Social Safety Net – Page 3 – The Wrongologist

How Bad Is Inflation?

The Daily Escape:

Chaco Canyon’s Chetro Ketl Great House – January 2022 photo by James C. Wilson

Every media outlet is talking about the latest inflation numbers. The NYT reported that the Consumer Price Index climbed to 7% for the year through December, and 5.5% after volatile prices such as food and fuel were stripped out. Sounds terrible, right?

Nobody likes higher prices. But remember that 12 month inflation rates (called year over year rates) are a look backward in time. And consumer prices increased 0.5% in December, lower than in the past several months. Month-to-month measures are more reflective of current conditions, although they bounce around more than year/year numbers. A half of one percent rise in December annualizes to a 6% inflation rate, less than the headline rate, if it remains at that level going forward.

Also, wholesale prices rose just 0.2% in December, the smallest increase in 13 months. So maybe inflation is starting to level off.

So, maybe this is a case of beware the headlines. Eric Boehlert says that US media can’t (or won’t) give people context for the current inflationary trend:

“Convinced that rising prices are the defining economic issue of the day — not huge job gains, record-setting GDP predictions, or boosted wages — the press continues to portray inflation as a uniquely American problem that’s hounding Democrats.”

Boehlert says that what’s missing from our inflation coverage is information that inflation is a global phenomenon, fueled by the pandemic. He cites the following articles:

Republicans claim that Biden’s agenda is responsible for inflation. The average person can be forgiven if they believe that Biden’s policies are the cause, but Biden didn’t cause inflation to jump in all of these other countries.

The Economist reports that since the pandemic, there has been a total of $10.8 trillion in worldwide fiscal stimulus, equivalent to 10% of global GDP. The result was that developed countries finally moved the needle on inflation, after they added money to their economies for nearly 15 years since the Great Recession.

So, while each item of the Consumer Price Index — cars, homes, energy and so on — has unique factors driving its prices, there’s an overall reality: The economy is recovering far more quickly than it normally does following a severe recession. But that recovery is uneven, showing up in some sectors as high prices. From The Grid’s Matthew Zeitlin:

“What really worries economists is not just inflation per se, but a situation, as in the 1970s, where prices are rising and the economy is otherwise stagnant, with little job growth or overall growth. This condition is called, naturally enough, ‘stagflation’.”

Zeitlin goes on to say:

“There’s clear evidence that stagflation is not the direction in which the economy is headed. The unemployment rate is down to 3.9%, and overall output is easily above its pre-Covid level…..it’s simply not the situation that the labor market is trending in the wrong direction.”

And the Conference Board is forecasting that 2022 GDP growth will be 3.5% and it will be 2.9% in 2023, so no worries about stagflation in our future.

Zeitlin points out that the supply chain is also a culprit. Over the course of the pandemic, Americans shifted their consumption from services to goods, especially durable goods like furniture and cars. While services still amount for the bulk of US consumer spending, shifting the balance between goods and services can have large effects:

These changes in consumer spending have caused major stress at ports, and throughout the logistics system that moves goods around. This has raised the costs of everything that needs to be shipped.

China’s Zero Covid policy is creating severe lockdowns to keep the variant from spreading ahead of the Beijing Olympics next month. This raises the prospect of more disruptions for supply chains that are based there. China remains the largest supplier of goods to the US.

The Zero Covid policy has economic consequences: Delivery times for ocean shipments from China to the US stretched to a record 80 days in December, up 85% from 2019. This also impacts the cost of shipping a 40-foot container from Asia to the US West coast: It currently costs $14,572 this week, down from a peak of more than $20,000 in September. But that’s about a tenfold increase from two years ago.

The major question facing the Federal Reserve, as well as Biden, businesses and everyday consumers who have to make decisions, is how likely is increased inflation to persist? If the inflation problem is largely being driven by how consumers and businesses have had to adjust to Covid, then while it’s severe, it may be temporary.

Nobody likes or wants higher prices. Pent-up demand and abundant cash savings are part of what’s causing inflation. The other part of the problem is labor shortages, which are resulting in large wage increases for certain occupations.

