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- [00:01]
A
With VRBoCare, help is always ready before, during, and after your stay. We've planned for the plot twists, so support is always available because a great trip starts with peace of mind.
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B
Hey, everyone, it's me, Sam Stein again, managing editor Bulwark, and I'm here with Katherine Pell, author of the Receipts newsletter. She's straight back from a Grateful Dead show with her.
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A
With her shirt on laundry day.
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B
I was gonna wear. No, I was gonna wear a tie. Dye shirt, too. Glad we didn't. I'm glad we didn't do that.
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A
That would have been embarrassing. Sam?
- [00:35]
B
Yeah, absolutely. Okay. We're gonna be talking about gas prices, or I guess, yeah, gas prices primarily. But the larger thing here is that suddenly Republicans who've been, you know, just running consistently on, well, we're making life easier for Americans. We're gonna decrease the cost of living. The. They're, they're turning around in the aftermath of the war in Iran and saying, you know what, things are going to get a little bit expensive and people just have to grin and bear it. It's an abrupt change of messaging and we're going to unpack it. So, Katherine, you've been pointing this out. I hadn't really seen all the clips until recently, but it is sort of remarkable. We're going to get to the clips in a little bit. How big a180 this is with respect to messaging around affordability?
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A
Oh, absolutely. Trump came into office, arguably won the election on an argument that he was going to bring prices down, that Biden had made your life much more expensive, and only Trump could fix it. He was going to bring costs down, tame inflation, and make everybody rich again. And instead, he has made everyone much poorer. Even. Well, maybe almost everyone. I should qualify. Almost everyone much poorer.
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B
His sons are doing just fine. Let's just be clear.
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A
His sons are doing fine. He's doing fine. Lots of cabinet members are doing fine. Kristi Noem seems to be doing fine, even though she got her new promotion of sorts to the whatever of the shield. But, yeah, I mean, prices have continued to go up to the extent that inflation was on a downward trajectory before Trump came into office. You know, we were very close to a coveted soft landing, meaning that inflation gets tamed without a recession. We are no longer in that circumstance anymore. And that's the case. Well, before this war, it was because of Trump's tariff policy amongst a whole bunch of other wrong headed, boneheaded ideas. But the war has, in addition to its human costs, has obviously had major effects on the cost of living as well. Yeah.
- [02:39]
B
And now normally you would think, ok, I'm a politician, I'm up for election, I'm going to sort of say I feel your pain. I'm going to do the Clinton thing and say this is unfortunate, it's horrible, we're doing everything we can to get these prices down. But that's not what's really happening here. What they're saying is people need to just be smarter about certain things. So here, let's play the John Husted, he's the senator from Ohio, he's running in this cycle here he is talking about how people kind of almost putting the blame on them for not being able to navigate the rise in gas price situation. And people living in poverty are just not very, they're not very experienced at navigating the real world. Right. I remember talking to one young lady who said, well, I don't really know how money works at a grocery store because she grew up and has lived all of her adult life using SNAP cards to buy groceries. And so you literally have to teach people how to budget. If the buzzword today, let's face it, it's affordability. Right? Unreal. Affordability is a buzzword.
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A
I'm all for financial literacy.
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B
Affordability, it's just a buzzword. And you gotta really figure out how to buy things because you've just been living on SNAP cards. Talk about tone deaf. I mean that's blaming people for being too stupid to get, you know, through the grocery store. It's unreal.
- [04:01]
A
Yeah. Somehow when we had high inflation in the aftermath of COVID that was not consumers fault according to this, you know, brain trust that we're referring to here. That was all because of the Democrats and Joe Biden. And look, I was pretty critical of Democratic fiscal policy at the time. So you know, I don't want to give them a complete pass. But nowhere did we hear that the problem was that consumers were too dumb to use a grocery store. It's just like amazing the pretzels that these guys are tying themselves into in order to duck responsibility for something that their party leader is obviously responsible for. Like normally including back then, you know, I would have said, look, presidents get too much credit, too much blame, you know, for good economy, bad economy, high prices, etc. And here it's really unavoidable that like the cause and effect. Right. That Donald Trump launched this war effectively led to a blockade in the Strait of Hormuz. Oil can't get through, fertilizer can't get through, lots of other Things can't get through and that's driving up prices. It's a very clear line from point A to point B. And consumers are smart enough to figure that out. They may not know how to walk through a supermarket, I guess, but they can figure out that bombs falling may disrupt the flow of gasoline slightly.
