POLITICO Playbook PM: How inflation could hurt Dems this year — and beyond

Sep 16, 2023

By ELI OKUN

10/12/2022 12:57 PM EDT

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New Labor Department numbers out today showed the producer price index jumping 0.4% in September. | Matt Rourke/AP Photo

INFLATION NATION — Rising prices are, as Playbook readers well know, perhaps the biggest reason why Republicans stand a strong chance of flipping one or both chambers of Congress next month. But even as the Fed tries to get costs under control with aggressive rate hikes, inflation remains stubbornly high — and new waves of price pain could yet unfold after the midterms, shaking the political landscape well into the 2024 presidential campaign.

Several new data points and stories today spell out the danger for Democrats:

Incoming, part I: We’ll get another major inflation measure Thursday when the latest consumer price index numbers come out — and economists tell Bloomberg's Reade Pickert they expect a 0.4% month-to-month increase and 6.5% year-to-year increase in core CPI, which excludes volatile food and energy prices.

Those numbers would tie the 40-year high we saw in March, indicating that by some metrics, inflation remains as bad as it's ever been in the Biden era. (Housing prices are a key culprit.) "Even so, analysts are seeing signs that core inflation has peaked and is finally on a downward slope, though the decline may take time," Pickert writes. Overall CPI is projected to dip to an 8.1% annual raise, thanks to improved gas prices.

Incoming, part II: New Labor Department numbers out today showed the producer price index jumping 0.4% in September, twice August's increase, indicating that the Fed still has plenty of ground to travel to bring prices down. Food and home heating were the biggest cost drivers, per the WSJ. The PPI's year-over-year rise stood at 8.5%, ticking down from the previous month.

Incoming, part III: If you thought we’ve seen it all on inflation, more surprises lay in store. Health insurance and medical costs are poised to skyrocket, posing the next big economic challenge for President JOE BIDEN over the next couple of years, Sam Sutton reports.

Administration officials say they don't expect the increase to last long, but the stark change in health care costs could rattle the country and reshape Biden's post-midterm agenda (or reelection bid). "While White House officials say the president and Democratic leaders have already taken meaningful steps to address the problem," Sam writes, "health care advocates and budget hawks say that won't be enough to remedy a significant deterioration in the affordability and quality of health coverage."

The political fallout: WaPo's Hannah Knowles has another story on economic concerns worrying Democrats in Nevada, one of the most inflation-addled swing states. Working-class voters of color, in particular, are threatening to bolt from the Dem coalition: Knowles finds several voters who have backed Democrats in the past but are now wavering. Others say that all they’ve heard about the Senate candidates is that ADAM LAXALT is anti-abortion. Republicans think if they can crack 37% among Latinos, Laxalt will win. The big question is whether HARRY REID's famed turnout machine can save Dems.

HEAVY METAL — The Biden administration is considering banning all Russian aluminum as punishment for the latest missile attacks in Ukraine, Bloomberg's Joe Deaux and Jenny Leonard scooped — a step the U.S. has been loath to take thus far because the material is so essential. Other options include massive tariffs that would essentially amount to a ban, or sanctions on Russia's aluminum company.

DANCE OF THE SUPERPOWERS — After a Ukraine-driven delay, the White House today finally released its big National Security Strategy, which lays out plans to compete with Russia and China while keeping an eye on terrorist threats, at home and abroad. The strategy also calls for more nuclear spending, stronger alliances and a focus on diversity in the military. Breakdown from Military Times … The strategy

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BIG PICTURE

DISINFORMATION DIGEST — Gobs of false information and conspiracy theories are swirling on social media in languages other than English, targeting immigrant communities even more than in past elections, NYT's Tiffany Hsu reports, and the platforms are doing little to respond. From Spanish to Chinese to Vietnamese, the rumors — often pushing conservative viewpoints about inflation, fake ballots, the FBI and more — are moving faster than fact-checkers can debunk them.

