Politico: “Soaring inflation” is looking pretty racist, you know

Could this be the weekend in which mainstream media turns its back on Joe Biden’s big-spending agenda? First Jazz reviews the Associated Press’ sudden skepticism about shoveling out $5 trillion in extra-budgetary spending as inflation roars at its highest level in almost 40 years. This morning, Politico focuses on a key aspect of inflation as a regressive tax on the poor and working classes.

Of course, this era being what it is, they focus more on race than class to declare that Biden’s economic policy impact is surprisingly … racist?

Rising prices have historically squeezed workers with lower incomes more than their higher-paid counterparts, particularly during economic downturns — not only because workers with lower incomes have less wealth to fall back on, but because the goods they purchase most increase more in price, and they are less able to seek out lower-priced substitutes.

“Since 2004, which is the earliest point where we have some data available on, we have found that inflation inequality has increased in that low-income households have paid higher inflation than high-income households,” said David Argente, a Penn State economics professor who published a paper on the topic earlier this year. “This was even more pronounced during the Great Recession.”

And because workers with low incomes are more likely to be Black and Hispanic — their median weekly earnings for full-time jobs were significantly lower than those of white and Asian Americans in the most recent quarter of 2021, according to the Bureau of Labor Statistics — they are also more likely to take the brunt of inflation.

Er … they’re just figuring out that inflation is regressive in its impact? All due respect to Professor Argente, whose work in providing data for economic hypotheses is certainly necessary, but this isn’t a tough question. Inflation by its nature decreases buying power, especially at rates where inflation exceeds wage growth. That means that people with less buying power will feel that effect sooner and stronger than those who have more buying power. People whose buying power is limited to core goods and services feel it the most — low-income workers and fixed-income retirees. This isn’t rocket science; it’s barely algebra.

I wrote about this potential problem in July, so someone’s a little late to the party. Of course, this was when the national media still contented itself to regurgitate Joe Biden’s assurance that inflation would be “transitory”:

The argument from Democrats, NBC’s Jonathan Allen writes, is that the impact of the spending programs will make life easier and simpler over time, and that those benefits will outweigh the damage of the “temporary” inflation taking place now. The problem with that argument is that the spending on those programs will roll out over a longer period of time, which means that the inflation will be anything but “temporary,” and it will be regressive as hell. It will hurt the people whom Democrats claim to champion hardest — retirees and working-class Americans.

Now that this has proven to be “anything but temporary,” suddenly media outlets are taking inflation more seriously — and the Biden administration’s assurances less so.

Politico’s going even further, pushing this into dangerous territory for the White House, and seemingly going out of their way to do so. The supposedly new data presented in this analysis may refer to a specific focus on ethnicity rather than income classes, but that isn’t clear at all from the Politico article. It reads more like Professor Argente is still talking about income strata, and Politico is extrapolating that into the woke lens through which all media narratives are filtered these days. There are only three quotes from Argente in the article and in none of them does he discuss the regressiveness of inflation from an ethnic demography perspective.

If Argente doesn’t connect the woke dots, Politico finds others to do it for them:

And because workers with low incomes are more likely to be Black and Hispanic — their median weekly earnings for full-time jobs were significantly lower than those of white and Asian Americans in the most recent quarter of 2021, according to the Bureau of Labor Statistics — they are also more likely to take the brunt of inflation.

With critics of Biden’s $1.7 billion social spending package warning it could increase inflation, the fact that rising prices are hitting hardest the very groups the White House has said the bill will help — Black and Hispanic workers and workers with low incomes — only makes the administration’s case for passage more difficult.

“When you’re low-income status, you have fewer options, fewer alternatives to get the goods and services you need,” said Andre Perry, a fellow at the Brookings Institution. “Black people need goods and services that are affordable.”

First off, as Jazz points out, the BBB runs closer to five trillion dollars once the gimmicks get stripped out of it, so the inflationary impact is much more massive. The White House argues (as Politico notes) that their economists see inflation as only a small near-term risk with this spending and that it would calm inflation in the long run. Of course, these are the same geniuses who publicly ridiculed Larry Summers’ warning in February that their previous massive spending bill — the pandemic stimulus bill passed in March — would have precisely the inflationary impact we are experiencing at the moment. Politico manages to skip over the Summers episode in this article, however.

Let’s get back to the narrative Politico chooses to use. Is it true that blacks and Hispanics are overrepresented in lower-income categories? Definitely, but those income demos are far from exclusively black and Hispanic, both in percentages and especially in raw numbers. According to Census Bureau data for 2020, 34% of white-not-Hispanic households (85.336 million) earned below $50,000, where inflation impacts would be most keenly felt — roughly 29 million such households. Of those, almost half (15.6%, or 13.3 million) earned less than $25,000. The percentages for the 18.326 million black households (52.2%, 29.1%) and 18.349 million Hispanic households (45.4%, 20.4%) were significantly higher, but the raw numbers show that lower incomes are clearly not solely a race phenomenon.

Nor are the impacts of economic policy and outcomes, especially inflation, which is an entirely economic issue. It’s basic mathematics, which has no relation to ethnicity. The overrepresentation of minorities in low-income households related to population size is another matter, of course, but that’s a larger and more complicated policy issue that is only partly related to economics. Inflation’s impact on those households is precisely the same as it is on white-not-Hispanic households, however.

So this is a false issue, but just the fact that Politico has raised it should set off big red flags for this White House. Joe Biden and his team have pandered to wokeness and CRT-drenched messaging ever since launching his campaign in early 2019. This looks like a very large petard by which Biden & Co are getting hoist, and that should advise them to change directions from big spending on social programs to some belt-tightening and focus on inflation mitigation tout suite. If Biden has lost the media, especially on the woke front, he may have no real floor for the free-fall to follow.

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