Editorial

Give Bidenomics Credit

Republicans plan to sabotage the economy with the expectation that voters will blame Joe Biden for the government shutdown the extremists plan to force Oct. 1 in their demand for deep cuts in federal spending.

Right-wing Republican “Freedom Caucus” members are demanding cuts that go far deeper than what President Biden and House Speaker Kevin McCarthy agreed to in May when Congress suspended the debt ceiling. Facing a right-wing revolt by Republicans who rarely support spending bills at all, McCarthy has agreed to allocations for the 12 annual spending bills at lower levels than the $1.59 trillion allowed in the debt ceiling deal.

In the last month of the fiscal year, Congress has not cleared any of its 12 annual appropriations bills. A temporary stopgap funding measure might avert a government shutdown beginning Oct. 1. But the far-right Freedom Caucus members are pledging to oppose a temporary measure if it does not cut funding substantially or include new border controls and restrictions on prosecuting disgraced former President Donald J. Trump. At the same time, senators of both parties want the stopgap bill to include billions of dollars in new assistance to Ukraine, a demand that House Republicans are resisting, along with funds to replenish federal disaster relief.

In the Senate, Democrats and Republicans have been working to advance spending bills and keep them free of contentious policy riders that are drawing fire in the House.

In the first two years of his administration, Biden had a narrowly Democratic Congress, with a majority of 8 to 12 votes in the House for most of the session and a 50-50 Senate, with Vice President Kamala Harris providing the tie-breaking vote, as long as center-right senators Joe Manchin and Kyrsten Sinema remained in the fold. With that, Democrats passed the American Rescue Plan (ARP), which provided a $1.9 trillion boost to the economy. This funded a relatively quick recovery, in contrast to the slow painful road back to full employment following the Great Recession brought on by the George W. Bush administration.

Biden also got an infrastructure bill, passed with a bipartisan majority, which not only addresses long-neglected infrastructure needs across the country; it also includes funds to support a green transition, by modernizing the country’s power grid and setting up a system of charging stations for electric cars. He also got the CHIPS Act, which appropriated $280 billion over the next five years (approximately 1% of the federal budget) for research and support for manufacturing advanced semiconductors in the US.

Then Biden got the Inflation Reduction Act (IRA), passed on a strictly partisan basis. Biden somehow managed to get the support of Manchin on that bill, which is jump-starting a green transition.

The IRA includes large subsidies for clean energy and electric cars. As a result, in the relatively short time since its passage, we have seen an explosion in plans for factories producing electric cars and batteries, as well as wind and solar power. And it also authorized Medicare to start negotiating lower drug prices with pharmaceutical companies, over oppositiion of Big Pharma and Republicans.

The unemployment rate, which stood at 6.3% when Biden took office, had fallen to 3.9% by the end of 2021, and has not gone over 4% since then. It dropped to 3.5% in July, but rose to 3.8% in August, driven by an extraordinary 736,000 one-month rise in the size of the labor force. It is still the longest period where the unemployment rate has been below 4% in more than half a century, economist Dean Baker noted, as employment is up by more than 2.8 million over the last year. “As a result of the ARP, the United States is the only major economy that is largely back to its pre-pandemic growth path. The US also now has the lowest inflation rate of any of the G-7 economies,” Baker wrote.

Yet Biden gets little credit for the economic rebound from the COVID lockdown. As Paul Krugman noted in the New York Times Sept. 7, “Poll after poll shows Americans rating economic conditions as very bad and giving Biden very low approval for his economic management.

“The strange thing is that these bad ratings are persisting even as the economy, by any normal measure, has been doing extremely well. Indeed, we’ve just experienced what Goldman Sachs is calling the ‘soft landing summer.’ Inflation is down by almost two-thirds since its peak in June 2022, and this has happened without the recession and huge job losses many economists insisted would be necessary. Real wages, especially for nonsupervisory workers, are significantly higher than they were before the pandemic.”

Krugman also noted that, despite the low poll ratings for Biden’s handing of the economy, “There’s substantial evidence that people don’t feel that they personally are doing badly. Both surveys and consumer behavior suggest, on the contrary, that while most Americans feel that they’re doing OK, they believe that the economy is doing badly, where “the economy” presumably means other people.”

The Federal Reserve conducts an annual survey of economic well-being of households, and at the end of 2022, 73% of households said that they were “at least doing OK financially,” down from the previous year (presumably because of the end of many pandemic aid programs) but not significantly below the number in 2019. In 2019, however, half the population said that the national economy was good or excellent; in 2022 that number dropped to 18%.

Republicans blamed Biden for high gas prices in the summer of 2022, when the national average gas price topped $5 a gallon in June after Russia invaded Ukraine. Biden asked the Federal Trade Commission to investigate possible illegal conduct by large oil companies in the national gasoline market, he released oil from strategic reserves and he urged oil producers to ramp up supply even as he urged the US and other countries to wean themselves from fossil fuels over the long term to avert catastrophic global warming.

Gas prices dropped below $4 in August 2022 but OPEC+, led by Russia and Saudi Arabia, in October 2022 announced a production cut of 2 million barrels a day, in what was seen as an effort to drive up gas prices before the US midterm election. Biden also threatened to seek a new windfall profits tax on major oil and gas companies unless they ramp up production to curb the price of gasoline at the pump, an escalation of his battle with the energy industry just a week before the midterm elections.

Senate Budget Chair Sheldon Whitehouse (D-R.I.) sponsored the Big Oil Windfall Profits Tax bill to curb profiteering by the five largest oil companies that produce 30% of the nation’s oil and hauled in pre-tax profits totaling $264.3 billion in 2022, when gas prices briefly surpassed $5 a gallon. Revenue raised from the windfall profits of big oil companies would be returned to consumers in the form of a quarterly rebate. But voters put Republicans in narrow control of the House, and gas prices are rising again.

Democrats should make profiteering an issue in 2024 and force Republicans to defend oil companies and monopolists. — JMC

From The Progressive Populist, October 1, 2023

Populist.com