The only way to stop prices from rising is for the Fed to reduce the money supply, raising rates until demand comes down far enough to match supply. The balancing act for the Fed is to tamp down price increases, while not causing a recession.

Whether the Fed can do that remains to be seen.

Our Curious Job Market

The Daily Escape:

Cranberry harvest, Carver, MA – October 2021 photo by Sarah Stiles Cabe

Robert Reich commented to Newsweek about the unexpectedly low US employment figures, that American workers are engaged in, “the equivalent of a general strike.”

He was referencing Bureau of Labor Statistics (BLS) numbers that showed US employment increased 194,000 in September, nearly 300,000 jobs shy of estimates. Despite a record level of job openings and 7.7 million out of work, many employers report difficulty filling positions. From Reich:

“In reality, there’s a living wage shortage, a hazard pay shortage, a childcare shortage, a paid sick leave shortage, and a health care shortage – and American workers are demanding an end to all these shortages. Or they won’t return to work.”

So, the question is: are Americans saying “take your shit job and shove it” to corporate America?

Reich may have a point, but the current employment situation is both good and bad, and it’s a lot less political than he thinks it is. The numbers make clear that ending unemployment benefits wasn’t as effective in generating new employment as conservative politicians said it would be.

The inability to find childcare, or concerns about the safety of the available jobs, and the possibility that people saved some amount of their former emergency benefits and it’s providing them with a cushion, are all possibly contributing to the current jobs situation.

There are other factors at work. The data also show a record number of people voluntarily quitting their jobs (meaning they are not eligible for unemployment benefits). The number of quits (to work for another company offering higher wages and benefits, change careers, or stay home and take care of the kids) spiked by 242,000 people to a record of 4.27 million in August, up 19% from August 2019.

A historically high number of quits suggests a tight and competitive labor market that’s encouraging workers to switch jobs. The highest quit rate was in leisure and hospitality (6.4%), a sector that includes accommodation and food services (6.8%), retail (4.7%), and professional and business services (3.4%):

In total, 892,000 workers in accommodation and food services quit in August, equal to 6.8% of all workers in that sector. Quits are usually high in this sector. In August 2019, during that pre-Covid tight labor market, 5.1% quit.

The Labor Department also reported that there were 10.4 million job openings in August, up by 46% from August 2019. A high number of job openings pushes employers to offer higher wages, better benefits, signing bonuses, and similar enticements to help bring qualified people on board.

Despite what Robert Reich says, workers now seem to have some pricing power. When they leave a job for better wages and working conditions at another company, they create a headache for their old employer who now has to find a new employee by also offering a better deal.

But it all doesn’t quite add up. On the one hand, there are tons of jobs going begging. On the other hand, the labor force participation rate is well below pre-pandemic levels. In September, the civilian non-institutional population in the US was 261.8 million. That includes all people 16 and older who did not live in an institution, such as a prison, nursing home or long-term care facility.

Of that civilian non-institutional population, 161.3 million were participating in the labor force, meaning they either had a job or were actively seeking one during the last month. This resulted in a labor force participation rate of 61.6% in September, down slightly from the 61.7% in the prior two months, but 0.2 points higher than the 61.4% when Biden took office.

The number of Americans counted as not in the labor force, meaning they didn’t have a job and were not looking for one, rose in September to 100.4 million, up 338,000 from August.

If the job market is so good, why are so many people staying on the sidelines? That’s not consistent with a tight labor market, so there has to be something missing from the data. We do know that a big chunk of employees have taken early retirement. The number of retirees shot up by around 3.6 million during the pandemic, according to the Federal Reserve Bank of Kansas City. At the usual pace, that figure would have been around 1.5 million.

Are people just working off the books more now? Is it people who can’t get/afford childcare? Or is it simply a mismatch of skills and jobs? We don’t need as many people staffing tourist jobs, but we need more people working at the docks and driving trucks?

Whatever is going on, there are millions of people doing it.

Passing Manchin’s Freedom to Vote Act is Critical

The Daily Escape:

Cannon Beach, OR – September 2021 photo by Rick Berk Photography

From EJ Dionne in the WaPo:

“…the next month is make-or-break not only for President Biden and the future of American social policy but also for the right to vote and our democracy itself.”