- [05:40]
B
Now you mention it because it's so recent, but also it's a really interesting parallel which is what happened with Biden in 2022. So just to go back a little bit, we emerged from the COVID pandemic, we have all these supply chain shocks, things are coming back online and that's absolutely affecting the price of gas globally. And then on top of that you have the war in Ukraine. And then on top of that, the Saudis decide they're not going to play ball with Biden, even though he goes there, he gives that infamous fist bump to mbs. They're not going to open up any oil production, they're just going to continue selling to the Saudis. And Biden is stuck, right? He's totally stuck in terms of what he can do. He taps the Strategic Petroleum Reserve. But that's basically it. And at the time Republicans were saying, well, you know, you shut down the Keystone pipeline, you're not drilling enough, let alone, you know, putting aside that these things would have been a 10 year window to get the gas online. They blame him directly for his policies having an effect on the oil market. In this case, to your point, it's the inverse of that. We had a war of choice launched in Iran and the obvious side effects of that was going to be the global energy market was going to be dramatically disrupted. And we are seeing that that's led us to the second type of kind of PR campaign that the Republicans waged, which is more or less, you gotta endure it like this is worth the cost. So let's play Mark Alford of Missouri talking about, you know, well, Americans just kind of need to suck it up. Yeah, Americans are willing to make that sacrifice. I think the people in my district are. They fully understand. I think it's our job to help bring people along to them and explain what's at stake. You know, I'm willing to pay 30% or $0.30 more at the pump to make sure that Iran does not have a nuclear weapon that's going to hit the United States. So I guess I would understand this a little bit more if in fact the public was supportive of the war, which polling indicates they are not. But you know, secondarily, it's easy to say you'll pay 30 cents more at the pump when you're a member of Congress, if your job is dependent on driving, if you're low income and you have to get to work every day and you got to get in the car, that 30 cents is not insignificant. That actually is going to matter materially for you. So that seems very much detached from reality to me.
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A
Yeah, absolutely. There are a number of problems with that sentiment that you just played there. One, of course, is that it's completely tone deaf about the fact that people are already struggling to make ends meet. They already have absorbed a lot of price growth over the past few five or six years and are feeling very frustrated by that. But in addition to all of that, you know, it's like telling people that they have to make sacrifices for what are not very clear or articulate objectives in a war that is not a war that is already over and we've already won. Like those are the, that's the level of paradoxes and just like self contradictions of all of this. You know that not only did they run on a promise of bringing down prices and they have not done that. And not only are they blaming people's financial illiteracy, but they're also saying people are like basically selfish for not being willing to absorb this sacrifice for whatever it is, a sacrifice for some as yet undetermined objective for this war that by the way, is not a war and that according to Donald Trump, has already been won. I don't know how that fits on a bumper sticker exactly, but either way I don't think it's going to really resonate with the American people. And I feel like there's a lot of cope going on, I guess is maybe the right way to put it.
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B
To summarize, it's also worth remembering like it's not the, obviously not the same parallel, but you know, the war in Iraq, as contentious as it was, there was almost a year buildup where the administration made the case, right? It was again, I'm not trying to compare these things. They insisted that there was wmd, that Saddam was a threat. They went to Congress, they got a vote for authorization, they at least proactively made a case. I disagreed with it at the time and turned out to be flimsy. But in this instance it wasn't even like a case was made. It was we woke up one day and we were at war. And it doesn't appear that they accounted for the possibility that there'll be adverse economic consequences. Now I kind of want you to put this in a larger context, because as you noted, inflation was going down. We're getting some signals that inflation has been relatively stable. We get these inflation reports at least more stable than I think people had thought after the implementation of all those tariffs. The tariffs are in limbo right now, but what is the sort of 30,000 foot picture for what the state of inflation is in this country?
