American politics is taking a new turn. Out with the personal, confrontational politics of the Trump era, in with the unifying, policy-centered politics of the Biden era. To the fore are battles of over how to confront powerful enemies: Covid, global warming, and an insidious threat to the preservation of the economic system, inequality.
True, an impeachment trial looms. Vengeance is mine sayeth Nancy Pelosi, the click of knitting needles audible, as she orchestrated another impeachment because “I don’t think it’s very unifying to … make nice, nice and forget that people died here …”. “We will be back in some form,” says Donald Trump. But that bitter battle is merely the undercard to the main, policy fights, as much an annoyance to Biden as to the 90% of Republicans loyal to Trump. The current plan is for the senate to work in bipartisan harmony confirming Biden appointees and approving his Covid-aid package until February 8, then turn to impeaching the former President for high crimes and misdemeanours. Majority leader Chuck Schumer assured the country, “Healing and unity will only come if there is truth and accountability” and the man for whom 74 million Americans voted is forever barred from public office. President Biden wants the day divided between his program and the impeachment trial, which means the senate might work on Biden’s business in the mornings, break for a brief lunch, and then conduct the impeachment trial in the afternoons, perhaps leaving time in the evening for a Biden address on the need for national unity. It is also not known whether Schumer will set up a special senate Committee of Public Safety to facilitate the trial.
Back to the policy wars. Commander-in-chief Biden (age 78) has chosen his generals from a list compiled during the 50 years in which he has fought such battles. On the fiscal front Biden’s top general will be treasury secretary Janet Yellen (age 74). She has already trekked to Capitol Hill to defend the need for big spending and high deficits even though the national debt already is closing on $28tn. She wants Biden to “act big”. The new President has enlisted Democratic Socialist Bernie Sanders (age 79) – “Democratic” to access the party’s caucus, “Socialist” a matter of conviction – to chair the committee that decides which battles to finance, which priorities to set. John Kerry (77), a seasoned veteran at seizing a spotlight on centre stage, his media claque in thrall, is being sent by his commander-in-chief to rally allies to turn up the heat on the battle over climate change.
If age is a measure of wisdom, none of these veterans will repeat their past errors or those of others, expecting different results – implementation of socialism in the case of Sanders, trust in China’s professions of greenness and the Mullahs’ veracity, in the case of Kerry.
These experienced leaders are joined on other policy fronts by a contingent of younger political warriors, blooded in the Obama administration, dusting off the policies they have long espoused: more emphasis on racial and economic equality, a tilt away from Israel and the Abraham Accords and towards the Palestinians, revival of deals with Iran and Russia. Fewer immediate headlines, as domestic economic issues dominate, but important nevertheless.
That is the political situation in America, painted with the broadest of brushes. So far, so good. So easy, since the overwhelming need to defeat Covid clearly makes it priority number one. No trade-offs, the hard stuff of policymaking, need be made. Unless you are Janet Yellen, willing to grasp that nettle. At her confirmation hearing she conceded that there is a trade-off between deficit spending and inflation, and argued that it makes sense to risk inflation to reduce the greater risk of the economic collapse that would befall us if the Biden administration fails to “go big” on spending. On the other hand, Biden, in consecutive sentences in a speech last week, saw no need for a trade-off when he proposed both to revive small service businesses and to raise the minimum wage, which those businesses can ill afford.
The need for trade-offs will become more apparent when Biden moves on from Relief to Recovery, and is forced to choose between his trade union friends’ efforts to prevent reform of the education system, and his own desire to improve the economic prospects of Black youngsters; between his plan to raise taxes on the wealthy and the need to provide incentives to invest and innovate.
These choices are important not only because of their effect on the economy. Once the virus is under control, the economy should take off, absent policy miscues. Mountains of unspent cash include
some $1.6trn in excess savings that is burning a hole in consumers’ pockets,
unborrowed funds sitting on banks’ balance sheets after they released billions in loan loss reserves they believe will not be needed,
record sums of cash sitting in corporate vaults ($4trn, up from $2.7trn ten years ago).
Add trillions of to-be printed-in-the-US-Treasury dollars to boost the economy as Biden ponders, “How do I stimulate the economy? Let me count the ways.” Larry Summers, former treasury secretary, summarized the situation, “If we get Covid behind us, we will have an economy that is on fire.” If that fire overheats the economy, the Fed fire department has promised to let it roar by leaving interest rates close to zero even if the inflation rate exceeds its target of 2%.
Most Americans favour giving Biden what he says he needs. They are implicitly assuming that the measures he is proposing are temporary responses to Covid and the economic dislocation caused by the lockdowns. Not so. “In practice, one-year programmes tend not to disappear,” advises The Lindsey Group. The 100,000 health care workers to be hired to administer the vaccines are more likely to be redeployed than laid off when the pandemic is controlled. Proposed increases in child-care payments, unemployment benefits, new sick leave entitlements, expanded programmes for women’s health and other benefits are unlikely ever to be rolled back, much less immediately before the 2022 mid-term elections. In short, a new era of the big government that Bill Clinton pronounced “over” is upon us. Odd, that, since smaller government – deregulation and lower taxes – seemed to be producing the rapid job, wage and economic growth topping Biden’s to-do list.