An Inflation-Driven Midterm Will Not Change Biden’s Economic Focus

Inflation and the economy dominated voters’ concerns on Election Day, yet they did not culminate in the kind of political drubbing of President Biden and his party that many had expected. That outcome has made Mr. Biden less inclined to pivot on economic issues to appease Republicans, who have spent months pummeling the president over his handling of the economy.

“We lost fewer seats in the House of Representatives than any Democratic president’s first midterm election in the last 40 years,” Mr. Biden said during remarks at the White House on Wednesday, adding, “I don’t have to change any of the policies that have already passed.”

Exit polls showed that concerns over rapidly rising prices were top of mind in House and Senate races across the country, with three-fourths of voters rating the economy as only fair or poor. Those who were most negative about the economy and inflation broke decisively for Republican candidates.

But Democrats nationally appeared to have overcome economic headwinds in many key races this fall, capturing a Senate seat in Pennsylvania and not losing as many races as party leaders had feared. As of Thursday, Republicans had a narrow lead to control the House. The Senate remained too close to call and was likely to be undecided until a runoff in Georgia next month.

Surveys before the midterm elections had suggested that inflation concerns were poised to play a decisive role for the first time in 40 years — mirroring the past decade, when inflation topped 8 percent on an annual basis. Recent polling from Gallup showed that nearly half of voters said the economy would be particularly important to them, and that 1 in 5 Americans called inflation the country’s most important problem, topping issues like crime, immigration and abortion.

Throughout the campaign, Republicans sought to blame Mr. Biden and his economic policies for rampant inflation, citing that as the reason to drive Democrats out of power. Economists largely agree that the pandemic stimulus and other spending bills Mr. Biden signed over the past two years have added to inflation, though there is no evidence that his policies alone have driven increases in prices for food, gasoline and other consumer staples.

But the president made clear on Wednesday that he does not see a need to change course when it comes to the economy. While he may seek common ground with Republicans on some fiscal matters, such as relatively mild cuts to government spending, he is unlikely to turn sharply to a more centrist economic policy like his Democratic predecessors did.

After losing control of both chambers of Congress in 1994, President Bill Clinton tacked right, working with Republicans to curb spending on safety net programs and adding new work requirements and limits on benefits. In 2010, President Barack Obama similarly ushered in strict spending curbs to appease Republicans after his party lost control of the House.

Asked what he planned to do differently given voter sentiment about the economy, Mr. Biden replied: “Nothing, because they’re just finding out what we’re doing. The more they know about what we’re doing, the more support there is.”

“The overwhelming majority of the American people support the elements of my economic agenda,” he said, adding, “I’m confident these policies are working and that we’re on the right path, and we need to stick with them.”

The president’s position was buoyed by inflation data released on Thursday that showed price gains, while still rapid, moderated more than expected in the year through October. Consumer prices rose 7.7 percent through the year, a cool-down from 8.2 percent last month.

“Today’s report shows that we are making progress on bringing inflation down, without giving up all of the progress we have made on economic growth and job creation,” Mr. Biden said in a statement after the Consumer Price Index release. “My economic plan is showing results.”

Republicans were quick to counter, saying that his refusal to shift course would hurt consumers.

“With persistent and high inflation for the foreseeable future, American workers saw yet another pay cut in their real wages last month,” Representative Kevin Brady, Republican of Texas, said in a statement. “What will President Biden do differently to change his cruel economy in which so many American are struggling? His answer is ‘nothing.’ What a shame.”

Mr. Biden plans to focus on carrying out more than $1 trillion in new government programs that he signed into law, much of which is aimed at speeding the nation’s transition from fossil fuels, bolstering domestic manufacturing and outpacing China in the race to dominate high-tech industries.

Yet how the president believes he can govern and what the political dynamic allows may not align, particularly if inflation persists and the U.S. economy falls into recession, as many expect. A recession could force Mr. Biden to seek new spending measures to jump-start economic growth, which Republicans would almost certainly reject. Mr. Biden styles himself as a bipartisan negotiator, having had some success in cobbling majorities across the aisle for infrastructure, manufacturing and gun legislation. But some of his most reliable Republican partners in the Senate are retiring and will be replaced by new members who campaigned as more firebrand partisans — like the switch from Senator Rob Portman of Ohio to J.D. Vance, who was elected on Tuesday.

If Republicans gain control of the House, they have already promised to use the borrowing cap — known as the debt limit — to force cuts to federal spending, including a potential push to reduce spending on Social Security and Medicare. It is a negotiating tactic that Mr. Biden knows all too well: In 2010 and 2011, as vice president, he led negotiations on a series of fiscal compromises with Republicans, such as raising the borrowing limit.

Mr. Biden said on Wednesday that he was “prepared to work with my Republican colleagues” and would invite them to the White House when he returned to Washington after attending a Group of 20 summit in Bali, Indonesia, next week.

But he added that he was “not going to support any Republican proposal that’s going to make inflation worse” and said he would also refuse “to cut or make fundamental changes in Social Security or Medicare. That’s not on the table.”

The inclination to forge ahead along Mr. Biden’s existing economic policy path is in part a reflection of administration officials’ stated belief that inflation was just one of many issues that hampered Democrats this fall in addition to crime, immigration and the historical backlash against a president’s party in congressional elections after he takes office.

Economic conditions on their own have historically mattered far less to midterm results than a president’s approval ratings. As recently as 2018, Republicans suffered deep congressional losses — including control of the House — under President Donald J. Trump, even though unemployment was near a 50-year low and the economy was growing steadily.

Mr. Biden spent the waning weeks of the midterms campaign stressing his economic accomplishments, like investments in low-emission energy sources; in highways, broadband and other infrastructure projects; and in advanced manufacturing sectors like semiconductors, while promoting the rapid job growth on his watch.

But he also sought to highlight Republican plans to reduce benefits and raise the retirement age for two bedrocks of America’s government-funded economic safety net: Social Security and Medicare.

Still, over the course of the election cycle, it was Republicans — not Democrats — who flooded the airwaves with economic messaging. Republican candidates spent $385 million nationwide on television advertisements mentioning taxes and $250 million on ones mentioning inflation, according to data compiled by AdImpact. Democrats spent $209 million on ads mentioning taxes and $139 million on those mentioning jobs. They spent more on ads mentioning Social Security ($80 million) than inflation ($74 million).

Perhaps most damaging to Democrats was the degree to which voters — and even Mr. Biden’s supporters — appear disenchanted with the president personally, along with his stewardship of the economy. His overall approval ratings began to sag last summer. That decline was less correlated with economic conditions than it was with the president’s order to withdraw U.S. troops from Afghanistan.

Mr. Biden’s approval ratings slumped further this spring, an apparent reflection of voter anxiety over increasing gasoline prices that were largely a result of Russia’s invasion of Ukraine, which rattled global oil markets. The ratings rebounded modestly at the end of this summer, as gas prices fell. The improvement stalled in September, and so did Mr. Biden’s climb in voters’ eyes. But it may have been enough to avoid a wipeout this week.