James Freeman:

[Thursday] this column noted the Washington Post story about White House economists who were refusing to endorse the Biden message tying inflation to corporate consolidation. Now a former Obama Treasury official is taking the president to task for blaming inflation on corporate supply chains. Eventually Mr. Biden will have to stop blaming business and acknowledge his own role and the role of Federal Reserve Chairman Jerome Powell in fueling the worst inflation in four decades.

The headline over a new op-ed in the New York Times reads: “Biden Keeps Blaming the Supply Chain for Inflation. That’s Dishonest.” Steven Rattner, counselor to the Treasury secretary during the Obama administration, says that the Biden supply-chain excuse is “both simplistic and misleading” and adds:

… supply issues are by no means the root cause of our inflation. Blaming inflation on supply lines is like complaining about your sweater keeping you too warm after you’ve added several logs to the fireplace.

The bulk of our supply problems are the product of an overstimulated economy, not the cause of it. Sure, there have been some Covid-related challenges, such as health-related worker shortages in factories and among transportation workers. But most of our supply problems have been homegrown: Americans have resumed spending freely, and along the way, they have been creating shortages.. All that consumption has resulted from vast amounts of government rescue aid (including three rounds of stimulus checks) and substantial underspending by consumers during the lockdown phase of the Covid crisis…

It’s a classic economic case of “too much money chasing too few goods,” resulting in both higher prices and, given the extreme surge in demand, shortages.

Mr. Rattner is not coming late to the anti-inflation party. For more than a year, he’s been warning about the problems likely to result from the Biden agenda. And in his new Times op-ed, the former Obama Treasury official offers useful advice for Team Biden:

For its part, the White House needs to be more honest as it rolls out initiatives…the high prices of meat and hearing aids, both of which Mr. Biden has vowed to address, are not at the heart of the current problem…

The Biden administration needs to shift its approach. In particular, with the economy steaming along, it should make deficit reduction as important as its other initiatives… But here again, Mr. Biden has been disingenuous. His Build Back Better plan claims to be deficit neutral, but that assertion is made credible only by using the fuzziest math.

If the White House and its allies among congressional Democrats need further persuasion that it’s time to restrain federal spending, perhaps they’ll heed a new warning from one of America’s foremost government-friendly economists. Bloomberg’s Mike Dorning reports:

Several of the Senate’s most vulnerable Democrats are spearheading a proposal to suspend the federal 18-cents-a-gallon gasoline tax until next year and others are drafting a bill to lower insulin prices. Democrats are also considering pulling out popular pieces of President Joe Biden’s stalled economic agenda addressing prescription drug and child care costs.

“None of these ideas so far will help to a meaningful degree, and could do some harm because they could juice up demand at a time supply is constrained by the pandemic and worsen inflation,” said Mark Zandi, chief economist for Moody’s Analytics.

Other than the sensible idea of cutting the gas tax, the rest of the agenda sounds like still more spending. And when you’ve lost Mark Zandi…

Sadly, the president now seems focused on crafting an empathetic message on inflation rather than reforming the federal policies that inflame it. The Journal’s Catherine Lucey and Andrew Restuccia report from Washington:

President Biden is shifting his message on inflation to show he understands Americans’ economic woes, in the midst of mounting public frustration over rising prices and after pleas from worried Democrats to change his tune.

In recent weeks, Mr. Biden has made personal appeals in his speeches to families facing higher prices for food, gasoline and cars. Addressing county officials this week he said: “I grew up in a family where the price at the pump was felt in the kitchen. Everybody knew. Everybody felt it. I understand.” In Virginia last week, he said: “I know food prices are up, and we’re working to bring them down.”

If he really means that last part, Mr. Biden’s State of the Union address on March 1 would be a great time to discuss how he’s going to restrain federal spending and reduce the U.S. tax and regulatory burden on U.S. business. It’s time to encourage the production of more goods and services to soak up all those dollars looking for something to buy.