Discontent over skyrocketing inflation is the most important issue for voters heading into this year’s midterm election, and Democrats are going to pay the price, according to Frank Luntz, a longtime GOP pollster and strategist.
While Luntz is a Republican, he tends to take both parties to task when he feels they’re missing the mark on an issue.
“We’re not just anxious anymore. This country is getting angry when they go to the supermarket, when they fill up their tank,” Luntz told CNBC. “They’re going to take that anger out at the ballot box in November,” with the Democrats’ slim majorities in the House and Senate at stake.
Luntz said he can’t fathom why President Joe Biden is trying to paint such a rosy picture of the economy while many people are struggling with higher prices against the back-drop of the hardships of the continuing pandemic and spiking Covid cases around the nation due to the highly contagious omicron variant.
Voters have given Biden poor marks on the economy in recent polling, including the most recent CNBC/Change Research survey.
“There’s a complete disconnect between what they are being told and what they are experiencing,” Luntz said. “The reason inflation is so important politically and economically, it’s universal, ubiquitous and it’s understandable.” He added, “I think this is going to have a much bigger affect on the electoral outcome in November than things like the voting rights act or January 6. This is hitting people where they live.”
Luntz bases a lot of his analysis on takeaways from focus groups with swing voters. In the lead-up to the 2020 presidential election, for example, he predicted Biden would beat incumbent Donald Trump. However, before and after the election, the pollster was rather even handed in his criticism of both Trump and Biden, in interviews on CNBC.
“You can’t blame Republicans” for the high inflation, Luntz said on “Squawk Box” on Friday. “This is only something that’s happened over the last year.”
“It may not be Joe Biden’s responsibility,” Luntz acknowledged, recognizing that the dynamics causing rising prices – such as persistent easy money by the Federal Reserve spanning both Trump and Biden administrations — are more complex than the current White House’s policies alone.
“But the public is increasingly thinking it’s his [Biden’s] fault. And the consequences of that are significant on Democrats,” he added.
This week, there was more confirmation of what Americans have been feeling in their everyday lives: Inflation is raging, and everything from food to gas to buying big ticket items like used cars is costing a whole lot more.
The government said Thursday the December producer price index rose 9.7% year over year, the largest increase on record. The reading on last month’s wholesale inflation came one day after December’s consumer price index rose 7% year over year, the quickest pace since June 1982. While both numbers were basically in-line with Wall Street estimates, they were still more evidence of problematic inflation.
The Fed has recently been telegraphing accelerated steps to tamp down price pressures after spending month saying that rising inflation would be transitory. In confirmation hearings this week on Capitol Hill and in the minutes from the Fed’s December meeting, central bank officials have been signaling multiple hikes of near-zero interest rates this year, in addition to a faster tapering of Covid-era bond purchases and talk about reducing the central bank’s balance sheet.
Luntz said the failure of Biden’s massive Build Back Better bill — at the hands of conservative Democratic West Virginia Sen. Joe Manchin — was a blessing for the economy. More stimulus money “would only be a fuel, it would only be a lubricant for greater inflation and that is exactly what the people does not want right now,” he added.
“The challenge is you can’t spend your way out of it. You can spend more money to hire people. You can spend more money to juice the economy or help small business. But on the issue of inflation, spending more money makes the problem worse,” Luntz said.