President Joe Biden rose early March 13 to address the Silicon Valley Bank collapse, impressing his former press secretary.
“It is important to note President Biden does nothing at 9 a.m.,” Jen Psaki told MSNBC’s Morning Joe. “He is a night owl. So, the fact that he is doing this at 9 a.m. anyway speaks to how vital the White House recognizes it is for him to have his voice out there conveying that to the American public.”
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Biden’s Monday morning quarterbacking comes as he is trying to take back the initiative on the economy ahead of a likely 2024 reelection campaign, having weathered a midterm election cycle in which this was the Democrats’ chief political liability.
Inflation is finally showing signs of easing. The economy is growing. Unemployment is low as the job market has proved resilient in the face of repeated Federal Reserve interest rate hikes. Biden is about to enter into a debt ceiling showdown with Republicans that could have huge ramifications for the federal government’s borrowing ability.
Policymakers have been playing economic whack-a-mole, trying to contain various problems while engineering a soft landing that calms inflation without triggering a recession. The Silicon Valley Bank failure was the latest wrench thrown into the works, showing just how precarious this complicated work can be.
Biden received low marks on the economy without a recession or high unemployment. His approval rating on the issue is 20 points underwater, according to the RealClearPolitics polling average, worse than his numbers overall. Some surveys showed majorities disapproving even before inflation was running at a 41-year high.
With the stock market initially sinking like a stone in reaction to the uncertainty, forecasters facing renewed fears of a 2008-style recession, and the Fed backing off its aggressive campaign of interest rate increases to keep the economy chugging along, Biden faces new challenges at the precise moment he had reason to hope the tide had turned in his favor.
“Today, thanks to the quick action of my administration over the past few days, Americans can have confidence that the banking system is safe,” he said by way of reassurance. “Your deposits will be there when you need them.”
Biden also proactively took on the 2024 political element to all of this. “During the Obama-Biden administration, we put in place tough requirements on banks like Silicon Valley Bank and Signature Bank, including the Dodd-Frank law, to make sure the crisis we saw in 2008 would not happen again,” he said. “Unfortunately, the last administration rolled back some of these requirements.”
The front-runner for the Republican presidential nomination to take on Biden next year happens to be the leader of the last administration, former President Donald Trump.
“I’m going to ask Congress and the banking regulators to strengthen the rules for banks to make it less likely that this kind of bank failure will happen again and to protect American jobs and small businesses,” Biden vowed. That means going to the same House Republican majority he will be fighting over spending cuts and the debt ceiling in the coming months, in another preview of 2024.
Biden also made the standard incumbent’s pitch for staying the course. “We have made strong economic progress in the past two years,” Biden continued. “We’ve created more than 12 million new jobs — more jobs in two years than any president has ever created in a single four-year term. Unemployment is below 4% for 14 straight months. Now we need to keep that progress going.”
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Whether that will remain doable is an open question. Biden also faces the prospect of an anti-bailout backlash against his efforts to protect the depositors of two middle-sized banks, many of them venture capitalists whose taxes, under most other circumstances, Biden would happily raise. Nevertheless, the markets have rebounded since the first hints of bad news. The Fed tightening that could have interrupted recent growth is likely to be forestalled. There are still plenty of positive economic data points Biden can cite ahead of this summer’s debt ceiling showdown and next year’s election.
Biden maintains he has had good policies on the economy. Others would argue it was good luck. Time will tell whether one or both is about to run out.
