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For Democrats, the pain of inflation is no reason to stop spending

Analysis: Democrats in the White House and Congress are betting that the long-term benefits of their agenda will outweigh a "temporary" rise in prices.

WASHINGTON — Inflation doesn't matter.

That's the message Democratic leaders are sending as they try to push more than $4 trillion into the economy to build infrastructure, fight climate change and ease the financial cost of child and elder care for families.

President Joe Biden says the 5.4 percent increase in the price of a basket of goods over the 12 months that ended in June is "temporary," and a private White House presentation obtained by NBC News encourages Democratic lawmakers to focus on how Biden's plan "lowers costs for working families rather than how it gets people back to work or helps the economy."

The suggestion is that more federal spending will more than counteract inflation, and the reason for that framing, according to the slide deck, is "polling" from the firm run by Biden's pollster, John Anzalone.

Sen. Debbie Stabenow, D-Mich., a member of the Senate Democratic leadership, dismissed concerns about the inflation spike as a function of Republicans' doing "their best" to "gin this up."

But what top Democrats are really saying, at a time when Republicans warn that a record infusion of government spending would hypercharge inflation, is that short-term price spikes aren't relevant to their attempts to expand the role of the federal government.

In effect, they are making a bet that Americans will reward them for the benefits of their spending plans rather than punish them for inflation that might not last as long.

The main audience is a handful of their colleagues in the Senate and the House whose support for Biden's agenda is as crucial as it is unsecured.

"Even if I thought there were a serious inflation problem, it is hard to argue that 50 years from now the question will be how did this Congress manage transitory inflation," said progressive Sen. Brian Schatz, D-Hawaii, who said he doesn't believe lawmakers have to choose between controlling inflation and enacting Biden's twin spending bills. "The question that everyone's going to be looking at 50 years from now is did we address the planetary crisis when we could or did we not."

But for party vote-counters, the question is how they can squeeze $4 trillion through Congress without losing a single Democratic senator or more than four House Democrats. Most Democrats are progressives sitting in safe seats, and they don't have to worry about the short-term vagaries of economic fluctuations and shifts in political sentiment. They can vote for anything.

For the most vulnerable Democrats, however — from Sen. Joe Manchin of West Virginia to a set of House moderates who narrowly won re-election last year — an acceleration in inflation that is short-term, relative to expanding Medicare and building affordable housing units, could end their careers before the long-term benefits are felt.

Republicans are hammering away at inflation and blaming Biden's American Rescue Plan, the $1.9 trillion measure enacted in March, for the largest year-over-year increase in inflation since 2008.

Senate Minority Leader Mitch McConnell, R-Ky., has accused Biden of taking a more-of-the-same approach in promoting a $3.5 trillion budget "reconciliation" plan alongside an infrastructure package that has more bipartisan support.

"Inflate our way out of inflation?" McConnell said on the Senate floor July 19. "Runaway costs and surging inflation are a huge worry for middle-class families."

They're also a major concern for the Democrats Biden needs to win over.

If White House officials think inflation isn't a problem, said a senior House Democratic aide familiar with the pressures facing politically vulnerable incumbents, "then they are misreading the situation in the House, because a lot of House Dems think this is really a concern."

The latest inflation numbers have changed the way they look at the spending proposals, adding an element of concrete consequences for constituents to the more abstract Washington feuds over budget lines.

"You've got members who are already nervous about the political consequences of a $3.5 trillion package," the aide said. "Now they're starting to have policy concerns."

The debate inside the Democratic Party and at the political level comes against the backdrop of a parallel fight among economists and investors. Some, like Mark Zandi, the chief economist at Moody's Analytics, say Biden's spending bills would ultimately provide a boost for the economy. Others, like investor Stanley Druckenmiller, say that they would overheat the economy and that rising prices would hurt some of the people Biden wants to help.

"Further spending in the aggregate, in my opinion, is going to cause a financial crisis," Druckenmiller told MSNBC's Stephanie Ruhle. "It's going to cause inflation, and nothing is going to hurt the poor more than that."

Most lawmakers know they can't predict or control the economy, and most Democrats say any concerns about inflation should be secondary to delivering on larger, long-term policy goals.

"Of course we care about inflation," Stabenow said. "To me, this is not a reason not to move forward at all."