one other tool that presidents do have a hand in, however, and that is taxes and spending by the government. It’s probably true that spending too much and increasing debt can lead to inflation, though we aren’t sure exactly what level of public debt is harmful and we need to be able to do things like give you benefits during emergencies. Among the things government does that makes it truly of and for the people is helping you out when factors beyond your control threaten you and your families. And, in any case, all of this takes help from Congress and the impacts are pretty darn slow on inflation. Consumer expectations and behavior are the most important effect.
Therefore, the one thing I would do as president is to gather the best economists and policymakers who have created the best models for how to set spending, manage deficits, and use taxation as a tool to make life better for you. It’s our only sensible path forward; I will not treat you like fools and children. I will set the stage for an economy that balances all of our complex needs. It will not be perfect but will be as good as we can make it.
I added in “models” there at the end because clearly we need better ones given the intellectual scraps over inflationary dynamics, Laffer curves, and everything else. Remember: Freedom and coordination. Ah, the burden of honesty in the face of fractious partisanship. Can anyone step up and take my place at the podium? Gavin or Mayor Pete with their athletic debating performances? A sensible Republican I can’t seem to identify? I know the criticisms of technocratic leadership, but at least I’d like to see some baseline honesty. Far too many people have a mysterious myth structure about how the world and our country actually works and that opens them up to manipulation, outlandish conspiracy theories, and the antics of authoritarian scumbags.