President Biden remaining optimistic despite continuous struggles for U.S. economy

Yahoo Finance political columnist Rick Newman looks at President Biden's outlook on the U.S. economy amid rising inflation and the potential of easing tariffs imposed on China by the Trump administration.

Video Transcript

DAVE BRIGGS: Inflation soaring, approval ratings tanking, foreign policy crises sticking. And yet, President Biden's optimism rather striking. Yahoo Finance senior columnist Rick Newman is here. And Rick, I am all for our leaders striking an optimistic tone. I think there's probably too much pessimism in the world right now. But Biden today to the AFL-CIO, was that bordering on delusional?

RICK NEWMAN: Yeah, he said he's optimistic about the outlook for the US economy. And the reality, Dave, is, the president can't just come out and say, yeah, everything sucks. I'm aware, you know? I mean, that's not leadership. And he's walking a fine line here. So he has to get us to the next phase here. And I guess for Biden, that means being his-- trying to be his normal upbeat self, seeing the hope in things.

But I mean, the problem here is that you try to convince Americans that things are better than they feel things really are. And Americans basically will tell you to pound sand. I mean, they're like, you don't get it. Obama did that in 2010 when he was saying, look at the recovery we've had in employment. The statistics look good. And people didn't feel it. And that's when Democrats lost control of both Houses of Congress. So Biden could obviously be facing something similar this time around in November.

SEANA SMITH: Well, Rick, when it comes to potentially capitalizing on the fact that we do see high inflation, Republicans have been very critical of the Biden administration. We haven't really gotten a concrete plan up until today. We're getting some more details from Senator Grassley. He's proposed-- making a proposal here just in terms of how to rein in inflation. Also a group of Republicans on the House Ways and Means Committee. What can you tell us about those proposals?

RICK NEWMAN: Right, so Biden has correctly said, yeah, these guys are all complaining about inflation. But what's their plan? They don't have a plan. And then he brings up this tax plan that Senator Rick Scott has, where he wants everybody to pay a little bit of tax, which would be a tax hike on lower income people. So Republicans finally figured out, we've got to get something other than Rick Scott's tax plan.

So now they're starting to float some things, a few tax cuts that would do things like incentivize more saving and investment. They're saying there's a fair amount of government money, parts of all those stimulus bills that's out there. It's unspent. Let's reclaim that money and pull a little bit of money back in. The reality is, Republicans, even if, let's say, they win both Houses of Congress in November, they could pass bills, and Biden is not going to sign them if he doesn't want to sign them. So they're basically just trying to say, yes, we do have a plan. So this is framing for the midterms.

RACHELLE AKUFFO: And Rick, something that we're also seeing being considered, obviously, what we're seeing with Chinese tariffs. You have one school of thought that says, look, this is not the time to do this. We need to sort of figure out our entire relationship with China before we do this. And the other side that says, look, this could be a way to ease inflation since the tariffs really only hurt American consumers who are buying these goods. What do we know about where the Biden administration is really going at this point?

RICK NEWMAN: Biden does not want to lift those tariffs Trump-- Donald Trump imposed on a lot of Chinese imports in 2018 and 2019. He wants to use those tariffs as leverage for getting other things from China. We don't know exactly what that all is yet. But the problem here for Biden is, there's been some research suggesting that you could actually lower the inflation rate here in the United States if you remove those tariffs or lowered those tariffs because what those tariffs did is they just drove up the price of those imports from China. And it was a fair amount of stuff.

So there was one study by the Peterson Institute a couple of months back that said you can probably, if you lifted them completely, you could probably get inflation down by a percentage point or two. And that's a lot, even if inflation is 8.6%, 7.6% may not sound that much better. But there's not anything else Biden can do that could get inflation down by a full percentage point. So that's why we're hearing the reports that maybe Biden could do something on those tariffs.

And by the way, he could repeal them for a set amount of time and then put them back in a place that could-- who knows? That could be linked to inflation getting below some threshold level. But this is one of these things. The Biden administration is floating a lot of trial balloons. How does this sound? How does the other thing sound? Because clearly, they feel they need to do something. And they just don't have very many good tools.