STAT OF THE DAY — "In the poll we have in the field right now, only 0.4 percent of dials have yielded a completed interview," NYT's Nate Cohn writes in a stark illustration of how difficult polling has become.

BATTLE FOR THE SENATE

UN-ENDORSEMENT WATCH — The Milwaukee Journal Sentinel has a brutal editorial today urging voters to send Sen. RON JOHNSON (R-Wis.) packing: "Johnson is the worst Wisconsin political representative since the infamous Sen. JOSEPH McCARTHY."

THAT WAS FAST — Just a day after leaving the Democratic Party, former Rep. TULSI GABBARD is swinging hard to the right: She’ll campaign with New Hampshire's DON BOLDUC, his campaign said.

BATTLE FOR THE HOUSE

AGAINST THE GRAIN — Though Democrats are mostly on the defensive, they’re hoping to hang on to their majority in part by targeting 14 Republican-held districts that Biden won, AP's Will Weissert reports from Grand Rapids, Mich. Democrat HILLARY SCHOLTEN is aiming to "cement this area's political transformation from red to blue." Republican JOHN GIBBS, on the other hand, refuses to commit to Weissert that he’ll accept the results of the election.

RATINGS ROUNDUP — Sabato's Crystal Ball shifted a new seat in Colorado from leaning Republican to toss-up, an open Dem-held seat in Rhode Island from leaning Democratic to toss-up and an open Dem-held seat in Wisconsin from leaning to likely Republican.

BATTLE FOR THE STATES

DEMOCRACY ON THE AIRWAVES — A whopping $46 million in ads are attacking Republican secretary of state contenders and other top nominees who deny the reality of the 2020 election or advocate other voting conspiracy theories, Bloomberg's Ryan Teague Beckwith tallies.

RATINGS ROUNDUP — Three gubernatorial changes from Sabato's Crystal Ball: Colorado's JARED POLIS moves off the board as safe Democratic, South Dakota's KRISTI NOEM inches onto the board as likely Republican, and Minnesota's TIM WALZ gets some breathing room as likely Democratic.

DOWNBALLOT — From Kalispell, Mont., WaPo's Karin Brulliard has an interesting dispatch on a contentious state Supreme Court race that is turning on the question of abortion. Gov. GREG GIANFORTE and the state's empowered hard right have been challenging the more liberal court, which has been a key impediment to abortion restrictions. "But as abortion — along with polarizing issues such as redistricting and guns — highlight the power of state courts, they are also injecting more partisanship into races even in states where judicial elections are officially above the fray."

HOT POLLS

— Georgia: Democratic Sen. RAPHAEL WARNOCK narrowly leads HERSCHEL WALKER 46% to 43%, per the Atlanta Journal-Constitution/Georgia News Collaborative. And Republican Gov. BRIAN KEMP may be running away with his reelect: He's ahead of STACEY ABRAMS 51% to 41%. … Quinnipiac has rosier results for Dems: Warnock leading 52% to 45% and Kemp up only 50% to 49%. … But Walker's internal polling has him ahead 46% to 44%, per NBC's Marc Caputo, who also reports that Walker had his best fundraising day ever Tuesday ($450,000).

— Nevada: Democratic Sen. CATHERINE CORTEZ MASTO is just ahead of Laxalt in the new USA Today/Suffolk University survey, 46% to 44%. Democratic Gov. STEVE SISOLAK trails JOE LOMBARDO, 44% to 43%.

— New Hampshire: Democratic Sen. MAGGIE HASSAN is up 52% to 45% over Bolduc, per AARP. Republican Gov. CHRIS SUNUNU is beating TOM SHERMAN 55% to 41%. In the state's House races, Democratic Rep. ANNIE KUSTER leads ROBERT BURNS 53% to 43%, while Democratic Rep. CHRIS PAPPAS is virtually tied with KAROLINE LEAVITT, 48% to 47%.

