“Elections have consequences, and at the end of the day I won,” Barack Obama informed Republicans shortly after his first inauguration. Indeed. The economic consequences of our recent election will be more taxes, more regulations, more government involvement in economic life. Not enough more of each to satisfy Joe Biden’s increasingly restive left – Bernie is already warning that he is unhappy, but might be cheered up if appointed Secretary of Labor – but enough more to worry the billionaires and Wall Street titans who funded his election.
We now have a clearer view of where President-Elect Biden intends to take the nation, assuming it is he rather than Kamala Harris who will be calling the shots. It should have come as no surprise to the leaders of industry and the nation’s trade unions who convened for a virtual meeting at the president-elect’s invitation that priority one will be bringing the resurgent virus under control. What is a bit of surprise is that in place of a generalized threat to shutter the economy we have a more nuanced, less economically damaging approach. Many of Biden’s “scientific” advisers now say that a total shut-down is not required. Rather, they want to calibrate the stringency of restrictions to the severity and geographic location of any outbreak. Biden, who once promised to shut the country down if the “scientists” so advised, is now off the hook, since no such advice will be forthcoming. He is going to great pains to say, “I will not shut down the economy, period.” Which clears one potential massive impediment to a continuation of the economic recovery now underway.
Nor could anyone have been surprised that Biden plans to raise taxes on households earning more than $400,000 per year (and, surreptitiously, on many earning less). And to eliminate tax breaks for capitalist plunders such as hedge fund managers, tax-dodging property developers, and climate-changing oil companies. Those changes will both generate revenue and move to reduce the income inequality that now threatens continued mass support for the system of market capitalism that is the greatest producer of wealth the world has ever seen. When he formally takes over, he will be importuned to raise taxes on realized and unrealized capital gains, raise inheritance taxes and take other steps urged on him, and not only by the Sanders wing. Much will depend on the outcome of the Georgia senate races, no longer considered certain to end in the Republican column because a self-deluded Trump is diverting so much Republican energy and cash from those races to support Rudi Giuliani’s fantastical conspiracy theories about a stolen election.
One aspect of Biden’s plan to Build Back Better is not easy to understand. He repeatedly promises to create millions of good-paying union jobs: “I’m a union guy.” Only 6.2% America’s private-sector workers belong to trade unions. Many of these unions do not have histories of financial probity, others are not famous for efforts to achieve membership diversity, still others do not draw their membership from growth industries of the future. Still, a 78-year-old President is entitled to succumb to a touch of nostalgia for the good old days his union-loving father had described, when unions, warts and all, built the American middle class, a point the great conservative, Irving Kristol, often made to me.
To attend to another large block of the work force Biden aims to raise the national minimum wage to $15 per hour. In some states this is of little consequence, as wages are at or above that level in most sectors. In others, that increase would come to about 25%-33%, and might put re-hirings beyond the reach of some service-sector employers. It will be important to balance any negative effect on hiring (denied by the $15 proponents) against the increase in the living standard of the beneficiaries of such a move (over-looked by opponents).
Here we come to one of the unfortunate features of the American political economy. Our Democratic Party pays as little attention to growing the national economic pie as Republicans pay to the equity with which it is distributed. Reformers in both parties are aiming to correct that weakness. Former Treasury Larry Summers persists in trying to remind Biden and the Democratic Party that economic growth cannot be take for granted, while a variety of think tanks are addressing the equity question as they seek to shape a post-Trump Republican agenda. The good news is that neither party will be able to impose its blinkered view on the other, barring a Republican cataclysm in Georgia, and that compromise might produce a rather larger pie with decent-sized slices to satisfy all save the most gluttonous appetites, of which there are more than a few.
On the question of climate change, Biden will certainly, perhaps on the famous Day One, on which all new presidents promise to do lots of things, re-join the Paris climate-change accord. He will equally certainly not submit the deal to the senate for approval as a treaty. That would require an unattainable two-thirds vote. We also know the President Elect
· is sympathetic to his greens but not fully signed on to a Green New Deal,
· will or won’t ban fracking,
· plans to convert the federal fleet to electric vehicles, and to build 500,000 charging stations around the nation.
That would mean government-run facilities, presumably like today’s 168,000 private-sector petrol stations that offer food and other amenities. Perhaps pack a sandwich if those become the only refueling stops when the day of the electric vehicle arrives.
The businessmen with whom I have spoken are not upset, although they plan to resist some of the raids on their shareholders’ and their own pocket books. Given the alternatives of Bernie on the left and Trump, well, somewhere today and somewhere else tomorrow, Biden seems a knight in shining armor, even if that costume is somewhat the worse for wear after years of battering in the political battlefields.
Finally, we come to Thanksgiving, the day on which families will gather to stuff themselves with 46 million stuffed turkeys, watch football, and have a good time. In response to the doctor/governor coalition against large family and especially multi-family gatherings, 31% of Americans are planning smaller gatherings than last year, which is why Sam’s Club stocked up on 10-15 pound turkeys, down from 22-pounds pre-Covid-19. While Fed policy makers persist in their insistence that inflation has not resulted from their policies, American families are finding that the average Thanksgiving meal costs 3.5% more this year than last.
Much to be thankful for as we approach 2021. Vaccines are ready to go; merchandise is flying off the shelves at shops such as Target’s; the home building industry is booming and there is an acute shortage of existing homes for sale; the auto industry is holding up surprisingly well; many consumers are awash in cash; the Boeing 737 Max will be in the air; the economy is also set for take-off, perhaps after a brief dip in the next few months which might prompt congress to provide some relief to those thrown out of work or who have lost their small businesses.
Wet blankets such as California governor Gavin Newsome have taken aim at “gatherings”, defined as “social situation that bring together people from different households at the same time in a single space or place.” All gatherings in California must be limited to three households, held outdoors (people can go inside to use the bathroom), last for only two hours, with diners wearing masks in “between bites” – yes, that means while chewing. Such absurdities did not dampen the birthday party for a leading lobbyist, attended by unmasked Newsome in Napa Valley, a hard-hit area of the state. Travel is restricted, except for several legislators who hied off to Maui, and Muriel Bowser, mayor of Washington, who classified as “essential” her trip to Delaware so that she could celebrate Biden’s victory without self-quarantining on her return, as mere non-pols were told to do. Delaware has a significantly higher virus-infection rate than the District, to celebrate Biden’s victory. Salons must be closed, except for House Speaker Nancy Pelosi.
Joe and Jill Biden have much to look forward to as they pare their dinner invitation list to a single guest, a painful process for a large families that includes seven grandchildren. Not for the Bidens other politicians’ “rules for thee but not for me”. Perhaps a bonus for those who have been arguing that character matters, even more than policy.