WASHINGTON — There is bipartisan consensus on Capitol Hill that punishing Russia for its war on Ukraine would be worth risking more inflation.
Top Republicans and Democrats this week called on the Biden administration to ban Russian oil imports, which have been carved out of economic sanctions in order to protect European and U.S. consumers from higher gas prices.
Even Sen. Joe Manchin (D-W.Va.), who has done more than any lawmaker to force his own party to reckon with current levels of inflation, said higher gas prices would be an “inconvenience” for American consumers — acceptable collateral damage for hurting Russia as much as possible.
“I would gladly pay 10 cents more a gallon,” Manchin said Thursday at a press conference, where he and Sen. Lisa Murkowski (R-Alaska) announced a bill to force the administration to ban Russian oil.
The war has already sent oil prices soaring to the highest level in a decade, with gas prices following. The national average cost for a gallon of gas rose 11 cents just this week, according to the American Automobile Association.
Manchin and many others in Congress, especially Republicans, have for the past several months decried inflation as a “tax” on everyone in America, one that especially burdens people with low incomes, such as retirees receiving Social Security benefits.
HuffPost asked Manchin if people would accept higher gas prices as the cost of supporting Ukraine after they’ve been told so many times that rising prices represent an unfair tax.
“It is a tax,” Manchin said. “This is war.”
The most recent consumer price index snapshot showed inflation had risen at 7.5% in January compared to a year ago, the fastest rate of inflation since 1982. Motor fuel accounts for 2.8% of the index. Economists debate exactly what’s driving inflation, but there’s no doubt that pandemic-related supply problems collided with strong consumer demand to put upward pressure on prices last year.
Republicans have mostly blamed the American Rescue Plan, saying the extra unemployment benefits and $1,400 direct payments Democrats approved in March 2021 gave consumers too much spending power. Manchin has said he doesn’t regret voting for the bill, but he has agreed with Republicans that more spending would be inflationary.
The Federal Reserve will try to quell inflation this year by raising interest rates, boosting the cost of credit so that people and businesses spend less money. Curbing inflation without hurting job growth is a tricky balancing act, and in the past, rate hikes have led to recessions. The war in Ukraine makes the Fed’s job more difficult.
It’s not clear how much a Russian oil ban would affect prices, however, since markets started shunning Russian oil weeks ago out of fear it would be sanctioned later, meaning gas prices could be reflecting the impact of a ban even though it hasn’t happened yet. The U.S. also only gets about 10% of its oil imports from Russia.
President Joe Biden announced this week that the U.S. would tap its strategic petroleum reserve to boost supply; Republicans have said the U.S. could offset the loss of Russian imports by boosting domestic energy production.
But the White House has resisted the bipartisan calls to cut off Russian oil. “We are looking at other options we could take right now to cut U.S. consumption of Russian energy — but in the context of maintaining a steady global supply of energy,” an administration official said in an email.
Federal Reserve Board Chair Pro Tempore Jerome Powell told lawmakers this week that the war’s effect on the economy is uncertain, and that it’s unclear how long the oil price spike will last.
“The concern, though, is there’s already a lot of upward inflation pressure, and additional inflation pressure does probably raise, at the margin, the risk that inflation expectations will start to react in a way that is negative for controlling inflation,” Powell said.