Fact-checking Donald Trump on the scale and causes of inflation under Biden, Harris

In his bid to regain the White House, former President Donald Trump has hammered away at the Biden-Harris administration for its inflation record. 

During a Sept. 7 rally in Mosinee, Wisconsin, Trump said that as vice president, Kamala Harris — his Democratic opponent — "cast the tiebreaking votes that caused the worst inflation in American history, costing a typical American family $28,000."

Republican National Committee spokesperson Anna Kelly told PolitiFact in an email that the spending initiated under the Biden-Harris administration was something that "even liberal economists warned would cause" prices to rise, linking to a few examples.

For Trump’s statement, portions of what he said are exaggerated or inaccurate. Here, we analyze his statement’s three elements. 

This is exaggerated. 

The tiebreaking vote Trump referred to was on the motion to proceed to a final Senate vote on the 2021 American Rescue Plan Act, President Joe Biden’s coronavirus pandemic relief bill.

The $1.9 trillion plan, supported by only Democrats, included $1,400 direct payments to about 85% of Americans, $360 billion for state and local governments and $242 billion in expanded unemployment benefits. (Technically, in the vote on final passage, Senate Democrats had enough to approve the measure without relying on Harris as a tiebreaker, because of  a Republican senator’s absence.)

As lawmakers worked on the measure, some economists, including Larry Summers, who directed  the National Economic Council under former President Barack Obama, warned the bill would lead to inflation. Fiscal conservatives joined in the warning.

In retrospect, economists now widely agree that the law put too much money in Americans’ pockets when the pandemic had hampered global supply chains. This meant demand outstripped supply, leading prices to spike.

However, most economists also agree that the American Rescue Plan exacerbated inflation but was not the sole cause. The supply chain shortages, economists say, ignited the inflation increase, and Russia’s 2022 invasion of Ukraine — which prompted an oil price spike and other trade interruptions —  worsened it.

Mark Zandi, Moody's Analytics’ chief economist, recently told ABC News that "there's a long list of reasons for the high inflation. At the top of the list is the pandemic and the Russian war.... (the American Rescue Plan is) "at the bottom of the list."

Harvard University economist and onetime Obama aide Jason Furman has estimated that the American Rescue Plan added 1 to 4 percentage points to the inflation rate in 2021. Michael Strain, of the conservative American Enterprise Institute, put the figure at 3 percentage points.

Economists we contacted for this article offered similar estimates.

Douglas Holtz-Eakin, president of the center-right American Action Forum, estimated a 2 percentage point rise in U.S. inflation and that can reasonably be attributed to Biden’s legislation, judging by the simultaneous rise in inflation among advanced economies in Europe..

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Bernie Sanders

stated on November 10, 2024 in an interview on CNN's "State of the Union"

Inflation-adjusted weekly wages “are lower today than they were 50 years ago.”

Dean Baker, co-founder of the liberal Center for Economic and Policy Research, also said he would allocate around 2 percentage points of the increase to the American Rescue Plan. Baker said the law’s passage had positives and negatives. 

"The package quickly got the economy back to full employment," he said, and "the inflation was temporary. It came back down."

This is incorrect.

The highest year-over-year inflation rate on Biden’s watch was around 9% in summer 2022. That was the highest in about 40 years. Cumulatively over Biden’s presidency, prices have risen by 19.4%, but that increase came over three and a half years, so per year, the inflation rate was about 5.5%.

The highest sustained, year-over-year U.S. inflation rates were recorded in the 1970s and early 1980s, when the price increase sometimes ranged from 12% to 15%. For one year — 1946, after the U.S. won World War II — the overall year-over-year inflation rate exceeded 18%.

Also, the year-over-year inflation rate has fallen since its 2022 peak under Biden. It was at 2.9% in July 2024, the most recent month available.

Trump’s campaign previously told the Washington Post Fact Checker that with this figure, the former president referred to an inflation tracker designed by the Republican staff of the Joint Economic Committee. The tracker calculates the amount of additional costs for a typical household now compared with January 2021, the month Biden and Harris took office. The $28,000 calculation takes into account the measured increases in spending for such items as food, shelter, transportation and energy.

Other data confirms that higher prices have taken a larger slice of U.S. household income since inflation began rising. For the four quarters preceding the pandemic, the savings rate — personal income after taxes minus personal consumption, divided by personal income after taxes — bounced from 7% to 9%. Since the start of 2022, it has ranged from 3% to 5%.

But the price increases Trump referenced didn’t occur in a vacuum. Wages also rose, cushioning the blow.

In the roughly three and a half years since Biden and Harris took office, prices have risen by 19.4%, while wages have risen by 17.7%. That means that during the Biden-Harris administration to date, wage increases have lagged price increases by a cumulative 1.7%, or less than half a percentage point per year.

The comparison looks more favorable to Biden and Harris if someone uses as the baseline February 2020, the last month before the pandemic started. Economists consider this a useful comparison because that was the last month before the pandemic, which began distorting economic data. Since then, prices have risen by 20.9%, and wages have risen by 23.3%. So, during that period, Americans’ spending power has run ahead of inflation.

Trump said Harris "cast the tiebreaking votes that caused the worst inflation in American history, costing a typical American family $28,000."

Harris cast the tiebreaking vote on the motion to proceed to a final Senate vote on the 2021 American Rescue Plan Act, a coronavirus pandemic relief bill.

An ideologically diverse cross-section of economists agrees that the American Rescue Plan added a couple of percentage points to inflation, but didn’t cause the wider spike. The primary causes, they say, were supply chain disruptions from the pandemic and Russia’s invasion of Ukraine.

Year-over-year inflation peaked in 2022 at about 9%. That makes it the worst annual rate in 40 years, but not the worst in American history.

The $28,000 increase is a credible estimate of how much extra households have paid for purchases since Biden took office. But that figure ignores that wage gains have evened out much — or depending on the time frame, all — of those increased costs.

The statement contains an element of truth because the American Rescue Plan did add to inflation, and households have had higher cost burdens. But the statement ignores critical facts that would give a different impression. We rate it Mostly False.