Former Obama Treasury adviser: Biden's $1.9 trillion COVID bill was 'an extraordinary mistake'

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Could inflation define the midterm elections?

Fox News congressional correspondent Chad Pergram has the latest on voters' concerns ahead of the midterm elections on 'Special Report.'

Steven Rattner, former counselor to the Treasury Secretary under the Obama administration, wrote in a column for The New York Times Thursday that President Biden's $1.9 trillion American Rescue Plan "will go down in history as an extraordinary mistake."

He said the solution to our inflation problem is to reduce demand by making Americans spend less. Unfortunately, this "leads to fewer jobs and slower wage growth, historically to the point where we tip into recession."

"That’s not desirable, but it is the price we pay for poor economic policies delivered by the White House, by Congress and by the Federal Reserve," he said. "Those poor policies include far too much budgetary stimulus as we addressed Covid challenges. The $1.9 trillion American Rescue Plan passed in the early days of the Biden administration will go down in history as an extraordinary policy mistake."

FORMER OBAMA ECONOMIC AIDE: I ‘WARNED’ DEMOCRATS ABOUT INFLATION, WONDERS HOW BIDEN GOT IT SO WRONG

President Joe Biden remarks on June's jobs report.  (White House)

He also said that the Fed "overestimated" the support the economy needed. 

"Optimists" like those in the Biden administration believe that the supply and demand disparity "can be addressed on the supply side of the equation," but Rattner said that this notion was "fantasy."

"Bringing more Americans into the labor force could moderate the pace of wage increases but not nearly quickly enough or on the order of magnitude needed to ease the current worker shortage," he continued.

BIDEN BLAMES PUTIN, COVID FOR RECORD-HIGH INFLATION IN US

A woman shops for groceries at a Whole Foods supermarket in New York May 18, 2010. U.S. consumer prices fell for the first time in a year last month and the closely watched core inflation rate posted its smallest annual gain since 1966, pointing to a lack of price pressure as the economic recovery gathers steam. Picture taken May 18, 2010. REUTERS/Shannon Stapleton 

Rattner said that lawmakers can't do much to prevent a recession but that the White House should listen to Sen. Joe Manchin, D-W.Va., and "couple new social programs — however meritorious — with an equal measure of deficit reduction."

The former treasury official said that while he doesn't think a recession is "imminent," history has proved otherwise. 

"A potential electoral nightmare for Democrats to ponder," Rattner concluded. 

President Joe Biden speaks at the House Democratic Caucus Issues Conference (AP Photo/Patrick Semansky)

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Inflation hit another record high in March, reaching 8.5% year over year and increasing 1.2% from February. Biden again put the blame on Russian President Vladimir Putin, calling it "Putin's price hike."

"Putin's invasion of Ukraine has driven up gas prices and food prices all over the world," Biden said during a speech addressing the numbers on Tuesday. "So everything is going up. We saw it in today's inflation data. Seventy percent of the increase in prices in March came from Putin's price hike in gasoline."