Why The President Isn't Responsible For The High Gas Prices

Herbert Hoover, the 31st president of the United States, once said “When you’re the president, you get the credit for the sunshine and the blame for the rain.” Perhaps no president understood this more than Hoover, who won with a landslide victory in the 1928 presidential election, garnering 58% of the vote and carrying 40 states, a clear sign that he got the credit for the booming economy of the roaring 20s that his party, the Republicans, had held the White House during. When the stock market crashed almost immediately into his presidency, his previous popularity plummeted, and he became the most unpopular president of all time as the Great Depression set in. Flashforward to the 1932 election, and in a complete reversal, Hoover lost in a landslide victory for Franklin Roosevelt, who won 57% of the vote and 42 states. Hoover went from 40 states to a measly 6, clearly getting all the blame for the worst economic crisis in US history. 

How much of the blame could Hoover rightfully get for the Great Depression? Well, seeing as he was barely in office when it started, it can safely be said he did nothing to cause it. Now, he certainly deserves blame for making it worse. Most of his decisions were ill advised and made things worse, such as him raising tariffs, which resulted in other countries imposing retaliatory tariffs, which only hurt Americans even more. However, what’s often ignored is that he at least tried to alleviate the struggles of Americans, more so than almost any previous president had in times of economic crisis. 

In the 19th century, the idea of economic intervention was almost unheard of. Politicians believed that they should not interfere with the natural business cycle, so presidents in that century did absolutely nothing during times of economic struggle. Although Herbert Hoover was economically conservative, he was not completely devoted to laissez-faire economics, the principle of minimum governmental interference in the economy. He believed in the government cooperating with businesses and intervened in the economy plenty of times to try and lift the country out of depression. Unfortunately, nothing he did seemed to work. 

Hoover was by no means a good president. If his presidency were to be graded, it would probably be fair to give it a D- for effort and not an F like the popular conception of Hoover would lead one to believe. He was a poor president not only because the Great Depression happened to occur under him, but because he failed to effectively respond to it.

Presidents hardly ever are the sole cause of the sunshine or the rain. Usually, the factors the economy responds to are the natural business cycle, volatile national and international markets, decisions made by banks, and decisions people make based on scarcity which is what economics ultimately boils down to. These contribute to declines or rebounds in the economy irrespective of the president.

The presidents can contribute significantly to the sunshine or the rain. Their policies often strengthen or weaken the economy. For instance, Hoover’s Republican predecessors, presidents Warren G. Harding and Calvin Coolidge had an entirely hands-off laissez faire approach to the economy that certainly contributed to the stock market crash. Hoover himself made the situation worse, as was previously mentioned. FDR’s New Deal policies helped the American people significantly by creating jobs that employed millions of people- however, FDR did not end the Great Depression. As any historian will affirm, World War II did that, as the wartime mobilization boosted production and employment.

American citizens have historically blamed the president for everything that has gone wrong with the economy, like they did with Hoover, who is now synonymous with the Great Depression. They seem to act like the president has magical powers over the economy, or like they have a lever underneath the resolute desk that can be switched to good economy or bad economy. Many conservatives think Trump had a heart full of gold and so had the lever on good mode, but then the wicked Biden got into office and switched it to bad. Many liberals think the opposite.

Many presidents do deserve frustrations for all manner of things including the economy. The problem is, the average citizen makes no attempt to analyze what presidents actually do in office. They don’t care how the legislation they passed and the policies they pursued impacted the economy in the short-term or the long-term. They instead mindlessly blame them for creating whatever situation they inherited, even if it was caused by things outside their control or had more to do with their predecessor’s policies.

Take the current situation. The current president, Joe Biden, is routinely blamed for the inflation of the past few years. But nobody stops to ask what did president Biden actually do to cause the inflation? Could there be something else at play here? Is there an elephant in the room that’s been forgotten? Maybe the global recession that started before Biden was president? Everyone seems to have forgotten the Covid-19 Recession that started under president Trump. And it wasn’t Trump’s fault either, because obviously, Trump didn’t create covid. It was out of both Biden and Trump’s control.

The global lockdown resulted in the collapse of industries and falling employment, which pressured banks and resulted in a stock market crash. The post-pandemic recovery resulted in increased demand for energy which outpaced the supply chains which had collapsed because of the pandemic. This caused inflation all around the world. That’s another thing that makes blaming Biden for inflation ridiculous: inflation is a global phenomenon, not an American one. And America isn’t the country that got it the worst.

