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Biden’s full plate: Ukraine, inflation, low public approval

On the same day that President Joe Biden called out Russia and and issued harsh sanctions for its invasion of Ukraine, his only other public appearance was an event focused on the need to unkink the supply chain for minerals used in batteries, electronics and other technologies.

The back-to-back events on Tuesday highlighted the competing claims for Biden’s attention entering the spring of a midterm election year: the prospect of a calamitous European land war that will only add to inflation and other problems at home while also managing a vexing set of domestic challenges and must-do tasks.

For Biden, the convergence of such urgent foreign and domestic issues puts to a test the often cavalier assertions of previous administrations that a president has to be able to “walk and chew gum” at the same time.

Biden acknowledged the troubling overlap in remarks Tuesday as oil and gasoline prices have climbed on the grim headlines from Ukraine. He announced sanctions against Russian financial institutions, oligarchs and banks as well as Russia’s sovereign debt, effectively cutting the country off from U.S. and European financial systems.

Yet Biden also said he wants to limit the “pain” to Americans because sanctions aimed at pressuring Russian President Vladimir Putin could also limit Russia’s exports of oil and natural gas and cause global energy prices to soar.

“I want to take robust action to make sure the pain of our sanctions is targeted at a Russian economy, not ours,” the president said at the White House. “We’re closely monitoring energy supplies for any disruption. We’re executing a planned coordination with major oil producing consumers and producers toward a collective investment to secure stability and global energy supplies.”

His White House this week is also vetting nominees for a coming opening on the Supreme Court. Add that 40-year high inflation, a stalled domestic agenda, a slew of executive orders to enforce, infrastructure dollars to spend and sagging approval ratings that could make implementation all the more difficult. And the impact of the COVID pandemic, while seeming to fade, is still being felt.

Biden used the minerals event to stress the importance of investing in U.S. production and avoiding reliance on China. California Gov. Gavin Newsom greeted Biden at the minerals event Tuesday afternoon by expressing surprise that the virtual event hadn’t been rescheduled because of Ukraine.

“I had an over-under that you were going do this today,” Newsom joked. “Thank you for not canceling on us.”

The start of a Russia invasion into Ukraine has spillover effects for Biden’s previous plans. It takes time to barnstorm the country and rally support for Democrats as he said he would do to try to maintain control of Congress in the midterm elections and it gets tougher to defuse inflation as the U.S. and its European allies escalate sanctions against Russia.

The invasion also puts Biden in a holding pattern, as he plans to amplify sanctions only to counter any additional aggression from Putin.

“The fact that Putin is in control of when and how and to what degree he invades, really places Biden in a very difficult position,” said Cal Jillson, a political scientist at Southern Methodist University in Dallas. “Putin looks like he is completely in charge.”

All of this takes away from the problem that Americans had previously said Biden must prioritize: inflation. A December poll from the Associated Press-NORC Center for Public Affairs Research found that 68% of Americans deemed the economy to be a top priority, while 24% said the cost of living should be a top priority.

But just how the unfolding crisis in Ukraine plays out and what it means for Biden’s agenda is difficult to divine. The higher energy and commodity prices could be short-lived, or they could reflect the beginning of a prolonged disruption as the sanctions to exclude Russia from the global economy wage a toll on oil, natural gas, aluminum and nickel supplies.

“We’re chasing a moving target,” said William Galston, a senior fellow in governance studies at the Brookings Institution.

Biden could easily blame higher prices on Putin. But voters might be skeptical because the inflationary run-up predates the current tensions in Europe. U.S. gas prices have increased about 6% over the past month, but they’re up about 33% from a year ago, according to AAA.

“We have had close to a year of soaring inflation rates and higher gas prices that cannot be attributed to foreign policy,” Galston said. “And in these in these circumstances, it’s not clear to me that an all out effort to shift the inflation focus to the Russian actions would be credible.”

Republican lawmakers have argued that Biden’s spending plans have been the real trigger for inflation. Yet they’re also encouraging Biden to immediately deploy sanctions against Russia in hopes of deterring Putin, a move that could drive prices even higher.

“This should begin, but not end, with devastating sanctions against the Kremlin and its enablers,” Senate Republican Leader Mitch McConnell said in a statement. “The president should waste no time in using his extensive existing authorities to impose these costs.”

Beyond oil, the markets for natural gas, corn, wheat, aluminum and nickel — all commodities at risk from the invasion — have turned volatile and hypersensitive to each move by the U.S., Russia, Ukraine and NATO allies.

The higher prices could push U.S. inflation above its current annual rate of 7.5% at a time when Biden has struggled to get sufficient support for an expanded child tax credit, child care subsidies, universal pre-kindergarten and other programs that could free up cash in family budgets. West Virginia Sen. Manchin, the key Democratic vote in the split Senate, is wary of additional spending.

Yet families will likely need some form of relief and that creates even greater urgency for Biden’s domestic agenda, said Joe Brusuelas, chief economist at the consultancy RSM, who estimates that the economic shock from war in Ukraine could send inflation above 10%.

Brusuelas said that the best fix might be renewing the recently expired increase to the child tax credit. The credit would get additional funds to families on a monthly basis to insulate them against price increases, an immediate source of funds that would contrast to proposed changes in federal regulation and new infrastructure spending to reduce price pressures in the long term.

“We have a readymade program that could be quickly revived to provide direct cash to stressed households and cushion the adjustment caused by Vladimir Putin’s external adventures,” Brusuelas said. “It is the American middle and working classes that will bear the burden of adjustment caused by another European war.”

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