Biden OMB official on inflation, housing and debt ceiling deal
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A persistent question about U.S. fiscal policy revolves around it being too loose to bring down inflation, something the International Monetary Fund has suggested.
Driving the news: At an Axios event Wednesday morning, we asked President Biden's top budget aide whether fiscal policy needed to tighten, even with spending cuts associated with the debt ceiling deal.
What they're saying: Shalanda Young, director of the White House Office of Management and Budget, answered by emphasizing one important area that the Biden administration is seeking to address: housing.
- "I never thought I'd use the word 'sticky' when it comes to inflation, but you do see that in core [inflation]," Young says. "And housing is really the driver."
- "Housing and shelter prices are too high. We've had proposals to get more supply of affordable housing. That is where we see the need to have some targeted conversations," she says.
The big picture: Economists are still debating what role the American Rescue Plan, the pandemic aid package passed in 2021, had in stoking inflation.
- Young pointed to the success of the pandemic-era recovery: "The economic scarring we saw from the financial collapse in 2008, we are not seeing that," she tells Axios.
What to watch: Young, who helped lead debt ceiling negotiations, says that brinksmanship was "bad for the U.S. economy." But she stopped short of calling for eliminating the debt ceiling.
- Even though a crisis has been averted, ratings agency Fitch warned that it could still downgrade the U.S.'s credit rating, noting the risks associated with "repeated political standoffs around the debt limit."