True. He’s talking about Democrats attempting to pass both the big stimulus package without ANY support from the Republicans, and a voting rights bill that might get some support from Republicans. Dionne goes on to say: (emphasis by Wrongo)

“Failing to enact Democrats’ social policy plan would be a big problem. Failing to protect democratic rule would be catastrophic.”

The media has focused on Biden’s big social policy package, not on the voting bill. They talk almost exclusively about the bill’s cost. They ignore the bill’s initiatives: On childcare, paid leave, elder care, health care, education, and the pro-family child tax credit, all of which are popular across party lines.

Dionne’s best observation about the big spending package is this: (emphasis by Wrongo)

“Yes, the much-discussed $3.5 trillion price tag is a lot of money. But that number is based on 10 years of spending. Sharon Parrott, president of the Center on Budget and Policy Priorities, points out that the $3.5 trillion should be placed in the context of an anticipated gross domestic product of $288 trillion over the same period — meaning that this debate is over roughly 1.2% of the economy.”

The politics of the big deal are clear. Democrats must come together and vote as a block in the Senate, or they will fail to deliver on the change they promised in the 2020 presidential election.

The politics for a voting rights bill are less clear. As with the big deal, Sen. Joe Manchin (D-WVA) has opposed the voting bills put forward by Democrats in the House. So, Senate Majority Leader Schumer asked Manchin to come up with a proposal that he could vote for and to find 10 Republicans to support it as well.

Manchin accepted that challenge and working with a group of Democrats including Sens. Klobuchar (MN), Merkley (OR) and Warnock (GA), developed a bill he supports. Marc Elias of Democracy Docket yesterday analyzed Sen. Joe Manchin’s compromise voting rights bill and found it…surprisingly acceptable:

“The Freedom to Vote Act, introduced this morning, reveals a surprisingly good voting rights bill. It reflects a sobriety and understanding of the challenges facing voters that is worthy of its lofty name. It is not just a reformulation of the prior For the People Act, but in many places, it is an improvement.”

You can read the bill here. With respect to voting by mail, the bill rolls back many of the Republicans’ disenfranchisement schemes. It forbids states from requiring notarization or witnesses to vote by mail. It provides for a free postage system for returned ballots, requires states to notify voters whose ballots are rejected due to a signature omission or mismatch and creates an easy way for voters to cure those ballots.

One of the big objections is that the new bill permits states to decide whether to require voter identification, but it broadens the list of acceptable IDs for states that require them. Under the new bill, states must allow utility bills and leases as well as student IDs and virtually any identification issued by a governmental entity to serve as an acceptable ID.

So, the challenge is whether Manchin will find 10 Republicans to support it. The big question is what will happen If he can’t: Will he and Sinema stick with their refusal to alter the filibuster and thus be complicit in the death of a bill as important to democracy today, as the original Voting Rights Act was in 1965?

Time is running out to save our democracy from a Republican Party that is rejecting it.

We learned in the past few days that our democracy was basically saved from a possible nuclear war and a coup d’état by Mark Milley, an American General with a conscience, and former VP Dan Quayle, who talked VP Mike Pence into not helping the insurrection succeed on Jan. 6.

That alone tells us what real peril we were in. It also should tell us what needs to be done to protect the country going forward.

It would be fantastic to pass both bills, but Manchin’s Freedom to Vote Act must pass, even if it means further weakening of the Filibuster. Wrongo doubts that Manchin and Sinema want to be associated in history with those who failed to stand up for democracy at the hour of maximum danger.

Within the next month, we’ll know where they stand.

Americans Die Earlier Than Europeans

The Daily Escape:

The Barber Pole, Vermillion Cliffs National Monument, AZ – May 2021 photo by Dave Coppedge

Derek Thompson in The Atlantic says that America has a death problem:

“According to a new working paper released by the National Bureau of Economic Research, Americans now die earlier than their European counterparts, no matter what age you’re looking at.”

Covid deaths are excluded from the study.

Before the 1990s, average life expectancy in the US was not much different than it was in Germany, the United Kingdom, or France. But since the 1990s, American life spans leveled off, and then fell behind those in similarly wealthy European countries.

