Treasury Secretary Janet Yellen said controlling the COVID-19 virus in the U.S. is the key to easing inflation.
“It’s important to realize that the cause of this inflation is the pandemic,” Yellen said on CBS’s “Face the Nation” on Sunday.
“If we want to get inflation down, I think continuing to make progress against the pandemic is the most important thing we can do,” she said.
Yellen and White House economic adviser Brian Deese fanned out on the Sunday morning talk shows to face repeated questions about inflation, a growing political risk for President Joe Biden as his poll numbers slip and Democrats wrangle over his economic agenda.
Biden’s overall approval rating fell to 41%, compared with 50% in June and 44% in September, in the latest Washington Post-ABC News poll. It suggests that about half of Americans overall, as well as political independents, blame Biden for inflation that accelerated to a 6.2% clip in the 12 months through October.
Yellen repeated that she expects inflation to decline by the second half of 2022.
“When labor supply normalizes and the pattern of demand normalizes, I would expect that, if we’re successful with the pandemic, to be sometime in the second half of next year, I would expect prices to go back to normal,” Yellen said.
Rising inflation has also complicated Biden’s bid to pass a $1.75 trillion bill funding long-term investments in social benefits such as child care and health care, while expanding taxes. Senator Joe Manchin of West Virginia, a moderate Democrat whose support for the bill has wavered, has expressed concern the measure would add to rising prices.
Deese, the director of the White House National Economic Council, argued it would have the opposite impact by lowering the cost of child care, health care and housing.
“All of these things go right at lowering costs for American families,” Deese said on CNN’s “State of the Union.”
He said the extra spending would not add to inflation because it would be “fully paid for” through tax hikes on corporations and high-income households. The administration is “confident that this bill is going to come up in the House this week, that we’ll get a vote, it will pass and it will move on to the Senate,” Deese said on ABC’s “This Week.”
He declined to say whether Biden would tap the Strategic Petroleum Reserve to help lower gasoline prices.
“The president has made clear that all options are on the table,” Deese said on CNN. “We’re monitoring the situation very carefully.”
Biden has hinted in recent days that he would act to tame gasoline prices, which are running at the highest level in seven years and have contributed significantly to rising consumer prices.
Former Treasury Secretary Lawrence Summers said inflation momentum has built up to a point “that it’s going to take some significant policy adjustment or some unfortunate accident that slows the economy before inflation gets back to the 2% range.”
“I think for many people, inflation is a test of whether the country’s under control,” Summers, a paid contributor to Bloomberg, said on CNN’s “Fareed Zakaria GPS.”