However, inflation did accelerate during Biden’s presidency. Once again it was caused by global events outside his control. Russia’s invasion of Ukraine reduced output of both countries and led to sanctions on Russia. This made the gap between demand for oil and the supply even larger which resulted in the inflated gas prices everyone is familiar with. There is another culprit, one which has been a constant through all of human history: corporate greed. All the big oil corporations have made record breaking profits during this spell of inflation while not doing anything innovative. They have, as the rich have always done, taken advantage of the narrative of inflation to get away with insane price gouging. That is raising prices way above what is needed.

Despite Biden’s misfortune, he has actually been a very effective president when it comes to policies that have lifted the country out of recession and fostered economic growth. Biden’s American Rescue Plan, passed in March 2021, gave stimulus packages to low and middle income Americans, $300 billion in unemployment benefits, $50 billion to small businesses, and $25 billion for small and mid-sized restaurants. Economists say this was a smart move that helped to stimulate economic growth and crucially aided Americans during a time of recession.

Despite how much Trump is praised for his economy, economic growth under Biden actually exceeds Trump’s pre-covid growth. In fact, the economic numbers all favor Biden even when you exclude 2020 for Trump. Business investments have increased at a 5.4 annual rate since Biden became president, it was 5.0 from 2017-2019. Consumer spending has increased 4.5% under Biden while it was 2.0% from 2017-2019. And under Biden, Americans with jobs increased by 14.3 million compared to Trump who had a net loss of 2.7 million. Now, to be fair to Trump’s record on employment, the lockdown obviously had a large role in the losses and the recovery obviously had a large role in Biden’s numbers. Even inflation has recently been going down under Biden, though for some reason, nobody seems to give him any credit for it.

The economic numbers just listed could be seen as coincidental, so more of Biden’s legislation, which contributed to those numbers, will be listed so as to not undermine the argument of the article. It is worth noting however that even by taking the approach of just looking at the economic numbers themselves, they favor Biden over Trump. The Infrastructure Investment and Jobs Act was a landmark infrastructure bill, something Trump promised but never delivered on. It invested $550 billion in roads, bridges, clean drinking water, high-speed internet, etc. Over time, it will also provide millions of jobs. The Inflation Reduction Act was a landmark legislation for Biden which invests into domestic energy production and clean energy, the largest investment in combating climate change in American history which also promotes American industry.

Now compare this legislative record, one of the most impressive of any president in decades, to Trump who had one of the least impressive legislative records. The one big piece of legislation passed was the Tax Cuts and Jobs Act which cut taxes for the rich, which only causes more national debt, something Republicans are supposedly against. And yet many people are convinced Trump was this genius businessman who created a strong economy. When asked just how he did that, they can’t point to any tangible thing he did. Although he was admittedly president during a time of economic prosperity (until COVID), he did nothing to cause it. He inherited it from the prolonged post-Great Recession recovery that was fostered by Obama’s policies. 

The fact that it was such a prolonged recovery made many in the rustbelt region feel discontented by the Obama administration and that’s why Trump won the 2016 election. Nevertheless, by the late Obama years, the country had largely recovered and the economy was rapidly growing. Yes, it got even better under Trump but that was just the economic growth continuing. It grew at roughly the same rate as it did under Obama, showing Trump had nothing to do with it. This is shown in the chart below. When people refer to the “Trump years” as a period of economic prosperity, they should really be saying the late Obama years and the early Trump years as of course it fell apart in his final year.

(Photo Credit: Statista)

Trump also made bad decisions that made the economy worse, most notably his trade war with China. He set tariffs and trade barriers against China in an attempt to force the country into fairer trade with the US. The result was damaging the economies of countries across the world, bringing struggles for American farmers and manufacturers, and raising prices for customers. The latter two contributed to a mild recession for US manufacturing in 2019.

People’s perception of the president’s impact on the economy is often manipulated by whatever news source they go to or by anecdotal evidence. When one actually looks at the president’s actions and policies and how they are reflected in the data, they can uncover the truth of how presidents impact the economy. They shouldn’t be unfairly blamed for unfortunate events that happened under them, they should be fairly blamed or credited with how they responded to those events.