We started hearing about America’s declining longevity when Anne Case’s and Angus Deaton’s 2015 study showed that White mortality in the US was rising. They called the new trend “deaths of despair”, caused by increased deaths by suicide, drug overdose and liver disease associated with alcohol.

Now, the bad trend has spread to all Americans:

“Compared with Europeans, American babies are more likely to die before they turn 5, American teens are more likely to die before they turn 20, and American adults are more likely to die before they turn 65. At every age, living in the United States carries a higher risk of mortality.”

The study collected data on American life spans by ethnicity and by income at the county level, and compared the data to those of European countries, locality by locality, allowing for direct comparisons. It explodes the myth about America having the best medical outcomes.

Dems Fumble Eviction Response

The Daily Escape

Mt Rainer at sunset, Paradise, WA – July 2021 photo by regulader.

There’s a political crisis brewing for Democrats in the form of the now-lapsed eviction moratorium. Progressive Democrats are angry at mainstream Dems like Pelosi and Biden for failing to extend the moratorium that expired on August 1.

The moratorium was put in place 18 months ago by the CDC. It has been popular with tenants, but many of them never caught up on their bills, and/or figured out how to access the aid promised under the moratorium.

Landlords sued to end the moratorium, and last month, the Supreme Court allowed the moratorium to remain through the end of July. But at the time, Justice Kavanaugh wrote that any further extensions would require “clear and specific congressional authorization” via new legislation.

While Kavanaugh said that a further extension of the moratorium would require Congressional action, that wasn’t the issue before the court. The issue before the court was whether to vacate a lower court stay. Their decision left the moratorium in place. When a judge expresses views beyond the specifics of the case, it is known as dicta, and is not binding.

So, the administration actually was free to extend the moratorium, and assuming the extension was later challenged in court, they could argue to the Justices that circumstances have changed. Here’s Judd Legum: (parenthesis by Wrongo)

“First, the Delta variant has made it more dangerous to allow millions of evictions to proceed voluntarily. Second, the time that Kavanaugh thought would allow for the orderly distribution of the funds (one month) has not been sufficient.“

But instead, Biden wanted Congress to act. The Congressional Democrats launched an effort to extend the ban, but the House adjourned last Friday without passing a bill. Senate Democrats were also pushing for an extension but didn’t have enough support that would lead to passage.

And now, the Biden administration is in a bind. Moderate Democrats along with Republicans, do not want to see the moratorium extended. Biden doesn’t want it extended either, so maybe we’ll see a deluge of evictions. From The Guardian:

“More than 15 million people live in households that owe as much as $20 billion to their landlords, according to the Aspen Institute. As of July 5, roughly 3.6 million people in the US said they faced eviction in the next two months, according to the US Census Bureau’s Household Pulse Survey.”

On Sunday, Pelosi and other House leaders said that action extending the moratorium “must come from the Administration.” They said that extending the moratorium “is a moral imperative to keep people from being put out on the street which also contributes to the public health emergency.”

But it’s hard for Democrats to hold the moral high ground when they refuse to stand on it. The House hasn’t interrupted its 7-week recess to address the issue.

Progressive Democrats are up in arms. Last weekend, Rep. Cori Bush (D-MO) led a protest on the Capitol steps to get the attention of her colleagues and the country. She wants Congress to reconvene and extend the national eviction moratorium.

What we’re seeing here is the political power of a freshman Congressperson. Bush has the attention of the media as she sits outside the Capitol. That means the administration and senior Democrats are paying attention. These kinds of political stunts rarely work, but since the Dems are in control of the government, albeit with very slim margins, everything needs to be taken seriously.

OTOH, eviction is purely a state/local process. It’s very difficult to really do much at the federal level. Also, landlords deserve to be paid, and able-bodied renters need to pay their bills. That’s how our system works.

The fact is that tenants and by extension, landlords were promised help and haven’t gotten it. The pandemic has caused a cascade of negative consequences at all levels. But $ billions of taxpayer funds are unused, and available to help landlords, if only they could avail themselves of the opportunity.

The system is set up to convey the payments to landlords, but renters must apply for the money, and too few either know about it, or have availed themselves of the program.