- [10:44]
A
Inflation had been on this downward glide path basically up until about April. April just coincidentally happens to be when Trump announced his liberation day. Those global tariffs that jacked up the price of lots and lots of imports around the world. So inflation had been coming down, it then started creeping back up again. It's kind of stabilized, but it's higher than it should be, higher than the Fed's target. And you're right that there had been fear that inflation would be even higher than it is now because of those tariffs. And you know, for a little while there was maybe something of a puzzle about like, well, why haven't those costs been passed along to consumers given that import prices have gotten a lot more expensive and those get passed along down the supply chain. And one of the reasons is that a lot of firms were sort of trying to hold off passing along higher costs to consumers because they were expecting that the Supreme Court would strike down the tariffs, as happened, and that they would get that money that they had paid in tariffs back. And so they would just like have to hold on to, to, you know, that, that hole in their budget for a little while, not pass it on, to not pass on the higher cost to consumers because they didn't want to piss off their customers essentially. And they could eventually, you know, on the other side of all of this litigation, be made whole. And that hasn't quite happened. Right. So a lot of companies that had been holding off, raising prices until they got their money back, they're still not getting their money back. And there's a lot of uncertainty still about whether or when they will be rebated back those tariffs. And you can see some evidence of this decision making process in the recent inflation numbers which show that like, for example, appliance costs got a lot more expensive relative to the previous trajectory. Apparel costs got more expensive. Food also. And those are all things where you might expect to see some of these tariff costs being passed along. And it's like a combination of companies were holding their breath waiting to see if they were going to get the tariff money back and trying to keep their prices relatively steady. Inflation had been coming down until Trump screwed that up. And he's now screwed it up several different ways. One is with tariffs, two is with this war, and then three, four and five and six are a bunch of other things that we can get to.
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B
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A
Yeah, well, if you look back at what he was saying in the state of the union, like, literally a week and a half before we bombed Iran, he was bragging about low gas prices. I mean, he was, like, making up some of these numbers, but he was saying how proud Americans should be and how much good he's done for this country by cutting gas prices. And now, of course, they're like, oh, gas prices? Who cares about gas prices? That's not really that important. Unless you're, like, too financially illiterate to go through a grocery store or too selfish to deal with this.
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B
Too idiotic to understand anything other than snap cards. Back when Biden was president, this was something similar they were grappling with. And, you know, I'm going to read a statement from Roger Marshall of Kansas Center, Kansas. This was him in 2022 blaming Biden. So he says, instead of proposing responsible solutions to rising costs, President Biden's only answer is to double down and has failed. Far left agenda. Take zero responsibility for the inflation crisis he created. A country is facing the worst price increases in the last 40 years, and now the average cost of gasoline is at its highest ever recorded price. So there's Roger Marshall basically saying gas prices are Biden's fault. Okay.
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A
Yeah.
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B
Now here's Roger Marshall this week talking about gas prices and Donald Trump.
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A
I'm asking you about gas prices that Americans are paying that are extremely high and having wild swings, in part because of the war with Iran that the president started.
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B
Right. So. So again, freedom is not free. Americans are going to have to make some sacrifices, but we're operating from a point of strength. All right, so I'll give him a little credit, actually. I'm going to give him credit. He at least is saying, he's at least implicitly acknowledging that Trump did cause this, but that's just the price you have to pay. My contention is, though, and I think it's yours, is that in fact, there are very few levers a president has to affect the cost of gasoline. I mean, there's things you can do to get it at the edges, but there's not much you can do, at least in the immediate future. But not in this case, because in this case, there was something that was done that did directly impact the cost of gasoline. So I guess the question is, what are the levers that a president has to affect this market?
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A
Yeah, this is a question that has bedeviled presidents pretty much every time there's an election year and gas prices are uncomfortably high, or at least uncomfortably high for political purposes. And Biden dealt with this, as you pointed out. Biden dealt with this in large part because of another war. That was the war in which Russia invaded Ukraine, which I don't think you played it there. But Republicans criticized Biden for pinning any blame for high gas prices on that war. And now they're saying, well, obviously gas prices go up when there's a disruption in oil supply because of a war. So this is bedeviled, like every administration. There are really not that many tools. They can release oil from the Strategic Petroleum Reserve, but that's supposed to be used only in the case of a true emergency. Presidents use it all the time when the emergency is just that high. Gas prices are unpopular. But. So it's not like that's unprecedented. But the problem is, if the disruption in oil, which looks right now to be the largest disruption in oil supply in history, if that persists, you only have one shot at using the oil in the Strategic Petroleum Reserve. Once it's gone, it's gone. And so it may not be super strategic to do that because you want that oil there. In the case of an actual national security incident, something, you know, you need whatever. You need oil for our military or something. So. So there's that. You know, they can jawbone oil companies and Biden certainly did that to sort of comical effect, like, why don't you guys, like, lower your prices and. And why don't you drill more? And, you know, that's not really going to do anything in this case. Donald Trump is also trying to jawbone oil companies by saying, like, why don't they just sail through the strait anyway? Like, show some guts and go through it. I've seen multiple interviews where he said some version of that, like, they should just go through anyway.
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B
Encouraging them to use a straight up.
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A
Or they should. I think they should.
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B
I think they should use.
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A
Look, we took out just about all
- [20:01]
B
of their mine ships in one night. We're up to boat number 60. I didn't realize that that big a navy, I would say it was big and ineffective.
