Biden plans to use Cold War-era law to try to lower US prices

Photograph: Brandon Bell/Getty ImagesBiden plans to use Cold War-era law in attempt to lower US prices

Defense Production Act of 1950 transferred to streamline production during the Korean War, last used during the Covid pandemic

The White House has announced it plans to use a Cold War-era law to ease supply chain problems that the administration says are fueling inflation — a key electoral challenge to Joe Biden's re-election chances next year as polls consistently show voters buys his bidenomics idea.

A White House statement said Biden will use the Defense Production Act to improve domestic production of drugs deemed critical to national security and will convene the first meeting of the President's Council on Supply Chain Resilience, where other manufacturing-related measures will be announced. and shipping goods.

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“We are committed to continuing to work to lower prices for American consumers and ensure the sustainability of our supply chains for the future,” Lael Brainard, director of the White House National Economic Council and co-chair of the new Supply Chain Council, said in a separate statement.

The Defense Production Act of 1950, which was passed to streamline production during the Korean War, was last used in early 2021 during the coronavirus pandemic to speed up and expand the availability of ventilators and personal protective equipment.

The Supply Chain Council aims to address issues ranging from improving data sharing among government agencies, renewable energy supplies and freight logistics.

Jake Sullivan, White House National Security Adviser, will co-chair the council, which includes the heads of Cabinet departments, the administration's Council of Economic Advisers, the US Director of National Intelligence, the Office of Management and Budget and other agencies.

Monday's announcement comes as the U.S. economy appears to be doing well on paper. But the White House has acknowledged that the improving economy is not being shared by consumers, and the administration has explicitly linked the economy to the president, calling it Bidenomics.

A recent Economist/YouGov poll found that only 39% voters approve of Biden's approach to jobs and the economy. And a separate Reuters/Ipsos poll names the economy as the most important issue for Americans over the past two years.

Even as inflation has slowed, consumers are shouldering an economic burden they haven't faced in years. According to a Bloomberg report, prices have risen as much over the past three years as they did over the previous decade, making it now cost nearly $120 to buy the same goods and services that a family could afford with $100 before the pandemic.

< p class="dcr-1kas69x">Since January 2020, grocery and electricity prices have risen 25%, used car prices have risen 35%, auto insurance prices have risen 33% and rental prices have risen about 20%, according to Bloomberg. Housing affordability is at the highest level. the worst in history. Auto loan rates and credit card interest rates are also at their peak.

As a result, many Democrats say it's time for Biden to adjust his economic message ahead of the 2024 election.

< p class="dcr-1kas69x">The White House statement said that “robust supply chains are fundamental to a strong economy.”

“When supply chains are smooth, prices for goods, food and equipment fall, putting more money in the pockets of American families, working farmers and entrepreneurs,” the statement added.

«Supply chain stress has eased markedly over the past year, and the Biden administration's announcement is another step in the right direction,» said Moody's economist Jesse Rogers.

Rogers added: “While it is unlikely that some of the more complex challenges facing supply chains can be solved overnight, measures targeting pharmaceuticals, climate infrastructure, data security and logistics will improve resilience and usher in smart infrastructure and global cooperation.»

In addition to measures on domestic production, the administration said it would work to strengthen global supply chains internationally, including by developing early warning systems with allies and partners. to detect and respond to supply chain disruptions in critical areas.

These include measures “to improve weather, water and climate observation and data sharing capabilities” with countries “needed to produce global climate information and minimize impacts on infrastructure, water resources». , health and food security.»