Kudlow: America's inflation problem is about much more than energy

In today's White House description of President Biden's schedule, it says he will join Business Roundtable CEOs and talk about Russia's "unprovoked and unjustified" war with Ukraine and then it adds "and the president plans to lower costs for working families, create good paying union jobs, and tackle the climate crisis." 

Really? I'll bet those hot shot CEOs are dying to talk about more social spending, more union jobs and especially the climate crisis, but wait a minute. Is oil at $110 today? Is gasoline about $4.25 at the pump? Did you say climate crisis? Unionization?  

Those of you of a certain age may remember the 1980 debate between Jimmy Carter and Ronald Reagan. Carter kept accusing Reagan of cutting healthcare and the Gipper famously responded, "There you go again." I would say the same thing about President Biden. 

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"Climate change, Build Back Better is going to reduce inflation, unionization is vitally important." There he goes again. All the things the country doesn't want, as poll after poll tells us. The country would like lower inflation. The country would like more oil and gas supplies for lower energy prices. Over half the states have become "right to work" and climate change doesn't hardly show up on a list of important polling issues. 

Then there's Biden blaming fossil fuel companies for price gouging and excess profits. You have to love that one. This is like a five-decade long left-wing banshee scream hating corporations and profits, and for that matter, free market capitalism. Socialists have always talked about price gouging and the like, and they're always wrong.  

In fact, so far as we know, there is not one single charge, or lawsuit, or government action brought against these companies so far. Even the left-wing consumer protection crowd can't find anything, although they'll try. 

The FTC, the DOJ antitrust... so far their guns are silent because there is no price gouging or excess profits. It's just, "There they go again." 

Anyway, while Biden blames Putin for the inflation, let me just note the four-decade high inflation rate—7.9% consumer prices through February. 

The inflation problem is really much more than energy.  Virtually all prices are rising—housing, cars, clothing, recreation, commodities, services... virtually everything except cell phones. In fact, if you took energy out of the CPI, you'd have a 6.6% inflation rate—a four-decade high. 

If you took gasoline out, you'd have 6.4% inflation rate. By the way, food prices are rising to 7.9%. None of this has anything to do with Putin. Unless he's rigging the CPI, just like he rigged recent elections, with a wave of disinformation about new and used car prices. It has to do with excessive government spending, deficit finance and Federal Reserve money creation. 

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Mr. Biden has a bad case of amnesia when it comes to the inflation hike of his first year where the CPI started at less than 2% and has gone up to nearly 8% and he has a very bad case of policy blundering with his BBB social spending, no workfare, inflationary policies, which even leading democratic economists have criticized. 

If he told the fossil fuel CEOs today at the Business Roundtable that he would call off the regulatory dogs in his war against fossil fuels, oil prices would probably drop $25, immediately, but he won't. 

We're still a couple million barrels per day lower in production than at the peak several years ago. Now, another point: it isn't clear that Russian oil or gas has been taken off the market. The U.S. sanctions on Russian imports won't take effect for probably a couple months.  

Europe is actually importing more Russian oil and gas. That's right, more! India and China are buying Russian energy. So really, the hike in energy prices is more psychological than due to any Putin-esque shortfall in Russian supplies and that's another reason why Mr. Biden and NATO must not go wobbly on us at their meeting in Poland later this week, to use the Wall Street Journal's editorial today, the oil and gas sanctions on Russia must be intensified because so far, they haven't really hurt Putin and his war machine.  

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Holman Jenkins' idea of an escrow account is a good one. Put the cash away until Putin withdrawals from Ukraine and stop running under the nearest desk every time Putin barks about weapons and all forms of assistance, including the MiG airplanes. 

As Walter Russell Mead has written, when the enemy's in retreat, stay in hot pursuit. Escalate weapon shipments to Kyiv. Toughen the sanctions. Deny Putin an off ramp. In fact, make it clear that the sanctions are going to last a long time until every Russian is withdrawn from Ukraine. 

Where's Ronald Reagan now that we need him again? That's my riff. 

This article is adapted from Larry Kudlow's opening commentary on the March 21, 2022, edition of "Kudlow."