A critical moment in Biden’s economic plan: “Failure is not an option”

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On the way back from a trip to the West Coast this week, Joe Biden stopped in front of solar panels and a huge windmill in the foothills of the Rocky Mountains to make the best of his trillion-dollar economic agenda publicity.

“We have set a goal, and this goal is achievable. I assure you, I assure you,” the president said Tuesday in the suburbs of Denver, Colorado. “This will create tremendous economic growth, reduce inflation, and put people in a place where those beautiful kids sitting in the back never have to worry about what we worry about now.”

As Congress fully resumes work next week, President Biden enters a critical periodThe judgments of modern presidents, even those who are re-elected, often depend on their legislative achievements in the first 18 months.For all the noise and blame around the whole summer The chaotic withdrawal of troops from Afghanistan with Propagation of Delta variants, The next few weeks of negotiations on the president’s spending plan will be a decisive moment.

If the White House has its own way, Biden will get Congress’s approval to farm Nearly 5 tons from two legislations, Access to infrastructure, childcare, education, healthcare, and the fight against climate change, part of the funding comes from Increased taxes on the wealthy and companies.

Politically, this will represent Biden’s huge legislative victory after a brutal summer that led to a decline in his approval rating. It will also allow congressional Democrats, with the help of the president, to promote these bills as practical help for low- and middle-income American families entering the 2022 midterm elections because they risk losing their weak majority in the House of Representatives and the House of Representatives. Senate.

But if the bill is shaken, it may make the 78-year-old president appear politically vulnerable and undermine his promise to voters and the rest of the world that he can restore the effectiveness of the US government.

President Joe Biden introduced his infrastructure spending bill during his visit to Colorado.If the White House had its own way, it would represent a huge legislative victory for Biden © Leah Millis/Reuters

John Podesta, the Chief of Staff of the White House under Bill Clinton, said: “His major commitment to build a stronger and more stable economy depends on these investments.” “Just you. It is a’life and death’ moment in terms of whether it can be passed, and whether it can be passed intact.”

What to cut?

However, ensuring that these measures are passed by Congress is far from guaranteed. Although a bill requiring $1.2 trillion in physical infrastructure spending-from roads to bridges and broadband-has some Republican support, Biden’s larger $3.5 trillion spending plan, Including tax increases, only the Democratic Party supports it. There is almost no room for betrayal In the presidential party.

In March of this year, shortly after Biden took office, the Democrats united and revolved around his $1.9 trillion fiscal stimulus agreement to push the US economy out of the winter downturn triggered by a new wave of coronavirus infections. But getting lawmakers to unite around a larger package (including related tax increases) will always bring greater impetus, especially for moderate and conservative Democrats.

This week, Biden spoke with some of the main participants in the talks: he invited West Virginia Senator Joe Manchin and Kirsten Cinema, The Arizona senator, went to the White House to fight for the most skeptical moderate Democrats. He also spoke with Speaker of the House of Representatives Nancy Pelosi and Senate Majority Leader Chuck Schumer to improve their negotiation strategy.

At the 6th Street Viaduct replacement project in Los Angeles, California, a Skanska AB construction worker is guiding a crane to move wood because the concrete boom is pouring concrete
The bill requiring $1.2 trillion in physical infrastructure spending has some support from the Republican Party, but the larger package is only supported by the Democratic Party © Bloomberg

“Some people want to see the package trimmed. Others want to see the package paid in full and nothing interesting. I think the most important dynamic is how much money they can raise and how much investment does this cover? If not 3.5 Tons, what would that cut?” Podesta said.

To further complicate the issue, the United States is rushing to provide funding for the government by the deadline at the end of this month or is at risk of a federal shutdown, and may Face the risk of sovereign debt default If it does not raise the borrowing limit as soon as possible.

“Failure is not the choice of the Democrats and the President. But how it all fits together… It may be the most complicated Rubik’s Cube you can imagine,” Virginia Democratic Senator Mark Warner told the Financial Times.

Biden’s Democratic predecessors learned through the difficult way in the early days of their administration how difficult it is to achieve that important legislative goal of shaping the legacy—even if they have a larger majority. Barack Obama had months of arduous negotiations on his iconic health care and Wall Street reforms before it was finally passed, and Bill Clinton’s efforts to reform health care took more than a year of bargaining. Eventually ended in failure.

The global impact of Biden’s fiscal negotiations is also important.use Biden’s climate measures This will mark the United States’ commitment to reducing carbon emissions-creating additional momentum for the agreement at the COP26 summit in Glasgow in November. At the same time, the United States’ commitment to establish a new international corporate tax system in the OECD depends on these terms in transactions approved by Congress.

