13/04/2021

Biden's New Deal

Three questions to Maya Kandel

Historian, Associate Researcher at Université Sorbonne Nouvelle Paris 3 (CREW)

On March 31, Joe Biden presented the first part of his Build Back Better program, considered by some as a "Green New Deal", which plans to inject $2.5 trillion into the economy, in addition to the $1.9 trillion of his economic "rescue" plan. It marks the beginning of a long marathon dealing with the institutional and political constraints of the American system, coupled with a hostile Republican Party. What does this plan reveal about Joe Biden's ambition and methods? Will he be able to defeat Trumpism in the United States and strengthen democracy? Maya Kandel, historian and specialist in American foreign policy, shares her analysis of the political and strategic issues underlying this ambitious plan.

The ink was not yet dry on the $1.9 trillion Coronavirus Rescue Act passed by the U.S. Congress when, on March 31, President Joe Biden presented a new plan worth over $2 trillion. What exactly is this new proposal?

On Wednesday, March 31, US President Joe Biden unveiled the first part of his "Build Back Better" program, a $2.25 trillion infrastructure plan. It takes a very broad view of what falls within "infrastructure", and is above all an extremely ambitious plan. Commentators and members of the Biden team have referred to it as a climate plan, an infrastructure plan, even a "China plan". Biden’s response has been in a sense "all of the above". While the bill is at heart about infrastructure, its official title focuses on jobs (the "American Jobs Plan"). At the same time, its significant climate components have led some commentators to call it the "Green New Deal". Further, measures to combat social and racial inequality are central to it, and many have noted that Biden, in presenting the plan, mentioned "China" much more than "roads".

If we consider the details of the plan, four main areas emerge:

The first area refers to the core meaning of infrastructure, "roads, bridges, ports and airports", and would receive approximately $621 billion. An additional $165 billion would go to public transport, mostly to Amtrak (passenger rail). Other elements targeted include charging stations for electric vehicles, updates to drinking water systems, the development of infrastructure for high-speed internet, housing renewal (particularly for public housing), and the modernization of electric grids.
The bill allocates $400 billion for "human infrastructure" or Care, especially care for the elderly, with budgets dedicated to home- and community-based care, as well as improving benefits and salaries for caregivers. Salaries in the sector are typically quite low, and the largely immigrant workforce has been dwindling - a fact experts find alarming given the anticipated explosion in the elderly U.S. population.
The third priority is the fight against climate change. This can be seen in the hundreds of billions already mentioned for modernizing housing and the electric grid, and in several proposed tax credits to change the energy mix. Yet, the most important (and difficult) proposal remains the drafting of a federal energy standard (the Energy Efficiency and Clean Electricity Standard). There would also be $174 billion in funding for electric vehicles, $16 billion to create jobs centered on the restoration and reclamation of abandoned shale (oil and gas) wells, and $10 billion for a new "Civilian Climate Corps" dedicated to environmental projects and protecting biodiversity.
The last key area concerns the US-China competition. The part of the bill that focuses on research and development, for a total of $180 billion in spending, is clearly aimed at surpassing China in the area of technology, in order to maintain the US’ position as the leader in technological innovation, "a priority for our economic competitiveness and for our national security". To do so, $50 billion is allocated to the National Science Foundation, to finance a new technology directorate that will develop research and industrial projects on semiconductors, quantum computers and microelectronics, biotechnologies, and "breakthrough technologies in the field of energy". Meanwhile, social and racial justice measures are woven throughout, with shares of funding reserved for networks and institutions that work with or for minority groups. In addition, recent concerns about supply chains are reflected in the $50 billion earmarked for a new office within the U.S. Department of Commerce to support the domestic production of certain technologies, such as semiconductors. Other specific funds direct $35 billion for climate science and research into new technologies of carbon capture, rare earth materials, and geoengineering. The scope of these plans is reminiscent of the U.S. government’s investments during the Cold War era, which were crucial to the development of the internet for instance, as well as GPS and other technologies that are commonplace today. But at that time federal research budgets were as high as 2% of US GDP (in 1964), compared to 0.7% in 2016.

Ultimately, the plan outlines a strategy to finance these budgets, by reversing the Trump tax reforms which reduced the corporate tax rate from 35% to 21%. Targeting "multinationals that make profits abroad and do not pay taxes", Biden proposes to reincrease the corporate rate to 28% in order to finance the plan over the next 15 years.

Does it have any chance of getting through Congress?

Now, the real work begins. While the Coronavirus Rescue Act did not cause (too much) internal debate, this time is different, as Joe Biden is confronted with the divisions within his own camp.

Biden has a sizable advantage, the best advantage a President can have with Congress: the support of the American people.

Nevertheless, the President is aware that in the midst of this dysfunctional and ultra-polarized political atmosphere, the window of a "unified government" - where the same party controls the White House and has the majority in both houses of Congress - may not last beyond the November 2022 midterm elections. This approaching deadline will limit the options for certain elected Democrats. What is more, the narrowness of the majority’s margin seems to have emboldened Republicans in their obstructionism, since it may only be a matter of time before the Democrats’ majority changes.

