Biden has a ton of ideas to keep Putin's invasion from hurting Americans' wallets, but there's 'no quick fix'
- The White House is readying Americans for uncomfortable price hikes.
- The Russian invasion of Ukraine is helping accelerate a rise in gas prices.
The Biden administration is bracing for potential shocks to the American economy stemming from Russia's three-week old invasion of Ukraine — and there's really not much Biden can do about it.
The ongoing Russian military campaign has already caused gas prices to hit record levels. But inflation isn't restrained to only the energy sector. Prices are surging for groceries, housing, and furniture, according to a new federal report released on Thursday. It's causing administration officials to concede inflation won't ease anytime soon.
"We're likely to see another year in which 12-month inflation numbers remain very uncomfortably high," Treasury Secretary Janet Yellen told CNBC.
A gallon of gas cost $4.33 per gallon on Friday, per AAA. That's likely to rise with the US and UK imposing an embargo on Russian oil and natural gas. Biden suggested his hands were largely tied to cut those prices, saying he "can't do much right now. Russia is responsible."
Yet Democrats say it's a big deal. They're pushing for aggressive action to rein in costs ahead of the November midterms.
"Not only can we do something about it, we must do something about it," Rep. Ro Khanna of California said in an interview. "It's the top issue in voters minds when they go to they see the gas price, and they are paying $60, $70, or $100 to fill their tank. So we've got to reduce the price."
White House officials are trying. Here are some of the options they're eyeing to cushion the economy, per The Washington Post's Jeff Stein:
- Releasing oil from strategic reserves
- Securing more oil production from petrostates like Venezuela, Iran, or Saudi Arabia
- Enacting a gas tax holiday
- Produce heat pumps for Europe
- Accelerate clean-energy production
However, these measures will likely have little impact in providing short-term relief to Americans seeing price increases just about everywhere they turn, experts say.
"There's relatively little the administration can do," Jason Furman, a former top Obama administration economist, told Insider.
"Inflation is extremely hard to reverse once it takes on a life of its own," Brian Riedl, a budget expert at the right-leaning Manhattan Institute said in an interview. "It's like a wildfire. Once it grows, it's really hard to control."
"There's not a silver bullet or quick-fix solution for the administration right now," Lindsay Owens, executive director of the left-leaning Groundwork Collaborative, told Insider. "But I think there are a range of policy actions, including continued investment in the supply chain to help unsnarl supply shortages, continuing to keep a tight labor market, and to ensure that we can staff adequately to help alleviate the supply shortage."
The White House's options to provide relief at the pump appear limited. A gas tax holiday is all but dead in the Senate, and economists argue that it wouldn't do much to help consumers anyway. The Biden administration in November authorized the release of oil from the strategic petroleum reserve, but oil prices kept climbing.
Khanna recently partnered with Sen. Sheldon Whitehouse of Rhode Island to introduce legislation that would tax the profits of large oil companies and use it to provide checks to Americans four times a year. The bill faces long odds to become law due to Republican resistance to any tax increases.
The California Democrat, however, also views the current crisis to carve a path towards energy independence, and further transition the US off fossil fuels towards greener energy sources.
"We need to make the case that if Kennedy said that we need to go to the moon to beat the Soviets today, we need to have a moonshot for renewable energy to beat the petro states of Russia, Saudi Arabia, Iran and Venezuela," Khanna said. "That's what will give us true national security."