Senator Kirsten Cinema
Biden has spoken to some of the major lawmakers involved in the negotiations, including Arizona Senator Kyrsten Sinema, as shown in the picture, to win the support of the most skeptical moderate Democrats © Samuel Corum/Getty Images

More broadly, US officials stated that it is essential for the Biden administration to increase domestic investment on a large scale, at least in the initial stages, in order to more effectively project its power around the world and prove that democratic systems can work.

“You have to readjust the situation in terms of strengthening institutions, but most importantly, strengthening the notion that the government can do something good to help people live,” Warner said.

Josh Lipsky, director of the Center for Geographic Economy of the Atlantic Council think tank, said that in the next few weeks, the United States may see Biden “fail to advance the core of its domestic agenda,” coupled with a debt ceiling crisis, or Raising the borrowing limit while making “major compromises” on material and human infrastructure will make it spend more on “reconstruction” than any other country.

“In October, the world will see two very different scenarios. Now both are up in the air,” Lipsky said.

Slower growth

The uncertainty and divergence of the fate of Biden’s government spending plan coincides with a turning point in the economy U.S. rebounds from the pandemicDue to the alarming spread of the more contagious Delta Coronavirus variant, the super-expansion recorded in early 2021 has given way to a more modest growth and a sudden slowdown in job creation. In recent weeks, economists have acted swiftly and therefore lowered their forecasts for this year, consolidating the view that the pace of US economic recovery has now exceeded its peak.

Senate Minority Leader Mitch McConnell
Many Republicans, including Mitch McConnell, left, believing that Biden’s spending plans were purely stupid and that these investments were unnecessary ©Stefani Reynolds/Bloomberg

“The bumper sticker will say that we have passed V,” said Michael Gabon, Barclays’ chief US economist, referring to the shape of the recovery since last year’s shocking crash. “We have experienced a sharp contraction and a sharp rebound. We are entering a phase of what looks like a traditional recovery, and the growth rate should slow down.”

Even so, the Fed is ready to relax its policy support, first by reducing the $120 billion monthly asset purchase plan implemented in the year to support the financial market and support the recovery.

“This is a government-supported recovery, reaching a level that we have never seen in history, but what we are seeing now is the transition from a government-supported economy to an economy that needs to be self-reliant,” said Nella, chief economist of the ADP Institute. Richardson.

The inflation outlook has also become more complex, and early signs indicate that some of the reported price increases in the industries most sensitive to pandemic-related disruptions (including used cars and travel-related expenses) are fading, although they may be dissipated by more others. Local price pressure continues.

Michel Meyer, head of US economics at Bank of America Merrill Lynch, said: “We have seen some categories of temporary inflation turn into temporary deflation, but for other categories, inflation seems to have expanded.”

Car dealer wearing protective mask showing car to customer
Some of the significant price increases reported by the automotive industry are fading. The automotive industry is one of the most sensitive to pandemic-related disruptions, but they may be replaced by price pressures elsewhere © Angus Mordant/Bloomberg

Benefits for everyone

Many Republicans believe that Biden’s spending plan is purely stupid at this stage of the recovery, that investment is unnecessary, tax increases will be harmful, and the result will be some form of stagflation. Minority leader Mitch McConnell said in the Senate this week: “They are eager to pass another large-scale, trillion-dollar reckless tax and spending frenzy-trying to move our country to the left forever.” This is the last thing American families cannot afford.”

But the Democrats and the White House have dispelled any concerns that this part of their economic agenda will lead to inflation, because spending is divided over 10 years and is mainly paid for by an increase in government revenue, unlike the direct stimulus funded by the deficit.

Speaker of the House of Representatives Nancy Pelosi

Joe Biden also called House Speaker Nancy Pelosi to refine their negotiation strategy © Samuel Corum/Bloomberg

In the long run, they expect this will ultimately solve the problem of long-term underinvestment in key public goods and reduce tax laws that favor the rich, thereby reducing deep-rooted income and racial inequality, thereby increasing the growth potential of the United States. Hart Research’s Democratic polling expert Jay Campbell said that even if the final bill is diluted and scaled down to accommodate centrist Democrats, it will still be a political outcome that will benefit the party.

“It will affect people’s lives in many different ways, in ways that will ultimately help them-the Democratic Party will have something that can be the real achievement of the Unity government in the first two years,” he said.

After returning to Washington from Colorado, seeing Republicans continue to criticize the package while Democrats are still arguing, Biden delivered a new speech at the White House, which seemed to be to unite his military and work together in the final stage of the legislation. Advance forward. process.

Biden said: “This is an opportunity to become a country we know we can become-a country where all of us, not just those at the top, can share the benefits of economic growth in the coming years. “Let us not waste this moment trying to protect the economy that has not been good for Americans for a long time.”

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