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Tags: Inflation | Blue Collar Voters

The Biden Equation: Inflation's Impact on Blue Collar Voters Is a Problem for Democrats

The Biden Equation: Inflation's Impact on Blue Collar Voters Is a Problem for Democrats
President Joe Biden gestures as he speaks during Independence Day celebrations on the South Lawn of the White House in Washington, DC, July 4, 2021.) (Photo by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)

Dan Eberhart By Wednesday, 07 July 2021 09:39 AM EDT Current | Bio | Archive

U.S. President Joe Biden has an inflation problem – and much more.

This problem can be explained easily in the following equation: Strong Inflation + Working Class Frustration = 2022/2024 Election Problem.

Recent numbers from the Bureau of Labor Statistics show that consumer demand is thundering forward as the economy emerges from its Covid-19 pandemic cocoon, creating inflation the likes of which Americans haven’t experienced in decades.

Inflation, in the long run, can help savers.

Over the short run, however, it’s shrapnel for the electoral cannon, doing the most damage to working-class and blue-collar constituencies that have become up for grabs in the past several election cycles.

The enormous deficit spending that Democrats are practicing is likely making inflation worse. The $1.9 trillion stimulus signed into law in March and Biden’s promised $6 trillion in new spending has come in for heavy criticism from inflation hawks like ex-Treasury Secretary Lawrence Summers, who in May pointed out how inflation helped elect Republican Presidents in 1968 and 1980.

But his warning may come too late.

Headline consumer prices in May rose 5 percent year-over-year, the fastest pace since 2008, while core inflation – excluding food and energy prices – rose 3.8 percent, the sharpest increase since 1992.

Shortages of lumber, steel, chemicals, and semiconductors have been in the news for months, causing price spikes for all sorts of products.

Now, these increases have entered into the service sector, boosting prices on airline tickets and dining out as the economy opens up.

This inflation attack is hitting the pocketbooks and wallets of working- and middle-class Americans today.

Prices for grains have surged more than 25% in the past year.

Oilseeds like soybeans and peanuts are up over 19%, while beef and veal prices have risen 10.5%.

But it gets worse. Rents for single-family homes rose 15 percent year over year, the highest growth rate in 15 years.

Meanwhile, surging used car prices – one of the most significant purchases any American household of modest means makes – will likely impact consumer confidence dramatically in the coming months.

This threat of inflation in parts of the real economy – rent and used cars – is something older Americans have seen before; in some ways, it’s a rerun of the late 1970s. But for those Americans born after 1980, this risk to their pocketbooks is new and somewhat sinister.

All this comes at a terrible time for the Democrats and the sitting President. This inflation is happening just as trends show Republicans are becoming more of a party of blue-collar workers.

A continuation of this trend into the 2022 and 2024 election cycles could spell disaster for ‘Uncle Joe’ and his fellow Democrats.

Since 2010, the percentage of blue-collar voters who call themselves Republicans has grown by 12 points, from 45 to 57 percent, according to an NBC News poll published in February.

The same poll found that the shift to the Republican Party by Hispanic blue-collar voters is even more pronounced, at 13 percent.

And for blue-collar African American voters, a group notoriously difficult for Republicans to receive votes from, a shift of 7 percent toward the Republican Party took place between 2010 and 2020.

Analogies between Presidential eras are imperfect, but when core inflation surpasses wage growth, as is expected over the next year, the political party in power usually suffers.

More than anything else, it was high inflation and the lowered economic expectations of the President Jimmy Carter era – the last time inflation factored this highly in politics – that led to a shellacking at the polls in 1980 for Democrats and ushered in the Reagan revolution.

The Biden administration’s relentless focus on identity politics, Critical Race Theory, and other progressive flag-waving is a problem with mid-term voters.

Still, voters historically pass judgment of a political party, not over its “culture war” tactics, but on the success or failure of its economic program.

If inflation stays historically high over the next year or three, the economic health of working-class households will suffer, and consumer sentiment will likely plummet.

This combination makes it nearly impossible for Democrats to keep the shift in working-class opinion away from their party from happening and even strengthening.

Many Democrats can see this is already happening, and with math this stark, they should reevaluate their spending priorities before the summer is out.

Dan K. Eberhart is CEO of Canary oilfield services and private equity firm Eberhart Capital, which has manufacturing, trucking and construction operations across the Heartland. Dan writes regularly on the intersection of energy policy, the economy and politics. He’s author of two books on energy. He lives in Phoenix, Arizona. Follow him on Twitter @DanKEberhart. Read More Here

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Many Democrats can see this is already happening, and with math this stark, they should reevaluate their spending priorities before the summer is out.
Inflation, Blue Collar Voters
Wednesday, 07 July 2021 09:39 AM
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