Republican lawmakers have made inflation and the economy their top attack against President Biden, but recent reports showing that annual inflation has dropped to 3 percent is forcing them to rethink their political strategy.

The economy is suddenly showing signs of being not a weakness but a strength for Biden and Democrats as inflations falls to a third of its peak and unemployment stands at a near-record low of 3.6 percent.  

The anticipated recession that was supposed to hit this year amid rising interest rates hasn’t yet materialized, leaving some Republicans wondering if they need to revise their messaging.

“I think it will diminish as an issue over the course of the year if inflation continues to stay down and continues to go down,” said Sen. Mitt Romney (R-Utah).  

Republicans repeatedly hit Democrats over inflation ahead of last year’s midterm elections, but it didn’t prove to be especially effective as Democrats responded by attacking Republicans over abortion rights and then expanded their Senate majority to 51 seats. 

The GOP did win the House majority but didn’t pick up as many seats as they expected.

Romney acknowledged that wage growth outpaced inflation by 1.2 percent in June, marking the first time since March 2021 that wages are growing faster than prices.  

“Having wage growth exceed inflation is a good thing. There’s going to be good news and bad news. Not everything the president does is good, not everything is bad. And of course the president has some responsibility for the economy,” he said. 

Romney noted that inflation has been significant since Biden took office in January 2021, pointing out that “people are paying almost 20 percent more for goods than they were paying before President Biden became president.” 

Inflation peaked at 9.1 percent on an annual basis in June of 2022 

Some Republicans say they don’t want their party to get straightjacketed into repeatedly attacking Biden and Democrats on inflation when data shows the economic environment is changing and there are other issues that voters care about, such as illegal immigration, national security, rising crime and drug addiction.  

“You always have to tell the truth,” said Sen. Ron Johnson (R-Wis.) on the need to make sure Republican messaging takes into account the latest economic numbers. 

He said “a dollar you held at the start of the Biden administration is worth less than 86 cents now today.”  

He acknowledged that inflation has fallen, adding “let’s hope that it stays down.” 

Johnson suggested that Republicans can make the argument that “Democratic governance has been a disaster” in other ways, such as pointing out that “we’re still encountering 6,000, 7,000, 8,000 at the border,” crime rates and the ongoing fentanyl crisis.  

Jeremy Siegel, emeritus professor of finance at the University of Pennsylvania’s Wharton School, Thursday told Bloomberg television that “the battle is won against inflation,” arguing that the Federal Reserve no longer needs to keep ratcheting up interest rates. 

The effective federal funds rate now sits at just over 5 percent. Nonfarm payrolls increased by 209,000 in June and hourly earnings increased 4.4 percent compared to last year. 

A Republican senator who requested anonymity to discuss messaging strategy said the latest inflation data “is good for the [Biden] administration” and speculated that Senate Republicans may have to recalibrate their message.  

“We as Republicans will stop talking about inflation and talk more about prices have raised and how people feel less well off than a year ago. We may drop inflation from the main theme,” the senator said in discussing what a revised Republican messaging strategy might sound like.

Senate Republican Leader Mitch McConnell (R-Ky.) made national security his top talking point at his weekly press conference Tuesday, urging the Senate to pass the National Defense Authorization Act before the August recess.  

McConnell is now focused on increasing the spending level for defense programs and says the defense spending cap set by the debt limit deal between Biden and Speaker Kevin McCarthy (R-Calif.) last month is “inadequate.”  

He believes in ramping up defense programs to stop Russia from taking over Ukraine and to deter Chinese aggression toward Taiwan and the South China Sea despite the concerns some colleagues have about the impact on the deficit and inflation.  

Senate Majority Leader Chuck Schumer (D-N.Y.) touted the new inflation data on the Senate floor Thursday. 

“We learned that inflation slowed down for the 12th month in a row, down 3 percent — 3 percent — the lowest that it’s been in two years,” he said. “Since we passed the Inflation Reduction Act, inflation has been cut by more than half on an annualized basis,” Schumer added, referring to a package of prescription drug and tax reforms that was projected to cut the deficit between $100 billion and $300 billion over a decade.  

Republicans argue the total projected cost of that bill will likely increase the deficit because the tax incentives for green energy programs are turning out to be more expensive than anticipated.

Sen. Bob Casey (D-Pa.), who faces a competitive reelection race in Pennsylvania, cheered the latest numbers showing the rate of inflation declining.  

“Costs are coming down because of the reduction of inflation — 12 straight months — and that’s good news but we have more work to do,” he said. “It’s trending in the right direction.” 

Casey called on Congress to pass the enhanced child tax credit, which expired at the end of 2021, to help families afford higher food prices. It provided $3,600 per child under the age of 6 and $3,000 per child aged 6 to 17.  

Some Republicans continue to hammer away on the inflation theme. 

Senate Republican Whip John Thune (R-S.D.) accused Biden of “turning a blind eye and deaf ear to what the American people are experiencing.” 

“Bidenomics in action means the fact that they’ve had 16.2 percent inflation since this president took office and that it cost $10,000 more per year for the same goods and services that they purchase on an annual basis because of this inflation,” he said. 

Sen. Kevin Cramer (R-N.D.) said it still makes sense for Republicans to talk about inflation because prices have increased substantially since Biden took office more than two years ago.  

“The floor is raised,” he said. “When you add 3 percent on top of 9 percent, you’ve got a 12 percent inflation since the last time you bought a car … While inflation as a metric may be lower than it was, the impact of higher priced everything is still hitting people and they know it.” 

But Cramer noted that there are many signs of economic strength, such as strong corporate profits.  

“It seems to me that the soft landing that the Fed was hoping to have, they’ve done a reasonable good job,” he said. “I’m encouraged by the numbers.” 

But he argued “the price of money is way too high,” referring to the impact of interest rates on the housing market and broader economy.