Jared Bernstein, a member of the White House Council of Economic Advisers, admitted Sunday that inflation is "unacceptably high," while also stressing that President Biden would not back down on climate change spending initiatives and does not see the country as headed toward a recession.
Fox News host Shannon Bream noted that about a year ago to the day, President Biden said that no serious economist thought that the U.S. would enter a period of unchecked inflation. His remarks came when the U.S. had at 5.4% inflation, while the U.S. is at 9.1% as of this week.
"How did the White House get this so wrong?" Bream asked Bernstein, a guest on "Fox News Sunday."
"Well that actually was the dominant forecast at the time, and we were very much citing forecasts across the board, including those at the Federal Reserve," Bernstein responded, noting "some unforeseen things that occurred," namely the war in Ukraine.
"Ukraine and Russia are both breadbaskets and energy baskets for the world," he said. "Those have put considerable upward pressure on prices. For example, for inflation, which is unacceptably high – let’s get that clear right out of the gate. Went up 1.3% in June. Again, an unacceptably high increase."
"Half of that is the increase in energy prices alone," Bernstein said, noting that since then, the price of gas has come down 50 cents per gallon, with now 20,000 gas stations with gas below $4 per gallon.
"Still too high," he said, "but that's moving in the right direction, giving Americans some much-needed breathing room. They need more, and we’re working on it, but that is a move in the right direction."
Bernstein claimed that Democrats are united on lowering the cost of prescription drugs and health insurance premiums under the Affordable Care Act, but Bream contended that Sen. Joe Manchin, D-West Virginia, in opposing some of the Biden administration’s big spending packages, might have inadvertently done the White House a favor when it comes to inflation.
"[What] Democrats are actually aligned on is a plan to lower prescription drug costs," Bernstein said. And I think everyone who hears me say that probably gave some kind of an applause; everyone wants to see that happen. But while presidents have tried to make it happen for decades, it still hasn't occurred. Now we pay two to three times for prescription drugs, what Europeans pay for precisely the same drugs. So it's time to stand up to Big Pharma, come together. Do something on the affordability there."
Yet, despite hesitancy from Manchin and others about more spending, especially regarding the White House’s climate change initiatives, Bernstein said Biden recognizes the "urgency of taking action against climate change and building up our clean energy industries, which are so important for good American jobs going forward."
"If there’s no legislative path forward, he will take the executive order and rule change path," Bernstein said of Biden’s approach.
"This president has tackled aggressively climate change measures already," he added. "For example, he's tapped the Defense Production Act to significantly ramp up the production of clean energy. He has set the most rigorous emissions standards yet to be set in this country, and he has helped to jumpstart the offshore wind industry. Now, those are all measures that he took by the power of the pen through executive action and rule changes. And he will continue to do that."
Bernstein stressed that the budget deficit is down $1.7 trillion this year, representing a 77% decline. But Bream noted that the U.S. is coming off enormous pandemic-era spending to keep the economy afloat.
The GDP was negative in the first quarter of the year and other figures suggest that it could be negative again in the second quarter, yet the White House pushed back on the assertion that the country is in a recession.
"It has to do with a number of economic variables that are actually doing better right now," Bernstein said, adding that payroll growth and consumer spending are both strong right now.
"It is very hard to conclude that we are in a recession when you look at the payroll and the job gains that we've seen now, it is tricky to look around the corner here, and I'm not going to predict quarters down the road," he continued. "But I think right now, you’ve got inflation headwinds big time in this economy – not taking anything away from that – but you also have some very strong tailwinds that are boosting consumers."
Bernstein also pointed to what he described as the strength of the U.S. labor market, noting that 9 million jobs have been added to the economy since Biden took office.