HOT ADS

Via Steve Shepard

— Wisconsin: A new ad from the RGA's Wisconsin affiliate features a woman whose sister was murdered by her then-husband — who has been paroled by "TONY EVERS’ parole commission."

— Oregon: Democratic gubernatorial candidate TINA KOTEK's latest ad seeks to tie Republican CHRISTINE DRAZAN to "MAGA Republicans," featuring images of DONALD TRUMP, Rep. MARJORIE TAYLOR GREENE (R-Ga.) and Sen. TED CRUZ (R-Texas).

— Washington: In Republican TIFFANY SMILEY's latest ad, women who say they have voted for Democratic Sen. PATTY MURRAY in the past back the Republican over crime concerns, including one who says, "Nonstop sirens. That's why you don't vote for Patty Murray. [It] never used to be like this."

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JAN. 6 AND ITS AFTERMATH

THURSDAY’S HEARING — The House Jan. 6 committee will unveil new evidence from the Secret Service of Trump being warned of violence the day of the insurrection — and nonetheless stoking it, WaPo's Carol Leonnig and Jackie Alemany report. Emails from the Secret Service and video footage will "further buttress accounts about staff members warning Trump about the risk and then the reality of violence that day," before his tweeting encouraged the rioters.

TRUTH AND CONSEQUENCES — A new ethics complaint in New York calls for an investigation by the state's attorney grievance committee of KENNETH CHESEBRO, who tried to help overturn the 2020 election, NYT's Charlie Savage reports. Lawyers Defending American Democracy organized the complaint, which attracted "a list of high-profile legal figures" in support — including former Chesebro friend LAURENCE TRIBE. The complaint

CONSPIRACY TRIAL LATEST — "Oath Keeper describes group's large weapons cache ahead of Jan. 6," by Kyle Cheney: Witness TERRY CUMMINGS on Wednesday "described a massive stockpile of firearms and other weaponry that allies had stashed in an Arlington, Va. hotel. ‘I had not seen that many weapons in one location since I was in the military.’"

THE PANDEMIC

GETTING A BOOST — The FDA today paved the way for children as young as 5 to get new coronavirus vaccine booster shots, authorizing Pfizer/BioNTech for those 5 and up and Moderna forthose 6 and up. Children under 12 hadn't previously been cleared for the jabs. More from Stat

MORE POLITICS

BIG SWING — "How to Make a Semi-Fascist Party," by N.Y. Mag's Jonathan Chait, reporting from last month's National Conservatism Conference: "The hostile, paranoid, and increasingly authoritarian path ahead for American conservatism."

THE NEW GOP — House Republicans are increasingly eager to tout their anger at corporate America, with hostility to big business high on the policy agenda if they retake the chamber, the Washington Examiner's David Drucker reports. The GOP sees this as a new political opening to connect with working-class Americans. And it could make for a dramatic shift in lobbying and corporate relations in Washington next year. "The Republican Party is so much healthier now that we’ve divorced ourselves from corporate America," Republican Study Committee Chair JIM BANKS (R-Ind.) says.

DEMOCRATIC DEMOGRAPHICS — Despite their electorate, Democratic campaign staffers are still disproportionately (elite) college-educated white people, a new analysis finds, per NBC's Alex Seitz-Wald. The study from DANIEL LAURISON covered 2004 to 2020, during which time 40% of Dem staffers went to elite universities and the percentage of non-college graduates was in the single digits.

POLICY CORNER

WHAT GARY GENSLER IS UP TO — The progressive SEC chair is working on a major initiative to overhaul the stock market's infrastructure, inviting a significant backlash from the industry, Declan Harty reports. The coming regulations would "crack down on the complex web of payments and fees that exchanges, brokerages and trading firms share when processing investors’ stock trades." But Gensler's moves could spark industry lawsuits and GOP criticism — and even some congressional Democrats are warning him not to go too far.