The White House won’t step in. The Dems in the House and Senate can’t be bothered to delay their trips to the Hamptons and the Vineyard to solve the problem. The Republicans, the so-called party of Christianity, will do nothing to help.

Who’s left? AOC and Cori Bush on the steps of the Capitol?

There are rumors that Biden is finally going to do something about this, but no details yet, as of this writing.

The Covid Recession and American Capitalism

The Daily Escape:

Upper Buttermilk Falls, Ithaca NY – June 2021 iPhone photo by Wrongo

The following chart appeared in the NYT on Tuesday in an article claiming that the recession is over. The unfortunate reality is that the COVID recession was artificially induced by a shutdown of the economy. But it may now be transitioning into a longer, systemic recession caused by poor economic policy. Take a look at the chart:

While economists say that, by traditional definitions, the Covid recession didn’t last very long, we are still down 7 million jobs from pre-pandemic levels, even while personal income is back to pre-Pandemic levels. So, how can the recession be over?

And why are lawmakers in Republican states calling for an end to unemployment benefits when so many remain out of work? Zandar says we should start by looking at Tennessee’s official job posting website:

“There are more than 250,000 jobs available in Tennessee right now, but….Only 3% of the jobs posted — about 8,500 as of Friday evening — pay $20,000 [per year] or more. The federal poverty line for a family of three is just under $22,000.”

Of the 8,500 jobs on the state of Tennessee’s official job board, about 8,250 pay $10 an hour or less, which is a poverty level wage even in Tennessee. But Tennessee’s governor Lee has decided to stop accepting CARES Act money in July, saying he didn’t want to pay people to sit at home.

As Ezra Klein said in the NYT: America doesn’t fight poverty, it runs on it.

“The American economy runs on poverty, or at least the constant threat of it. Americans like their goods cheap and their services plentiful and the two of them, together, require a sprawling labor force willing to work tough jobs at crummy wages. On the right, the barest glimmer of worker power is treated as a policy emergency, and the whip of poverty, not the lure of higher wages, is the appropriate response…”

Sunday Cartoon Blogging – May 16, 2021

Both Houses of Congress have finally agreed to set up a committee to investigate the causes of the January 6th attack on the Capitol. Democrats wanted a Congressional investigation to reveal the causes of the insurrection so Congress could pass laws to prevent it happening again.

Republicans had been blocking its creation. Initially, they wanted to investigate all political violence in the country, including that caused by “Antifa”. Their strategy was that could water down the committee’s report and possibly obscure the role of Trump’s supporters in the insurrection.

The 10-person bipartisan commission will be evenly split between the parties. The Speaker of the House and Senate Majority leader will together appoint five commissioners, including the chair. The House and Senate Minority leaders will appoint the other five commissioners, including the Vice Chair.

Commissioners cannot be current government appointees and must have significant expertise in the areas of law enforcement, civil rights, civil liberties, privacy, intelligence, and cybersecurity.

This might look like a victory for the Democrats, but it isn’t. The Republicans can control the investigation through the committee’s subpoena power. To issue any subpoena, at least 6 members of the committee must agree. This gives the GOP the power to veto calling any witnesses.

It will probably result in a milquetoast committee report. The GOP’s inherent veto over the subpoena process is a flaw that potentially dooms the investigation to failure. On to cartoons.

Same as it ever was:

If the elephant’s trunk was like Pinocchio’s nose:

How business’s view changed from stimulus #1 to #2:

Fox keeps the anti-vax message going:

Market for fake IDs seems to be the gas hoarders:

Will this ever end?

Israel is losing control of the narrative because there are only so many viral videos of brutality that it can dismiss by saying, “Actually this is way more complicated than it looks.” As Caitlin Johnstone says, a nation that cannot exist without nonstop warfare is not a real nation, it’s a military operation with suburbs. This map should tell you that there is no possibility of a two-state solution. Palestine won’t be viable unless large numbers of settlers are removed, and that’s not happening:

More: Back in the Nineties, Netanyahu said that then-Prime Minister Yitzhak Rabin was “against Jewish values” for offering to withdraw from some of the occupied territories in exchange for peace. He led a mock funeral at which his followers brandished signs with Rabin’s head in the crosshairs of a gun. And when Rabin was assassinated by one of Netanyahu’s followers, he said he never condoned violence.