Biden’s main challenge will be to maintain unity in his camp, which is threatened by the ideological divergences between the party’s progressives and centrists. While climate activists applaud the plan’s initiatives, they also criticize it as being largely insufficient, with Alexandra Ocasio-Cortez leading the critique. At the same time centrist Democrats have expressed concern about certain measures, notably on the fiscal front. Biden can afford to lose no more than 3 votes in the House of Representatives, and none at all in the Senate. Meanwhile, on the Republican side McConnell immediately denounced the bill as a "Trojan Horse" for the more "radical" priorities of the Democratic Party. The GOP refuses to consider any infrastructure beyond "roads, bridges, ports and airports", dismissing the rest of the plan as "a bunch of costly progressive demands". The Republicans will certainly turn the debate into another culture war to justify their anticipated obstruction.

Nonetheless Biden has a sizable advantage, the best advantage a President can have with Congress: the support of the American people. His popularity is at 61% and has held steady for the last three months. It is on a rising curve concerning the economy, with his approval rate up from 55% to 60% in the last poll; regarding his management of the pandemic, 73% of Americans support him, including 50% of Republicans (a notable fact). During his four years in office, Donald Trump never passed the 50% bar of approval.

In any event, the announcement of the plan is only the beginning of a months-long congressional marathon, which will involve negotiations in both chambers, especially between Democrats, and especially in the Senate. There will also be negotiation between the two chambers to arrive at a common version of a bill, which will more or less resemble the current proposed plan.

What does this plan tell us about Biden’s goals, and his methods?

The vast scope of the plan can be explained first and foremost by the institutional and political limits of the American system, and the narrowness of the Democrats’ majorities in Congress. The next congressional elections will take place in 18 months, and, in some districts or states, the battle for the primaries has already begun. This means that Biden’s window for action is already closing. In addition, the specific constraint of the Senate filibuster, which effectively means that a party needs 60 votes to wield a majority, can only be circumvented in 2 circumstances: for nominations, and through the so-called budget "reconciliation" process, a method that can be used only twice more this year, and with some limitation.

This lays the context of this plan, which in an earlier period of American political life would have been the subject of multiple different bills. The recently-passed rescue act similarly included, in addition to economic stimulus measures (such as individual checks for $1,400), education and family policy components: in the absence of European-style "social safety net" in the United States, Democrats are also motivated to "seize the moment" of the pandemic crisis, and push through measures that have long been policy priorities for some members of the party.

The impulse to "go big and go fast" also comes from lessons learned in the early stages of the Obama administration. Barack Obama spent a year in 2009 negotiating with Republicans on his two flagship issues, healthcare reform and climate change, with no result. The climate plan never saw the light of day, and negotiations over "Obamacare" only reduced the scope of the reform - without winning a single Republican vote.

Democrats are also motivated to "seize the moment" of the pandemic crisis.

Biden has also referred repeatedly to the crisis of democracy, both in the United States and more generally worldwide, to the "existential challenge" of climate change, and to the priority for the US of focusing on competition with China. At the beginning of March, he gathered historians for a discussion at the White House centered on transformative ambition, Franklin Roosevelt and Lyndon Johnson, and the need to "think big and go fast". These ambitions were present in Biden’s 2020 campaign, in his desire to create a new "democratic coalition" which "transformed his candidacy" in the spring of 2020, when the pandemic and Bernie Sanders’ withdrawal led to joint working groups between the two campaigns, and the two wings of the contemporary Democratic party. The joint work has continued, and Biden’s closest advisors are still in touch with the party’s progressive base, its organizations and elected officials. This willingness was further confirmed in his first political nominations. Biden appointed multiple personalities known to be close to Elizabeth Warren, notably in the areas of the economy, trade, and climate, leading some Washington insiders to refer to his administration as the "Warren administration". None of this is surprising coming from a politician who has always evolved along with his party’s center of gravity - and with the American people. It also seems to be indicative of Biden’s method for achieving this new democratic synthesis, one that can only come through its confrontation with what is possible politically in the contemporary Congress.

This strategy would definitively turn the page not only on the Reagan era of American politics, but also on the era of Bill Clinton’s "New Democrats", instead hearkening back to a role for government within the American economy that was more prevalent in the 1950s and 1960s. As Biden explained when he presented his plan in Pittsburgh, Pennsylvania, on Wednesday March 31, the objective is to "reform capitalism", and "prove that democracy works better than authoritarianism".

In part, this last argument has a foreign policy tint that aligns with the plan’s ambitions concerning China, but is also a message for the domestic audience. Biden wants to defeat Trumpism, by showing that the new trumpist GOP represents a false populism, a "pluto-populism" that in fact only legislated for the benefit of the wealthy (as particularly exemplified by the 2017 tax reform), while the Democratic Party wants to act for the benefit of America’s middle and working classes - whether that working class is white or not. As such, it is no coincidence that Biden went back to Pittsburgh, Pennsylvania, to present his new plan - Pennsylvania, the decisive swing state in the last two elections, a state he already visited to explain and pitch the covid rescue plan, where he launched and closed his presidential campaign, and where he made more trips than any other candidate in 2020.

Copyright: BRENDAN SMIALOWSKI / AFP