President Biden’s Dreams and Some Perilous Realities
Even before President Biden started speaking before a joint session of congress history has been made. The two persons sitting behind him were women—House Speaker Nancy Pelosi and Vice President Kamala Harris. What followed was an attempt by Mr. Biden to make history on a different level by, among other proposals, changing a heartless America to one that allows a paid leave for Americans and providing funds for cancer research. He previously proposed plans on infrastructure. On the eve of his 100 days in office, Mr. Biden pushed for $4 trillion in spending on programs reminiscent of the New Deal and the Great Society. Most Americans knew from their daily experience with the existing infrastructure, housing, child poverty, unemployment and school conditions, that those programs are things they needed to do.
Signs of Optimism
There are signs of optimism that Mr. Biden’s task may be easier given several factors. First is the hopeful economic recovery, with an annualized growth rate of 6.4% during the first 3 months of the year. Second is the approval by congress of the Covid-19 relief bill in March. With that Mr. Biden can now proceed to focus on structural issues such as systemic racism and income inequality. The relief bill was passed on an emergency basis and should not lead to the assumption that congress would approve other bills without negotiations. Republicans will probably offer their counter proposals to meet reduced figures for Mr. Biden’s plans. Third is the rate of vaccination and the decrease in the number of virus cases. Now, Mr. Biden can cautiously reopen the lockdowns.
The Public versus Republican Support
The public seems to be more supportive of Mr. Biden’s plans than Republicans who fear that the $4 trillion would lead to inflation. Some of them say the figure is larger that what the U.S. needed to win World War II. Experts among Democrats such as former Clinton administration advisor, Larry Summers, shares the same concern. The Congressional Budget Office, (CBO) projects a federal budget deficit of 2.3 trillion in 2021. At 10.3 % of gross domestic product (GDP) the deficit in 2021 would be the second largest since1945. However, Gallop polling shows Biden’s average approval rating in his first 3 months in office is 56%.That is higher than Donald Trump’s 41% but lower than Obama’s 63%. President Biden is taking advantage of his high approval rating by touring the country to drum up support for his plans and placing constituent pressure on Republican lawmakers. But Mr. Biden gets less support on other issues like immigration.
Immigration Policy is Doomed
Realizing the challenge, he faces over immigration and the border President Biden is calling for patience and for sequencing legislation. He gives a priority to the infrastructure plan before turning to other thorny issues like immigration, gun violence and policing. There was some congressional momentum about policing but the razor thin majority the Democrats enjoy in the Senate threatens to undo the Biden’s plans as they stand in their original form. His immigration policy, in particular, faces a double threat outside of any congressional opposition. Mr. Biden assigned Vice President Harris to meet with Latin American leaders to discuss ways to stop illegal immigrants from crossing into the U.S. Coupled with aid to those countries to improve living conditions Mr. Biden hopes to remove the root causes of illegal streaming across the border. But any aid, even if we assume a corruption-free use of the money, is long-term in its effects. Aid will not stop immigrants overnight. There is another factor why the policy is doomed: The American Dream. Even if living conditions in Central America and other countries in the world are improved people will still take risks to live in America. Women in their late pregnancy months from China, Latin America to the Middle East come to deliver their babies at U.S. hospitals because they want their children to be born American. It is the deeply-rooted American Dream. The same idea applies to Buy American.
Buy American, Pay More
Amid the COVID-19 pandemic most of the world would prefer American or European vaccines even though Chinese or Russian vaccines may be available to them. So, while there is great appreciation for American products abroad, Buy American policies at home may be difficult. The Peterson Institute for International Economics argues that these policies don’t add jobs to the economy and may actually limit growth. The Peterson Institute estimates that the annual cost to taxpayers for every job protected by Buy American is over $250,000 because of the higher prices paid for the products. Nobody wants to see Chinese goods flooding American markets because of their cheap prices. But there is a need to deal with the unintended consequences of the policies.
Biden the Politician
To fund his wonderful plans Mr. Biden is imposing higher taxes on those making more than $400,000 a year and increasing corporate tax which may lead many jobs to flee overseas. But what happens if higher taxes are not enough to fund his ambitious plans. He may be forced to increase taxes on those making less than $400,000. But he would not say that because he is a politician. In fac, he is a self-serving politician. Experts say that many of the jobs created by his plans will be temporary. They would vanish with the completion of the infrastructure and other projects. He should know that. In his speech, the self-serving politician claimed that by the time he assumed office less than 1% of the seniors in America were fully vaccinated against COVID-19. A hundred days later nearly 70% of seniors are fully protected. While the figures cited by Mr. Biden are correct, he did not account for the fact that on January 20, his inauguration date, the vaccines were newly available. Mr. Biden did make good efforts to expand vaccination and he should be commended for that but we should also wish him good luck with yet-to-come challenges.
Good Luck Mr. President in the next 100 days and beyond.