He’s also the guy who hasn’t been able to form a government after four tries, who’s also in danger of going to prison for corruption, assuming he can’t somehow cling to power.

The US has to think carefully about what our role should be in this conflict.

Nomadland Is Best Picture

The Daily Escape:

Desert Lilies, Desert Lily Preserve, Desert Center, CA – photo by Bob Wick for BLM

The film “Nomadland” won best film, best director, and best actress at this year’s Oscars. Wrongo and Ms. Right kept our tradition, and didn’t watch the Oscars, but we have seen the film twice.

If you haven’t seen it , the film is worth your time. It offers a sympathetic view of what’s happening to the American working class in what’s becoming a de-industrialized America. It shows the hollowing out of middle America, and the growing regional inequality that stems from the US economy being concentrated in fewer and fewer corporate hands, and often, in fewer places.

Our changing economy has left wide swaths of rural America in decay. The movie’s story centers on Fern, an older widow. She worked in the US Gypsum plant in Empire, Nevada until the Great Recession reduced demand for drywall, and thus the mine and the plant were closed.

Once the factory went, so did the town. It became so de-populated that it even lost its zip code. Now, Fern, (played by Frances McDormand), sleeps in an old, converted van and works a seasonal job with one of the few employers left in the area: An Amazon shipping center.

But the film isn’t about Amazon. It’s about coping with downward mobility. Fern travels the southwest mountains, working a variety of gig jobs: In addition to Amazon, she’s kitchen help in a Wall Drug. She works at a beet processing plant throwing cases of beets into a hopper. She helps run a small RV park.

The film avoids clichés about the formerly middle-class, mostly White Americans it depicts. None of them blame Black people or immigrants or the left-wing media for their problems. They simply no longer play by the norms of an economy that ruined their lives.

Ironically, these characters don’t follow the usual White working-class stereotypes. Unlike Trump voters interviewed by the media in diners across America, they don’t turn to racism or blind acceptance of patriotism because of their economic uncertainty. Fern and the rest of the characters in “Nomadland” demonstrate dignity, decency, and stoicism in the face of the structural forces grinding them down. They teach each other how to survive while living off grid. They help each other when the chips are down.

Eric Cortellessa at Washington Monthly offers great insight:

“Unlike JD Vance’s flawed Hillbilly Elegy…this film does not blame the victims for their own downward mobility. It doesn’t point to bad habits (drugs and laziness), bad morals (racism and Trumpism), or bad attitudes (toxic masculinity and perverted Christianity). Instead, it shows humble men and women who don’t scapegoat others and who manage to preserve their dignity and, to a large extent, their own personal freedom in the face of systemic forces that are exploiting them.”

Let’s point out that since 1985, the average Wall Street bonus has increased 1,217%, from $13,970 to $184,000 in 2020. If the minimum wage had increased at that rate, it would be $44.12, instead of $7.25. And $7.25 equates to $15,080/year, nowhere near enough to make a payment on the US median home that’s priced at $301,000. It’s not even enough for a tiny dump of a house, like the one Fern left in Empire NV, which probably cost one-third of the median price.

Jessica Bruder, the author of “Nomadland: Surviving America in the Twenty-First Century,” that the movie is based on, wrote over the weekend about her exploration of this growing subculture. Bruder says a scene depicting Fern spending a night in her van when she hears “the knock” is chillingly accurate:

“No overnight parking! You can’t sleep here.”

The knock, Bruder explains, “is a visceral, even existential, threat,” one that nomads try to evade by hiding in plain sight: “Make yourself invisible. Internalize the idea that you’re unwelcome.”

Some places forbid overnight parking. Others outlaw living in a vehicle. Penalties can pile up fast. Unpaid, they can lead to the cruelest punishment of all: Your home gets towed. Failing to pay the impoundment fee means losing your home. Bruder says that people ask her what they can do for the nomads:

“Letting vehicle dwellers exist in peace would be a fine start. Individuals have the power to help. When you see someone living in a car, van, or RV, don’t call the police.”

