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Economy

White House economic adviser weighs in on the inflation spike and spending plan

AILSA CHANG, HOST:

It's getting more expensive to buy groceries, fill up your car, pay your rent, heat your home. And the Labor Department reported this morning that consumer prices in October were more than 6% higher than they were a year ago. That number marks a 30-year high. This news comes as President Biden visits the Port of Baltimore today to detail how his administration is going to deal with inflation and other pandemic-related economic pressures. Meanwhile, the president is still trying to get his social spending package, known as Build Back Better, past.

Given all this, it seemed like a good time to check in with Brian Deese. He is the White House director of the National Economic Council, and he's been a key negotiator on the administration's infrastructure plan and social spending package. Welcome.

BRIAN DEESE: Thank you for having me.

CHANG: So we'll get to infrastructure and Build Back Better in a moment. But I first just want to have you react to that number that I read - a more than 6% increase in consumer prices from last October. How much does that concern you?

DEESE: Well, look. It's absolutely a concern for us. And interestingly, we saw two important pieces of data come out today. First we saw on the employment side that for the sixth consecutive week in a row, new unemployment insurance claims fell. And it underscores a remarkable and, in fact, stunning recovery in the jobs market. At the same time...

CHANG: Sure. But what about inflation?

DEESE: Yeah. We've seen prices increase. And the president has acknowledged and the president really understands that even small increases in prices or even short-term increases in prices can really impact working Americans, which is why, if you look at our economic plan, it is focused on how we can relieve those price pressures in both the short term and the long term.

CHANG: I want to talk a little bit about short term versus long term because the administration has been saying for months now that this inflation is temporary. In fact, President Biden is in Baltimore this afternoon talking about steps that he's taken to address supply chain disruptions, which are contributing to this inflation that we're seeing. Are you confident that the administration is doing enough to address inflation?

DEESE: We are very focused in the short term on the actions that we can take to try to get those economic conditions back to normal, to get more people working and to ease price pressures. Getting COVID under control is important. Those supply chain bottlenecks are important as well. We're going to keep at that in the short term. But over the medium term, this is why the infrastructure package is so important. Because a lot of these challenges in our supply chains, the challenges at our ports, reflect decades of underinvestment. Most other ports around the world operate 24/7. The United States is way behind. This infrastructure package, with $17 billion of investment, is going to change the game. That's really the medium-term answer to how we ease these price pressures and...

CHANG: Medium-term - that said, do you believe that realistically, this infrastructure plan can have enough of an impact on the economy quickly enough to offset some of this inflationary pressure that we are seeing right now?

DEESE: Well, I'll tell you, we're going to waste no time in moving out and implement this historic investment. In fact, even this week, we've been able to move funding to allow the Port of Savannah, for example, in Georgia, to set up inland pop-up ports to move containers out more quickly. We released an action plan this week to demonstrate to the ports what they can expect over 30, 60, 90 days in terms of money flowing out the door. We're going to do the same with airports and roads and bridges as well. So we're going to move with all deliberate haste here.

But I would also underscore that it's been decades since we've made the kind of capital investment in this country that we need. And so we're also going to really focus on those shovel-worthy projects in addition to shovel-ready. Because the fact is that rebuilding our infrastructure so that we can compete with other countries, compete in the competitive race for the 21st century with China, is not going to happen overnight. So what we need to do is couple short-term actions with the medium-term investments that Washington has been talking about for years.

CHANG: OK. Let's pivot to the social spending plan. Build Back Better, as you know, is not going to pass if Democratic Senator Joe Manchin of West Virginia does not support it. And Manchin tweeted this afternoon that the threat from inflation, again, is not temporary and is, instead, getting worse. He is withholding his support of the social spending plan until he sees a score from the Congressional Budget Office. How concerned are you that you will not be able to get Senator Manchin on board with this? He's a key vote.

DEESE: I'm glad you asked that question. Because if your principal concern is inflation, the Build Back Better agenda is exactly designed to relieve those price pressures over time. First, it's fully paid for, and so won't add to the deficit across time. Second, it is going to drive increases in labor supply - more people working - by providing affordable childcare, affordable elder care, to help more parents and women in particular get into the workforce. And third, it's going to address directly the costs that typical Americans face for prescription drugs and for health care, among other issues.

CHANG: OK. Let's look a year ahead from now. What do you think the headline will be on the U.S. economy next November?

DEESE: Well, I'm not in the prediction business, and it's never a good idea...

CHANG: (Laughter) Not as an economist.

DEESE: ...For someone in my role to...

CHANG: OK.

DEESE: But what I would say is, we will be able to look back and say that this was a historically strong recovery and a historically strong recovery for those working Americans that President Biden ran for president to help support. And I think that that's where we can head.

CHANG: Brian Deese is the White House director of the National Economic Council. Thank you very much for speaking with us today.

DEESE: Thank you.

CHANG: All right. NPR's Scott Horsley has been listening in with us and joins us now. Hey, Scott.

SCOTT HORSLEY, BYLINE: Good to be with you, Ailsa.

CHANG: Good to have you. All right. You have also been watching today's inflation numbers, and I'm curious. What struck you most about what Brian Deese had to say about inflation?

HORLSEY: Well, I think Deese is wise not to make a prediction about where inflation is going to be a year from now because the people who have been making forecasts have been proven wrong time and again. You have to go all the way back to the first Bush administration to see inflation as high as we saw in October. Back then, in 1990, it was the first Gulf War that was driving up energy prices. And once again, energy is a big part of what's driving up costs today. Gasoline, natural gas, home heating oil - they're all more expensive. Groceries are more expensive, too. And all of that is hitting families, especially those whose budgets were already stretched thin in. And it's right up on the consumer price index today. Wells Fargo called this the consumer pain index. And while the infrastructure and Build Back Better plans might help over time, that pain is being felt right now. Now, Deese is right. The economy is rebounding quickly from the pandemic. But demand is rebounding a lot faster than supply, and that's a recipe for sometimes painful price hikes.

CHANG: So what do you think ultimately? Is there any sign that inflation is slowing down?

HORLSEY: Not really. The month-over-month price increase was actually higher in October than the three previous months, which suggests that inflation is not slowing down; it's speeding up. Now, one could argue that is the lingering effect of the delta wave, which threw a big wrench into the global supply chain. And if you think delta is to blame, you might expect prices to settle down as the public health outlook improves. But that's not a sure thing. And until we do see prices start to level off, inflation's going to keep chipping away at people's buying power. And that could carry a political price for the president and for his fellow Democrats.

CHANG: That is NPR's Scott Horsley. Thank you so much, Scott.

HORLSEY: You're welcome.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.