What Biden Should (and Shouldn’t) Do About Inflation

President Joe Biden and his allies in Congress are rightly concerned about surging prices. High and persistent inflation has surprised most policy makers, including at the Federal Reserve, and has defied easy fixes. The only sure solution is to curb demand, as the Fed is beginning to. Doing that without tipping the economy into recession will be quite a challenge.

How can the federal government help? Biden has promised to let the Fed get on with it, which is surely welcome. His other suggestions, though, have mostly been either beside the point or simply counterproductive. Ideas that would actually make a difference seem of little interest to his administration.

For instance, Biden is again calling for a brief gas-tax holiday. Even his friends in Congress seem unpersuaded by the idea. They’re right to be. Pausing the federal levy of 18.4 cents a gallon would, for a start, further undermine the Highway Trust Fund, which the tax finances, and which already faces an ominous shortfall. The savings would be modest and partly self-defeating — because they’d add to the demand for gas, serving to push prices back up. In the end, producers would probably gather most of the benefit.