Biden Moves From Transitional to Transformative

President Biden appeared before a joint session of Congress last week to announce the largest expansion of the American government since Lyndon Johnson’s Great Society in 1964-1965, and perhaps the largest ever redistribution of income, wealth and resources from richer – the top 1% – to poorer. The man who campaigned as a moderate is governing as a leftish progressive. The man who had styled himself a transitional President decided instead to be a transformational one at an age, 78, when many of his early colleagues in government have long since retired or died.

It is not good form to open such a talk with a fib, or several. In days gone by an alert media would pounce. No longer if the President is sufficiently Left and Woke to its liking. Biden claims he inherited a nation in crisis, a runaway virus and a shattered economy. Not true. Thanks to Donald Trump’s willingness to fund the final development of vaccines, one million Americans every day were receiving their shots when Biden was sworn in. Thanks to Trump, Biden inherited an economy so fundamentally strong that it was on a path to one of the greatest booms in its history. And thanks to Trump, Biden inherited Jay Powell, a Fed chairman who is determined to keep the pedal to the metal as the economy approaches the brink of an inflationary spiral.

I suppose the new President felt it would diminish his own accomplishments if he credited the predecessor he so loathes. Which is unfortunate, because Biden has much for which he deserves credit. One is what we might call tone. Unlike Trump, Biden can empathize with others; understand that a soaring stock market is seen as irrelevant to the daily lives of millions, even though tens of millions own stocks and tens of millions have 401(k)s; that the mounting income of CEOs is accompanied by the pain inflicted on workers by lay-offs that often fatten the profit margins on which CEO bonuses are based; that there is a degree of inequality of income and wealth that, whatever its causes, threatens the sustainability of the capitalist system.

To cope with these sorts of problems Biden is asking a congress in which his Democrats command the thinnest of majorities, and a nation in which 74 million voters favored his very different opponent, to devote trillions upon trillions of dollars to reconstruct its physical infrastructure and rewrite its social contract. Think of his ten-year programme as LBJ’s Great Society on steroids.

Two years of free pre-kindergarten ($200 billion), another two at free community colleges ($109 billion), grants to colleges serving minorities ($46 billion) will restore America’s educational lead. Paid family and medical leave ($225 billion), child care and tax credits to cut child poverty in half ($825 billion), in-home medical care for the elderly ($400 billion), a $15 per hour minimum wage and more, will give the middle and lower-income classes decent lives “with a little breathing room” as the President’s father put it to him. Or as permanent dependence on government, as horrified critics put it.

Add repair of roads and bridges ($115 billion), elimination of lead water pipes ($45 billion), a robust electric grid to allow the replacement of fossil-fuel generation with renewables ($100 billion), gun control, police reform, legislation to expand trade unionization and to lower drug costs, and other government interventions, and America’s democracy will be able to see off the threat posed by totalitarian regimes such as China’s and Russia’s. Greater expansion of the welfare state to come when Biden proposes his budget for the fiscal year beginning October 1.

Phew! It is certainly arguable that the American welfare state is due for an overhaul. When it was put in place “working moms” were a relative rarity. Some 800 million Chinese workers were not competing for jobs with American workers, and the Chinese government was not massively subsidizing its industries to give them an edge over US competitors. Most parts of the nation’s infrastructure, especially Dwight Eisenhower’s interstate highway system, were sparkly new. Climate change was not “going to bake the planet” as Biden believes it will. A pandemic had not revealed the holes in the safety net – cars lined up at food banks – and exacerbated the problem of inequality of incomes, wealth and opportunity.

Attention must be paid to these changes, and for Biden that means a major expansion of the role of government in Americans’ lives, from cradle to grave. But like all revolutions based on democratic consent rather than tumbrils and rifles, Biden’s faces some serious obstacles.

The first is what Washington calls “pay fors”. The President proposes to raise the corporate tax rate from 21% the level to which Trump reduced it, to 28%, where it was when George W. Bush was president, and to add taxes on overseas operations. He would increase the top personal income tax rate from 37% to 39.6% for households earning more than $400,000 per year, raise taxes from 23.8% to 39.6% on capital gains of the “three-tenths of one per cent of all Americans” earning more than $1 million, and expand the Internal Revenue Service ($80 billion) to take in an extra $700 billion from “millionaires and billionaires who cheat on their taxes.” Few geese, several with highly paid lobbyists, will fail to resist this plucking.

And perhaps the small number of reporters not prostrating themselves at the President’s feet will point out that in addition to the rate increase there will be an Obamacare surtax of 3.9%, and that the new higher rates will cut in at incomes considerably lower than now is the case. Oh yes, and it is not true that anyone earning less than $400,000 will not pay higher taxes. That figure applies to households, so if, say, two persons each earn $250,000, the new higher rate will be applied to their combined income even though each earns less than $400,000. And more than three-tenths of all Americans become millionaires over time, many for a single year in which they sell a successfully launched business – something no sensible pro-growth administration would want to discourage unless in thrall to an envious, vindictive Left.

The second problem is the enemy within. His beloved trade unions will stand athwart several of his proposals shouting “stop”. The teachers’ unions, of which his wife is a prominent member, are opposed to charter schools and other reforms that would raise educational standards. Not all unions are models of fiscal probity. His green allies will take to the courts to oppose the construction of the high-voltage transmission lines needed to implement his plan to replace fossil fuels with renewables. Government bureaucrats’ record in “picking winners” to subsidize has been far from flawless, as Biden must remember from his vice presidential days of selecting future bankrupts to receive government aid.

Most important are the inherent contradictions in the Biden vision. He promises to buy American while wooing foreign allies he is excluding from our markets. He will confront Xi and Putin while imposing real spending cuts on America’s military. He will establish a cradle-to-grave welfare state, but at no cost to average Americans.

“I contradict myself. I am large. I contain multitudes” wrote Walt Whitman in 1855 in a self-description applicable to America’s President 166 years later.