Wrongo was struck by how the nomads helped each other. In our little New England town, people do the same, they try to help. The bystanders at George Floyd’s murder tried to help prevent Floyd’s death.

The only people who don’t seem to care about helping one another are corporate executives and Republican politicians. How did they get like that?

See the film.

Biden’s Infrastructure Plan

The Daily Escape:

Crepuscular rays at White Sands NM, NM – photo by dantreks

Biden announced his big infrastructure plan on Wednesday. The American Jobs Plan is a $2+ trillion proposal that is an expansive interpretation of the word “infrastructure.”

Naturally, Republicans are against it. South Dakota Gov. Kristi L. Noem (R) disparaged it on Fox:

“I was shocked by how much doesn’t go into infrastructure…It goes into research and development. It goes into housing and pipes and different initiatives, green energy.”

So, Republicans aren’t sure what “infrastructure” is? Or maybe, they want Biden restricted to being President Pothole? They must know that “pipe” and “green energy” are well within the definition of “infrastructure.”

But they would be against it, no matter how little it contained. Today’s Republican Congress is even worse than it was in 2009. Back then, Obama’s stimulus bill to combat the Great Recession, (like Biden’s stimulus bill after COVID-19), received zero GOP votes in the House. In the Senate, Obama got three more Republican votes than Biden. And in the 2010 midterms, the GOP regained control of both chambers, setting its template for 2022.

Now In 2021, Republicans no longer run on policy. They’re running against a mythic Democratic party bent on imposing socialism, demeaning Christianity, defunding the police, coddling menacing migrants, and supporting angry American minorities.

If you’re a Republican politician, you’re not offering any actual policy. They’re offering to fight Democrats, and that seems to be enough to get reelected. This means that Republicans will filibuster any bill the Democrats can’t pass through reconciliation.

Biden knows that. So, his legislative strategy prioritizes rebuilding American infrastructure, something that has a broad consensus within the electorate. His plan includes a commitment to confronting climate change (and creating jobs) by modernizing the electrical grid, encouraging the development of alternative energy sources, and building charging stations across America.

He plans to combat poverty and buttress the middle class through funding childcare, universal pre-K, and free community college, while extending the child tax credits authorized by his stimulus plan.

Taken together, his American Jobs Plan represents Biden’s belief that the pandemic has changed what is politically possible. He proposed to open the way to expanding government’s role in addressing our economic and societal weaknesses, on a scale of spending we wouldn’t have dreamed possible.

He’s taken the ideas originally outlined in the Green New Deal in 2019 and repackaged them under the more politically popular umbrella of infrastructure, including some of the same goals. Biden’s plan isn’t the Green New Deal in sheep’s clothing, regardless of what Republicans say.

To help cover the costs of his plan, Biden proposes raising taxes on corporations, the affluent, estates, and capital gains, starting with corporate taxes. He’s proposing an accompanying tax plan, the Made in America Tax Plan. If it passes, it will pay for the American Jobs Plan in 15 years, and reduce deficits from then on.

Biden proposes to set the corporate tax rate at 28%, from its current rate of 21%, nowhere near the 35% tax rate before the 2017 tax cuts. He also plans to discourage offshoring of corporations and to get rid of subsidies for fossil fuels. Here’s a chart that gives some historical perspective about Biden’s corporate tax proposal:

It’s clear that despite Republican wailing that the infrastructure plan is a “trojan horse” for raising taxes, the reality is that corporate taxes will still be lower than at any point since the 1940’s.

Even this may be a bridge too far, since the Senate’s most conspicuous swing vote, Sen. Joe Manchin (D-WVA), says that while he favors tax hikes, he insists that infrastructure legislation should be passed with bipartisan support.

This suggests a longish legislative process. As a realist, Biden will be happy to again pass landmark legislation with no Republican support. But first he must get Manchin to labor through the thankless work of establishing that the GOP is unwilling to work toward a meaningful compromise.

OTOH, a new Morning Consult/Politico poll says that by a two-to-one margin voters prefer an infrastructure bill that includes tax hikes to one that does not have those tax hikes. That means the GOP may be in trouble if it castigates Biden and Democrats if they pass his plan.