GET READY FOR GLOBAL TECH DAY: Join POLITICO Live as we launch our first Global Tech Day alongside London Tech Week on Thursday, June 15. Register now for continuing updates and to be a part of this momentous and program-packed day! From the blockchain, to AI, and autonomous vehicles, technology is changing how power is exercised around the world, so who will write the rules? REGISTER HERE.

JUDICIARY SQUARE

KNOWING DAVID WEISS — The Delaware prosecutor who's leading the HUNTER BIDEN investigation is known for being an even-handed straight shooter who former colleagues say won't politicize any charging decisions, WSJ's James Fanelli reports. Weiss, a Trump appointee, will make the ultimate call on whether Biden committed crimes; he "has a depth of experience in handling politically sensitive cases."

FOR YOUR RADAR — "Trump can't get out of deposition in E. Jean Carroll defamation lawsuit, judge rules," CNN

TRUMP CARDS

NEW FROM ‘UNCHECKED’ — "New book details tense call between Trump and moderate Republicans ahead of first impeachment," by NBC's Scott Wong, via Rachael and Karoun Demirjian's new book: "That weekend at Camp David, Bade and Demirjian write, moderate Republicans ‘charged the president's chief of staff like a pack of wolves.’ ‘Hell of a week. Can we try a little harder here? Like really, MICK?’ Rep. ANN WAGNER, R-Mo., sneered at MULVANEY as she and other Republicans ripped Trump's top aide while huddling around a crackling campfire."

PLAYBOOKERS

IN MEMORIAM — "Walter Dean Burnham, Who Traced Political Parties’ Shifts, Dies at 92," by NYT's Sam Roberts: "Walter Dean Burnham, a political scientist who theorized that political parties realign periodically in tectonic shifts that he called ‘America's surrogate for revolution,’ died on Oct. 4."

OUT AND ABOUT — The Partnership for Public Service hosted an event for the release of "The Peaceful Transfer of Power: An Oral History of America's Presidential Transitions" ($29.95) by David Marchick, Alexander Tippett and A.J. Wilson on its office rooftop Tuesday evening. SPOTTED: Josh Bolten, Carlos Monje, Ed Meier, Dan Tangherlini, Eric Ueland, Claire Buchan Parker, Tamera Luzzatto, Mike Memoli, Avery Miller, Max Stier, Valerie Smith Boyd, David Marchick, Martha Kumar, Mary Gibert, Terry Gerton and Katie Tenpas.

STAFFING UP — Livia Shmavonian is heading up OMB's "Made in America" office, per Reuters. She previously was director of the International Trade Administration with the Commerce Department.

TRANSITIONS — Sam Franco is now deputy director of legislative and public affairs at the Architect of the Capitol. He most recently was chief of the legislative team at the VA. … Gary Nuzzi is now VP of public affairs and government affairs for CVS Health. He previously was SVP for public affairs at Adfero. … Liz Natonski is now director of scheduling for Sen. Martin Heinrich (D-N.M.). She most recently was chief of operations for Rep. Jason Crow (D-Colo.).

WEEKEND WEDDING — Emily Blumenthal, senior accountant at RSM US, and Joel Cohen, legislative director for Rep. Dina Titus (D-Nev.) and a Ben Cardin alum, got married Sunday at Gordon Springs in Purcellville, Va. The couple met in November 2020 through a program put on by the Jewish Federation of Greater Washington. They had their first date at Union Market in 2021 and got engaged at the same location one year later. Pic … Another pic … SPOTTED: Regan Williams, Elya Taichman, Dylan Sodaro, Paige Schwartz, Zach Kahan, Matt McLaughlin, Reid Fauble, Mitch Moonier, Jennifer Bell, Andrew Fisher, Melanie Egorin and Mary Bowman.

WELCOME TO THE WORLD — Liza Joenler, senior director at Seven Letter, and Simon Joenler, congressional adviser for defense at the British Embassy, welcomed Freya Crawford Joenler on Monday.

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