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A
But every one of their ships, just about all of their navy, is gone.
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B
Here's exactly what he said. These ships should go through the Strait of Hormuz and show some guts. There's nothing to be afraid of. They have no navy. We sunk all their ships.
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A
You first, Donald Trump.
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B
Right. There might be mines there.
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A
Yeah. He's like, why don't you do like a demonstration sale, a nice big photo op to show everyone just how safe it is. Somehow I don't think he's going to take us up on that. And then another Thing he has done, of course, is he has relaxed sanctions on Russia because Russia is a petro state. And again, the reason why gas prices went up, or among the reasons why gas prices went up in 2022 is because we placed sanctions on Russia. We've placed even more sanctions on Russia since then. Now Donald Trump is saying, you know how we said people shouldn't be buying oil from Russia? Well, maybe it's okay, India, we're going to suspend our, you know, third party sanctions on you. You can go ahead and buy oil from Russia again, that's fine. You know, we want to alleviate the prices here. The irony, of course, is that, like, first of all, Russia is, is already replenishing its war chest, its financial war chest here because gas prices, oil, rather oil and gas prices have skyrocketed. So they're benefiting just from the fact that prices are up. They're now also benefiting from the fact that prices are up and they have more customers that they can sell to. Meanwhile, they are giving strategic military advice to Iran about how to target American targets, American soldiers, American blood and treasure. And so this whole roundabout solution, if you want to call it to high gas prices to, you know, a problem caused by Trump, is just causing even more problems by putting more service members in harm's way by emboldening and enriching Putin. So he's Putin's really the winner in all of this. But, you know, that's the only mechanism, that's really the only major lever that Trump has at this point is to get more oil flowing. Because, like in America, we're producing, you know, record high amounts of oil. We were doing that already. It's not like a whole lot more you can wring out of that. And at least in short order, you have this disruption in the strait of 20% of the world's oil. The only release valve you have here really is Russia. So you can help Russia and maybe try to alleviate some of the pain at the pump here in the United States. But obviously you cause lots of other problems in the meantime.
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B
So I've heard a lot of people say, well, you know, the United States is a net exporter at this point. Like, why are we even affected by, by what's happening globally for a net exporter of oil? And on top of that, we seem to have basically taken over the Venezuelan oil market. Shouldn't that buffer us a little bit from what's happening in Iran?
- [23:10]
A
So there is truth to the fact that we are a net exporter. We are, again, producing more oil than any country has ever in history on earth. So you would think we would be more insulated. And I think we are more insulated than we were in say like the 1970s when there was another oil blockade. But we're not an autarky, you know, we are not a completely self sufficient country that doesn't trade with other countries. Some of the oil that we produce here gets refined abroad. Some of the oil abroad gets refined here, depending on what kind of oil it is and what kind of refinery it needs. So there's that. Beyond that, you know, if we don't sell our oil abroad again, we have all of these interconnected supply chains around the world. So if we were hoarding our oil, even if we could refine all of it ourselves and reserve it solely for American consumption, some of that oil needs to go into the production of things abroad that Americans then consume or that become inputs in other parts of the supply chain that eventually become products that Americans consume. You know, globalization is a real thing. You can't just get rid of it. You can't wave a magic wand, as Donald Trump would like to do, and nor should you want to. You know, there are benefits to that system unless you have a president who does not anticipate the foreseeable consequences of throwing a wrench in all of those supply chains. So it's not like we can just hang on to all of those barrels of oil and we'd be okay. You're still not going to have the refined products that we need in sufficient supply and you're going to again, screw up all of the other downstream products that rely on petroleum or petroleum byproducts that get used elsewhere in the world that ultimately make their way to Americans.
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B
Well, just a tease of what's to come. We have a newsletter we're recording this Wednesday afternoon. We'll probably put this up Wednesday later today. Lauren Egan, author of the Opposition newsletter about what's going on in Democratic politics, has a really good newsletter coming about how Democrats are trying to capitalize on this moment, with a lot of them pointing out just the contradictions that Republicans have made from where they were a couple years ago under Biden, and of course, pointing to comments like the one from John Hued, who seems to think that people are just too stupid to figure out how to navigate these price increases. So stay tuned for that. That will be in your inbox, but only if you are a bulwark subscriber, which is important in these times because we give you great stuff like this. Catherine, thanks so much really appreciate it. Say hi to the Cat, who disrupted this program several times because the Cat's upset with the oil prices too. Thank you all for watching Bulwark Takes. Subscribe to this feed on YouTube as well and we will talk to you soon.