Despite Wrongo’s early misgivings, Biden is the reset button that America desperately needed. He was outwardly moderate but has moved to embrace more progressive positions.

But we shouldn’t underestimate the damage Republicans can do with their singular focus on power and winning the 2022 mid-terms.

American Rescue Plan: A Bold Bet by Biden

The Daily Escape:

Jay Peak, VT – photo by Alan Baker

Today, Wrongo listened to a NYT podcast that tried to dissect “Republican Populism”. Based on the American Rescue Plan that is about to become law, no one should EVER again say that the GOP are populists, except in the demagogic sense.

Long-time blog reader David P. called yesterday to alert Wrongo to Steve Rattner’s appearance on Morning Joe. Wrongo never watches morning television, so he would have missed the charts Rattner used to compare Trump’s Tax Cuts and Jobs Act to Biden’s American Rescue Plan. They are important:

The two bills are nearly the same size, but Trump’s plan on the left above shows that 85% of the benefits from Trump’s plan were tax cuts for businesses and people making more than $75k/year. Just 16% went to people making less than $75k.

Biden’s American Rescue Plan (on the right above) gives 52% of its benefits to individuals making LESS than $75k, of which, 8% is in the form of tax cuts for dependent children. Biden’s plan also spends $1.75 Trillion on attempting to return the American economy to pre-pandemic normalcy.

Rattner’s next slide shows where each plan’s benefits went by income level:

This bar chart divides America by income bracket. The blue bars are Biden’s plan, and the red bars are Trump’s plan. Starting from the left, Biden’s plan provides 23% of the overall benefit to people in the bottom 20% income, while Trump’s plan gave them just 1%. Instead, Trump’s plan gave 65% of the benefits to the top 20%, while Biden’s gives them just 11%, mostly in the form of the $1,400 checks.

It’s easy to see which bill has helped the rich, and which did not. A key Republican talking point in the past few weeks was that the American Rescue plan isn’t focused enough on the pandemic. Yet when Trump and the Republicans had their chance, they showed themselves to be the same old plutocrats.

A key difference between the two Parties:

The CARES Act was a Republican accident. They got scared, and when the Republicans are scared, they’ll flirt with doing the right thing for self-preservation.

The America Rescue plan is a big win for Biden and the Democrats. When signed, it gives more than just cash to American families. It makes Obamacare more affordable for more people. It provides $27 billion in rental assistance and much-needed help to cities and states, and it establishes a child allowance of $3000-$3600, which could become permanent down the road.

It doesn’t contain the $15 an hour minimum wage provision, but compared to previous big pieces of Democratic legislation, like Clinton’s 1993 tax bill or Obama’s 2009 ACA, despite the American Rescue plan’s huge price tag, it passed relatively easily. And just like those two earlier bills, no Republicans voted for it.

Let’s hope that the media continue to describe all of the things Republicans hate in the bill. Who gets what and when, and how, down to the last Biden buck. That they continue to talk about Republican consternation about the deficit and how we pay for it all.

Republicans today have zero ideology. For decades, tax cuts were their preferred economic tool. Tax cuts also caused revenue shortfalls for the government, who would then be unable to offer more safety net programs for the middle and working classes. A Republican delight!

Progressive Democrats believed that putting money in the hands of working people and the poor would be a better economic stimulus because it provided material support to people who needed it.

That’s Biden’s plan.

Progressives want to make things better; conservatives want to maintain the status quo. Progress is usually a good thing, but it isn’t a baseline premise for both Parties.

Reagan turned “liberal” into an epithet. Modern Republicans are doing the same with “progressive.” That will be a hard sell if progressives are bringing jobs and a measure of economic security to hometowns across America, while all the Republicans have to offer is “Look what the progressives did to Mr. Potato Head!”

They will always have the cultural issues, real or imagined, to run on.

But on economic issues, the whole “progressive wish list” compliant from the Republicans is pretty weak tea, when they’re unwilling to vote for anything.

Biden and the Democrats are making a big net on progressive, Democratic ideology. It will be exciting to see how it works. And all of it is going to be popular.

The Wrongologist

Geopolitics, Power and Political Economy

Category: Social Safety Net